Global Strategic Management

Global Strategy

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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

http://www.quickmba.com/strategy/global/

18-02-2011

Global Strategy

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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

Strategic Objectives

National Differences Scale Economies
Exploit factor... [continues]

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