NTT DoCoMo and the former Swiss flag carrier enjoyed strong economic success built around a former monopoly and a highly protected incumbent positions in their home markets. NTT DoCoMo is the clear leader in the Japanese mobile market with a 60% market share that drives an annual operating cash flow of more than $10 billion. Swissair's dominant carrier position delivered financial performance that was similarly blue chip.

But a strong domestic market position and excess cash flow do not guarantee success abroad. In fact, without a quite sophisticated understanding of the uniqueness of its domestic situation, a strong domestic position could conceal some of the risks of a global strategy.

That means the first lesson is to start with the microeconomics: Understand what drives superior economic performance in your business and don't take your domestic success for granted. Both the airline and the telecoms businesses are highly regulated, technology driven and capital-intensive industries with high fixed and very low marginal costs (per airline seat or per mobile call minute). Rapid changes in regulation and technology are changing some of the rules of the game, but not the basic economics of either of these businesses.

In the airline industry, cost advantages are driven by an airline's dominance in airport hubs and on specific routes. The airline with the most flights in and out of a specific airport generates lower unit costs per flight and per passenger than competitors. The airline with the highest market share and flight frequency on a given route typically has lower costs per seat, higher utilization and superior pricing power. In the mobile industry, the significant fixed-cost components of the business (networks, product development, and brand advertising and promotion) provide unit cost advantages to the national market leader compared with its followers.

The second lesson from NTT DoCoMo and Swissair's experience is to have a clear view of the real economic boundaries of your business—is it a global business or rather a multi-local or regional one? Sitting on increasing cash balances, both DoCoMo and Swissair saw a high volume of merger and acquisition activity. They apparently concluded a wave of "globalization" was underway in their industries and they could not afford to be left out. They developed growth aspirations beyond their national boundaries.

While regulatory changes allowing increased foreign shareholdings in telcos and airlines have opened up new international investment opportunities, they have not changed the laws of economics. And it is ultimately economics that must drive strategy, not aspirations.

Despite regulatory changes, the economics of the mobile industry remain primarily national in nature. That is, it is clearly better to be a market leader in one country than a follower in two countries. There are obvious trends suggesting that broader geographic scope adds value in mobile. Increased subscriber roaming and higher mobile penetration rates are shifting an increasing portion of cross-border traffic from fixed to mobile networks.

Both trends favor a mobile operator with domestic leadership positions in a number of major city markets within a continental regional market such as Europe or North America. Value has been created by such "regional" consolidators. Vodafone accomplished this in Europe, now owning the No. 1 or No. 2 mobile operator in most major national markets - D2 in Germany, Vodafone in the U.K., Omnitel in Italy and Airtel in Spain.

While regulatory changes in the traditional bilateral air transport agreements will shift barriers to entry and hence increase competition and reduce pricing power in the airline industry, they do not change its fundamental economics. All successful airline mergers have been driven around building or expanding hub or route dominance, not around building sheer absolute scale either in terms of aircraft or destinations served.

When both NTT DoCoMo and Swissair convinced themselves they needed to expand beyond domestic boundaries to survive, the race to fulfil their global aspirations seems to have resulted in a set of investments more focused on the number of flags on a boardroom map rather than on these basic economics driving superior profitability in their industries. The risks of these two aggressive expansion strategies were further compounded by not having control over most of their international investments.

That means the third lesson from the two companies' problems is to move to management control if you are serious about capturing acquisition synergies. During the mid to late 1990's Swissair kept its investment bankers busy with a non-stop string of deals. It adopted an explicit "Hunter Strategy" which led to acquisitions of non-controlling minority stakes in a string of strategically challenged non-incumbent carriers—German charter carrier LTU, the French airlines AOM/Air Liberte and Air Littoral, and Italy's Volare Airlines and Air Europe. In addition, Swissair acquired stakes in Polish flag carrier LOT, Belgium's Sabena and South African Airways.

Without majority control, there was very limited scope for Swissair management to drive the economic benefits from these airline shareholdings through route consolidation, aircraft fleet rationalization and purchasing benefits. In addition, there was no ability to take corrective action when operational or financial performance deteriorated.

Similarly, in short order DoCoMo accumulated direct or indirect stakes in nine mobile operators—most for cash, at the peak of the telecom bubble. But this acquisition spree resulted in equity stakes in only two market leaders and these were in relatively minor geographic markets—KPN Mobile domestically in the Netherlands and Hutchison in Hong Kong. All the others were lesser players. DoCoMo acquired stakes in the No. 3 U.S. player AT&T Wireless, Taiwan's No. 4 player KG Telecom, U.K. No. 5 player Hutchison U.K., and distant followers KPN Orange in Belgium and E-Plus in Germany. Worse still, all these investments were minority stakes and so would appear to give DoCoMo limited ability to exert control over critical strategic and operational issues at these operators.

In fairness, DoCoMo has argued that its global strategy is less driven by footprint than by the two other objectives—to generate royalties from its i-Mode business model for mobile Internet services in joint ventures with its newly acquired mobile partners and to drive adoption of DoCoMo's third generation mobile technology standard. Time will tell how this plays out, whether it is accomplishable with minority stakes and whether it counterbalances the anticipated write-offs at the end of this fiscal year.

In contrast, Singapore Telecom appears to be pursuing a more focused strategy. Withdrawing from an early set of unfocused European investments, SingTel has focused more recently on mobile operators in South Asia. It now has stakes in the No. 1 or the strong No. 2 mobile operator in Singapore, Thailand, Indonesia, the Philippines and Australia.

Successful global growth cases are rare, even though the economics seems relatively straightforward. The problem is that global aspirations often cause managers to ignore the disciplined application of an industry's basic economics and the importance of exercising control over your investments. Then bankruptcy or a forced withdrawal often waits in the wings—and shareholders are left carrying the high cost of these failed global strategies.