Distance Matters in Global Diversification: Why Business Leaders Should Care

In today's globalized world, it is easy to assume that distance no longer matters when it comes to doing business. With advancements in technology and communication, it is now possible for companies to collaborate and compete in real-time with people from all parts of the world. However, this assumption can be risky for multinational companies that are looking to diversify into new global markets.

Distance Creates Costs and Risks

Distance can create additional costs and risks of doing business in a new market, which can dramatically affect the assessment of the attractiveness of foreign markets. For instance, the farther a firm's main operation is from a target country, the harder it will be to conduct business in that country. The distance can create environmental instability for multinational companies, which can pose serious costs and risks on the performance of cross-border business transactions.

Consideration Of Diverse Factors

Business leaders should note that distance still matters in global business operations. While it is important to consider a country's wealth and GDP size, greater consideration should be given to the impacts of distance. Companies should factor in effects of culture, administrative barriers, geographical separation, and supply chain constraints. These factors can significantly affect the performance of cross-border business transactions.

Environmental Outcomes and Environmental Uncertainty

Organizations that attempt to adapt to different environmental outcomes arising from a global expansion will spend most of their time adjusting structure and very little time spent in organization actions. Business leaders should realize that environmental uncertainty tends to favor specialist firms than generalist firms. Companies need to consider distance because of environmental variability in their decision for global diversification. They should adopt local content strategy as used by specialists' firms.

Impacts of Distances Between Ecologies

In diversifying into new global markets, companies should take a strategic approach to manage the environmental outcomes of distance. They should be concerned with how distances between ecologies impact the firm's performance. Business leaders should also consider the strategic management of environmental outcomes when distance matters. By adopting a local content strategy, companies can better manage the risks associated with distance.

Diversification Strategy and Distance

Multinational companies should seriously consider the impact of distance on their global diversification strategy when venturing into foreign markets. This homogeneous global village perspective of the performance of multinational companies in global markets can be said to lack strategic importance if the factors of distance are excluded. Companies must move away from the risky assumption that distance does not matter.

Advisory By Gabriel Domale Consulting

Business leaders need to recognize that distance still matters in global business operations.

While technology and communication have made it easier to collaborate and compete in real-time with people from all parts of the world, distance can create additional costs and risks of doing business in a new market.

Companies should factor in the effects of culture, administrative barriers, geographical separation, and supply chain constraints.

By taking a strategic approach to manage the environmental outcomes of distance, companies can better manage the risks associated with global diversification.

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Interested investors, financiers and asset owners can contact us at +2347034604152 (Also WhatsApp) or info@gabrieldomale.com and  leesi.gborogbosi@gmail.com

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Author

Sir (Dr} Leesi Gborogbosi

Bio – Sir (Dr) Leesi Gborogbosi – MD/CEO, Gabriel Domale Consulting

Sir (Dr) Leesi Gborogbosi is the Managing Director/CEO of Gabriel Domale Consulting, a management consulting firm based in Nigeria, that helps companies in Africa to grow, provides insights to leaders and transforms institutions.

He has about three decades of leadership experience in the oil and gas industry (Shell Nigeria). He is an expert in finance, strategy, corporate governance, transformation, cost management, leadership development and due diligence.

Sir (Dr) Leesi Gborogbosi was Project Finance Manager of Upstream Oil & Gas Projects (7 projects - Headline size: $8 bln) - Southern Swamp Associated Gas System, Forcados Yokri Integrated Project, Otumara, Adibawa, Agbada and Assa North/Ohaji South Projects.

He provided advisory services namely, strategic planning, budget management, funding strategy, risk management, governance, due diligence, and investment plan covering the full life cycle of the seven major upstream oil/gas projects, power facilities and export pipelines.

He collaboratively works with business leaders and their organizations to identify growth opportunities and create value through operational excellence in strategy implementation and capital efficiency by delivering projects within costs, building strategy, and planning frameworks and crafting innovative funding solutions.

Sir (Dr) Leesi Gborogbosi provides support to finance leaders to make crucial decisions and optimize performance through financial excellence in finance systems and accounting operations, budgeting, finance transformation, cost reduction, governance, risk, and compliance.

He has doctoral degrees in strategy and business studies and MSc (Research Methodology in Management) from IE Business School, Madrid, and an MBA (Finance and Banking) from the University of Port Harcourt, Nigeria; and BSc (Accountancy) from the University of Nigeria, Nsukka. He had his secondary education at Federal Government College, Jos, Nigeria.

His doctoral dissertation focuses on strategy implementation, collaboration, the role of middle managers, and the dynamics of social movements (host communities).

Sir (Dr) Leesi Gborogbosi leverages his professional experience as a Certified Management Consultant (CMC); Fellow, Institute of Chartered Accountants of Nigeria; and The Institute of Management Consultants. He is a member of the Chartered Institute of Procurement & Supply, London; Nigerian Institute of Management (Chartered); and Strategic Management Society, Chicago, United States.

He was nominated by the Strategic Management Society, Chicago for the "Best International Conference Paper Prize Awards" in 2017 and 2015. He was appointed the Chair for the Session on “Leading change implementation processes” at the Strategic Management Society conference in Denver, United States in 2015.

Sir (Dr) Leesi was a member of the Strategic Management Society “Special Committee on Diversity and Inclusion”, Chicago, USA, with the responsibility of providing the Strategic Management Society Board of Directors with a good audit of where the Strategic Management Society stands with respect to inclusiveness in its activities.