Implementing global strategies
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 5, 2021
Implementing global strategies
The globalization of the business in our environment has been a source for global
organizations to incorporate the process of a global strategic management.
In this report, we are going to propose three different frameworks from three different
group of authors: Yip, Johnson and Scholes, and Cavusgil and Zou.
However, theses proposed framework would be analysed and compared and we would give
a critical evaluation of theses frameworks.
Indeed, as we can suppose a multilocal strategy differs from a global strategy.
The same author, Yip, defines a multilocal strategy treating “competition in each country or
region on a stand-alone basis, while global strategy takes an integrated approach across
countries and regions”. To resume, a global strategy could be “defined as the way a business
competes in a global market, plays a vital role in determining the performance of a business
in the global market”, ( Zou and Cavusgil, 1995). Define global strategy is seen as a difficult
task because our environment is in permanent change and companies need to these
changes the most efficiently possible.
Definition of Strategic Management
Initially, Strategic management would involve the degree of implication of people, and
especially managers in order to define, decide and execute a strategy. so as, Johnson and
Scholes, can underlines the term strategic management engross the importance of
managers with regard to strategy, (2008). And they suppose, strategic management differs
from operational management. Indeed, operational management requires to deal with
issues arising in the operational control, all the operations like the production, the
management, the financial performance. Thus operational control is what managers are
involved in most of their time.
2. Global strategy:- Organization's strategic guide to globalization. A sound
global strategy should address these questions: o what must be (versus what is) the extent
of market presence in the world's major markets? o How to build the necessary global
presence? o How to run global presence into global competitive advantage?
1. 3. Contd.. It is appropriate in industries where firms are faced with strong
pressures for cost reduction. Global strategies require firms to tightly coordinate their
product and pricing strategies across international markets and locations. Firms that
pursue a global strategy are typically highly centralized.
2. 4. Why globalize? Expand global market share Restructure value chain on
a global scale. Ultimate goal. Diversification. Expansion.
3. 5. Types of global strategies: • Global strategy Multi-domestic strategy
Transnational strategy
4. 6. Multi-domestic vs. Global Strategy:- Multi-domestic Strategy Product
customized for each market Decentralized control - local decision making Effective when
large differences exist between countries Advantages: product differentiation, minimized
political risk, minimized exchange rate. Global Strategy Product is the same in all
countries. Centralized control - little decision-making authority on the local level
Effective when differences between countries are small Advantages: cost, coordinated
activities, faster product development
5. 7. Philips followed multidomestic strategy:- Innovation from local R&D
Entrepreneurial spirit Products tailored to individual countries High quality due to
backward integration Matsushita followed a global strategy :- Strong global distribution
network Financial control More applied R&D Ability to get to market quickly
6. 8. Sources of Competitive Advantage from a Global Strategy Efficiency
Economies of scale from access to more customers and markets Exploit another country's
resources - labor, raw materials Extend the product life cycle- Operational flexibility -
shift production as costs, exchange rates, Strategic First mover advantage and only
provider of a product to a market Cross subsidization between countries Transfer price
7. 9. Contd… Risk Diversify macroeconomic risks (business cycles not perfectly
correlated among countries) Diversify operational risks (labor problems, earthquakes,
wars) Learning Broaden learning opportunities due to diversity of operating environments
Reputation Crossover customers between markets - reputation and brand identification
8. 10. Globalization & Global Strategy — • GLOBALIZATION ? --Something to do
with increasing interdependence between countries. • GLOBAL STRATEGY --At simplest
level: Treating the world as a single market E.g. Japanese companies during the 1970s &
1980s, (YKK, Honda) standard products, developed & manufactured within Japan. --At more
sophisticated level: Strategy that recognizes and exploits linkages between countries (e.g.
exploits global scale, national resource differences, strategic competition) World as World as
World as inter- separate single mkt. related mkts. national mkts. global strategy
multidomestic strategy
9. 11. Sumantra Ghoshal of INSEAD proposed a framework comprising three
categories of strategic objectives and three sources of advantage that can be used to
achieve them. Sources of Competitive Advantage Strategic Objectives National Scale
Economies Scope Economies Differences Sharing Efficiency in Exploit factor cost Scale in
each investments and Operations differences activity costs Balancing scale Market or policy
Flexibility with strategic & Portfolio induced changes operational risks diversification Societal
Experience – cost Innovation and differences in Shared learning reduction and Learning
management and across activities innovation organization
10. 12. GLOBAL STRATEGIES Four basic avenues that companies can take to
market their products or services globally: Foreign Direct Investment Joint ventures
Contractual agreements. Licensing (includes franchising)
11. 13. Joint venture :-- Moscow, June 8, 2011 – Ford Motor Company and Sollers
OJSC have signed agreements to establish a 50-50-owned joint venture in Russia. The new
business, named Ford Sollers, is scheduled to start operations later this year.
12. 14. BENEFITS FROM JOINT VENTURE :-- New technology used :- Basically it
replaces the very expensive batteries with much smaller and inexpensive ones. This affords
to position a car at much lower price. In any case it is a new product. It would help ford to
increase the sales and production to regain the no.1 position in U.S or other markets.
13. 15. Mergers and Acquisitions:- In 1999, Global Crossing acquired Frontier
Corporation, the former Rochester Telephone Corporation Renamed the company Global
Crossing North America, Inc. It sold the local telephone operations it owned, including the
Frontier name, to Citizens Communications in 2001, which renamed itself Frontier
Communications in 2008.
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