Globalization is an Option Not an Imperative. Or, Why the World is Not Flat

Most managers consider global expansion to be an imperative, and cross-border expansion commands wider support than cross-business expansion. This article not only counteracts such a bias, but provides a framework for valuing cross-border moves, called the ADDING Value Scorecard. There are two broad approaches to evaluating strategies: in terms of principles and in terms of analyzing their implications for value. While principles may help guide routine decisions, they should be seen in the context of important decisions as ways of complementing analysis of value rather than substituting for it. The ADDING Value Scorecard’s first component is Adding volume, and is followed by three levers for improving margins: Decreasing costs, Differentiating, and Improving industry attractiveness. The last two components, Normalizing risks and Generating knowledge (and other resources), are add-ons that reflect large discontinuities that can arise at national borders. As an example, the scorecard is applied to a cross-border move that clearly failed the ADDING Value test — the merger, recently dissolved, of Daimler-Benz and Chrysler.

• Cross-border Expansion
• Value Analysis
• Strategy Evaluation
• Automotive Industry