It’s a global world, even in the defense business – Mary T. O’Sullivan

By Mary T. O’Sullivan, MSOL

“Globalization is a fact, because of technology, because of an integrated global supply chain, because of changes in transportation. And we’re not going to be able to build a wall around that” – Barack Obama

The overall impact of globalization has brought radical change in every aspect of the way many companies conduct business. Due to the nature of much in the world of business, export of certain technologies is banned by the US Government. However, due to the US Government’s need to ally with strategic international defense partners as well as corporate international offset requirements, leveraging multi-national alliances has become far more commonplace. Defense companies now do business with Thales, BAE, and partners in Australia, Canada, as well as Japan, Taiwan, Turkey and the United Arab Emirates (among others) in order to fulfill those strategic requirements.

Technology, Trade/Investment

The relationships the company establishes are not necessarily based on cheaper labor or cheaper parts; these relationships are driven by the need of the US Government for leverage in strategic countries for the purpose of national defense.

As mentioned earlier, certain technology exports are closely controlled if permitted at all. As far as manufacturing defense products overseas, many international customers desire products that are made in US factories by US workers. They want that visit to the US to physically tour facilities. A trip to a major manufacturing plant in the United States is often considered a symbol of status.

As is expected in globalization, securing a contract with an international customer usually dictates a need for alliances with companies in that country, often involving an acceptable technology transfer. Generally speaking, only non-critical hardware and software are available for technology transfer. Delicate negotiations and cultural sensitivities are essential in dealing with this situation. Another interesting issue a major US defense company faces is the importance of relationships. We, in the US, have not come to grips fully with the concept of dealing with our global partners’ relatives, friends, and other external relationships. This practice takes great finesse, and if mishandled, can lead to irreparable harm to the business deal.

People (movement, composition of workforce), multi-nationals (mergers and acquisitions), culture (spread of common ideas and practices).

A major issue faced by many companies is the inexperience of its senior managers in international dealings. Most have unrealistic expectations and impose unrealistic deadlines and changes on the negotiators on the ground. This approach does nothing to speed up delicate discussions or improve milestone payments. Most international companies value relationships far more than artificial deadlines. Even with the acquisition of small international companies and hiring of experienced international business people, many of senior executives remain woefully unskilled in global protocols. (Like the importance of honoring verbal agreements.)

Also, while US defense companies have hired from many diverse cultures, much of the work is classified, requiring native born US citizens only. In fact, some documents must be stamped “NO FORN (no foreign). Many employees of diverse backgrounds who were not born in the United States work in areas like HR, Communications, or Public Relations, etc.

How organizations have changed, if at all, in their mission, type of business, operations, ownership, management practices or other characteristics as a result of globalization.

Organizations have made some progress. For example, some may have appointed a foreign director to lead a major international capture effort. One company has leveraged a small German subsidiary to assist in European and West Asian efforts. In general, there are also endeavors ongoing to establish landed companies in strategic nations like Saudi Arabia, the UAE, and Kuwait. Moreover, this company has appointed a senior executive for one major international business area who is from India, as is the senior in-country executive for that same business.

The mission of a defense company is to engage in the national defense of the United States, and that mission has not been changed by doing business internationally. Their mission is dictated by the US Government, and inclusiveness is a corollary to that mission.

International efforts are in support of expanding the role of strategic partners engaged in a similar business type overseas.  And the basic business model has not changed. Unlike many foreign companies, US companies do not deal in palm oil, rice, carpets, or other commodities. Therefore, business operations have been limited to obtaining and establishing landed companies, not expanding US concerns abroad. As mentioned earlier, much technology based business is not transferable.

Opportunities or Potential Challenges

With national defense as a core mission, opportunities as well as challenges present themselves to a large defense concern. Opportunities for international sales are apparent as the US Government seeks to export defense products to further its own interests in strategic countries. The burden for completing those deals successfully is with the defense contractors, as they navigate the unfamiliar whirlpools, eddies and currents while establishing viable business partners overseas. Savvy leaders are needed to build and maintain those business relationships and to bring profit into the company, while protecting US national interests as well.

“Globalization is going to bring us closer and closer together across nations and technology you can’t stop.”- John P. Kotter


Connect with Mary:

Mary T. O’Sullivan, Master of Science, Organizational Leadership, International Coaching Federation Professional Certified Coach, Society of Human Resource Management, “Senior Certified Professional. Graduate Certificate in Executive and Professional Career Coaching, University of Texas at Dallas.

Member, Beta Gamma Sigma, the International Honor Society.

Advanced Studies in Education from Montclair University, SUNY Oswego and Syracuse University.

Mary is also a certified Six Sigma Specialist, Contract Specialist, IPT Leader and holds a Certificate in Essentials of Human Resource Management from SHRM.

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