Page 1 of 9
QuickMBA / Strategy / Global Strategy
Global Strategic Management
During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing global strategies to gain a competitive advantage. However, some industries benefit more from globalization than do others, and some nations have a comparative advantage over other nations in certain industries. To create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition.
Sources of Competitive Advantage from a Global Strategy A well-designed global strategy can help a firm to gain a competitive advantage. This advantage can arise from the following sources:
• Efficiency Economies of scale from access to more customers and markets Exploit another country's resources - labor, raw materials Extend the product life cycle - older products can be sold in lesser developed countries Operational flexibility - shift production as costs, exchange rates, etc. change over time • Strategic First mover advantage and only provider of a product to a market Cross subsidization between countries Transfer price • 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
Page 2 of 9
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. Assembling these into a matrix results in the following framework:
Sources of Competitive Advantage
National Differences Scale Economies
Exploit factor... [continues]
Cite This Essay
(2011, 03). Global Strategic Management. StudyMode.com. Retrieved 03, 2011, from http://www.studymode.com/essays/Global-Strategic-Management-642964.html
"Global Strategic Management" StudyMode.com. 03 2011. 03 2011 <http://www.studymode.com/essays/Global-Strategic-Management-642964.html>.
"Global Strategic Management." StudyMode.com. 03, 2011. Accessed 03, 2011. http://www.studymode.com/essays/Global-Strategic-Management-642964.html.