Global Competition and Strategic Management
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 7, 2021
Global Competition and Strategic Management
Strategic management applies to managerial decisions that fuse the organization to
its environment, guide internal activities, and concern organizational long-term
performance. The strategy determines markets and products or services, it is about
selecting where and how to compete, which organizational structure has to be established,
how can employees be motivated, and how to allocate resources to create the greatest
overall success.[7]
The intensifying competition in global markets causes a further need of
understanding the strategic management process. This increase in competition influences
the strategies of competing organizations decisively.[8]
2.1 The Concept of Strategy in Business Life
The point of implementing strategy is to fulfill stakeholder expectations in the long
term, that means to handle the uncertain future. To accomplish this purpose, the strategy
has to give consistency and direction to the individual decisions of an organization and
should continually be adapted according to environmental change. However, there are no
concrete rules to perform this assignment, formulating and implementing strategies base on
special techniques, frameworks, concepts and, more or less, on intuition and experience.[9]
In business life strategy is about achieving competitive advantage[10] by responding
to external opportunities and risks and internal conditions (see figure 2-1). It can be seen as
the harmonizing of the actions of an organization to its environment.[11]
A strategy facilitates to allocate an organization’s resources in order to reach the
organization’s objectives. Strategic decisions are based on predictable, unpredictable, and
unknowable environmental changes. Thus, strategy has to be integrated in all managerial
decisions and activities of a business corporation to anticipate environmental changes and
actions of competitors.[12]
A global strategy can also help your company take advantage of new resources.
Some companies choose to create global strategies for the purpose of resource seeking—
finding new resources in other parts of the world. Often, this can help companies use less
expensive resources, which can reduce their costs and increase their profits.
Fostering global brand awareness
Creating a global strategy can also help you increase your global brand awareness.
As you move into a global market, you can increase your recognition in all parts of the
world. There are also many benefits of using a global branding strategy, including increasing
the consistency of your messaging, reducing your marketing costs and increasing your
company's customer awareness across the globe.
Lowering labor costs
Another benefit of creating a global strategy is taking advantage of lower labor
costs in other parts of the world. Some companies include efficiency-seeking activities in
their global strategies to allow them to decrease their labor costs. Efficiency seeking is
attempting to take advantage of differences in costs in locations outside of a company's
home country, and it can allow companies to significantly reduce their costs and increase
their profits.
Creating economies of scale
Expanding into the global market can also allow your company to experience the
benefits of economies of scale. Economies of scale occur when a company experiences
reduced costs as a result of increasing their production and efficiency. This can allow your
company to reduce production costs, which can increase your profit.
2.2 Strategic Planning and Strategy Formulation
Strategic planning is a chain of analytical and evaluative measures to formulate an
intended strategy and the means of implementing it. Strategy formulation proposes to
advert all of the crucial strategic issues. Actually, the process of strategic planning and
strategy formulation differs in each corporation. However, the concept of the perspectives
of strategy is valid for almost company. Basically, there are three intertwined perspectives
of strategy: corporate, business, and functional.[13]
The corporate strategy deals with the decisions that concern the overall
corporation, it occupies the highest level of strategic decision-making. Definitely, these
decisions are not to be taken decentralized because suboptimization errors could be the
consequence.[14]
In general, there are three corporate-level strategies:
- growth strategy (internal growth or external growth),
- stability strategy, or
- retrenchment strategy (turnaround, divestment, or liquidation).[15]
Business unit strategies, secondly, concentrate on improving the competitive
situation of the corporation by asking how an organizational subsystem can compete in its
business.[16] The business unit strategies are undoubtedly closely linked with the corporate
strategy, and vice versa. Every business unit strategy has to be congruent to the corporate
direction.[17]
Lastly, functional strategies do not merely combine the functional requirements
(functions of operations, marketing, human resources, finance, and so on). Insisted by the
corporate and business strategies, they comprise the capabilities considered necessary to
balance customer value and competitive advantage.[18]
The sequence of formulating these particular strategies is not fixed, there is no
specific hierarchy of strategy (see figure 2-2). The strategy formulation process can start at
the corporate level (top-down strategic planning) as well as at the division level or the
functional level (bottom-up strategic planning), furthermore, Strategic Analysis, Strategic
Choice and Strategy Implementation
Strategic management contains three interlinked elements: strategic analysis, in
which the strategist tries to comprehend the strategic position of the corporation, strategic
choice, that deals with the measures of accomplishment, and strategy implementation,
which is concerned with bringing the strategy into effect and managing the changes
required.[20]
Strategic analysis, firstly, considers the understanding of the organization’s
strategic position in terms of its corporate environment (internal and external), as well as
the expectation and demand of stakeholders. Certainly, the development of the corporate
environment affects the conditions upon choices are made. Thus, the intention of strategic
analysis is to form a view of the most important internal and external influences facing the
corporation.[21]
Secondly, strategic choice concerns identifying bases of decision-making
(stakeholder expectations and other ambitions of the organization), creating strategic
options, the evaluation of those options, and, of course, choosing between them. The
starting point of strategic choice is to understand the corporate environment and the
competencies of the organization.[22]
Strategy implementation, finally, deals with the transformation of strategy into
organizational execution. There are several questions to answer in order to bring the
strategy to work:
- Who is responsible for implementing the strategy?
- What changes in organizational structure and culture are necessary to support the
strategy?
strategy can be formulated by an interactive approach between the levels.
