FIJIAN COMPANIES EXPANDING THEIR WINGS OFFSHORE

The latest corporate reporting season shows the risks and rewards of owning companies with an expanding international footprint. For every Fijian and regional company that delivers rapid offshore growth, many landmines lurk. Yet investing in companies that can grow overseas has never been more critical. Pacific's small economies, challenging growth outlook, and influx of foreign competition is encouraging more companies to look offshore. Integrated Business Information System (IBIS) Pacifica chairman Simon Peters says companies that resisted growing offshore face a challenging future. 'Local and regional companies that are not good enough to go overseas will virtually get killed in our market. Very few of our retailers ventured overseas and look what's happening to them now. Due to foreign competition and its inability to achieve economies of scale, institutions like the Viti Corporation from its first ten high performing outlets today are on the verge of insolvency". The good news, says Peters, is the emergence of younger regional firms that suit international expansion. They tend to have capitallight business models, intellectual property, and products or services that are marketable overseas. 'There are stacks of opportunity for clever regional firms overseas,' says Peters 'Those with products that are at, or preferably above, world's best practice has a real shot at cracking international markets because they need less capital to expand. 'Unique intellectual property is a trait of successful local companies overseas, says Peters. 'If the product is not unique by world standards, the company will get eaten alive offshore'. Ruthven prefers regional companies to expand in emerging markets rather than developed markets. 'There are always exceptions, but New Zealand has been a minefield for our companies. You need massive economies of scale to compete in markets as large as Australia and New Zealand. You have to take something unique to those markets that give you a right of entry'. Peters says Fijian, and most regional companies need deep pockets to compete overseas. 'The company must be able to sustain the offshore divisions for a long time. When the product takes off, they need capital to grow the business very quickly, because foreign investors will chase hard if you have a good idea. You must keep innovating to stay ahead'.

Question

1. Suppose you have been hired as an OD consultant to examine the demise of Viti Corporation. This exercise will require close collaboration between managers of Viti Corporation and yourself. From an OD perspective, describe some problems that might arise between you and the management. Propose strategies of foreseeing and mitigating the impact of these issues. Evaluate your discussion with relevant examples [6 marks]