Go Global Or No?
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Go Global–or No? In my view, the answer is “not yet.” To survive, DataClear has to go global in the future but its current decision-making process and rationale are flawed. What DataClear needs to do is to not panic, slow down, and take a clearer look at its situation and the business environment and develop some strategic options that will allow it to go global when the time comes.
Theyve got some time but not a whole lot of it. As stated in the case, they need to focus.
Despite VisiDats emergence and its contract with Shell, DataClear still has the data analysis market in the U.S. to itself, as well as a proven product to sell. VisiDats product was still in beta and had no successful installations, and there is no guarantee that it will perform as well as–much less outperform–DataClears.
DataClear had also recorded very impressive sales growth in its first two years and, given the projections, were looking at 300 percent average revenue growth thru 02. The case analysis available shows that DataClear has a $600 million annual domestic market for its current product and $1.2 billion when you add in the global market in telecommunications and financial services. With product expansion, there was a potential annual $2.7 billion market ($1.5billion domestic/$1.26 billion abroad) to target in the telecommunications, financial services, chemical, petrochemical, and pharmaceutical industries combined.
The case also suggests that DataClear would not have to substantially modify its core software product in order to accommodate expansion into new markets for its services, although the total cost of expanding both product and infrastructure/staff support was put at $4 million. The cost of immediate global expansion was not explicitly stated but probably somewhere around $2 million just for infrastructure and staff support, before product development (lets call that $2 million–so its even).
What was clear in the case was the lack of international business experience on the part of DataClears senior management–a serious shortcoming. Before thinking about going global, DataClear must get smarter about the international scene and get some real expertise on board.
My recommendation is that DataClear first press ahead with consolidating its first-mover advantage in the U.S. telecommunications and financial services markets and expand as planned into chemical, petrochemical, and pharmaceutical data analysis. In all these areas, the companies it deals with or will be marketing to are global players so, in effect, DataClear is already developing a global presence.
Next, I would get a copy of or access to VisiDats product to see just how good it really is and determine its shortcomings–this will aid in refining the ClearCloud product as well as follow-ons. Then, I would hire at least one manager with international expertise to start developing a global strategy. This