Global Strategic Management

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Global Strategic Management

Executive Summary

In the international competitive environment, the ability of an organization to develop a transnational organizational capability is the key factor that can help the firm adapt to the changes in the dynamic environment. As the fast rate of globalization renders the traditional ways of doing business irrelevant, it is vital for managers to have a global mindset to be effective. Globalization of business has led to the emergence of global strategic management. A combination of strategic management and international business will result in strategies for global cooperation.

Background

Strategic management is a relatively young subject. It has its roots in the economic and social theories of the 1930s and 1940s - perhaps even earlier. But it only really began to emerge as a separate topic in the 1960s and 1970s. Even today, there is only partial agreement on the fundamental principles of strategic management with many views, ideas and concepts. This makes the topic interesting and challenging. But it also means that there is no fully accepted body of knowledge unlike, for example, mechanical engineering or organic chemistry. There are two main streams of thought related to strategic process: prescriptive (or intended) strategic processes and emergent strategic processes. The field of strategic management deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments.

Introduction

The rapid globalization of business has resulted in the emergence of a new field, Global Strategic Management which is a blend of Strategic Management and International Business. Strategic Management is identifying and responding to opportunities and threats in the environment (Wortzel, 1991). A global firm is organized and managed to take advantage of the opportunities across various country markets. The global firm has one global strategy, produces and or markets its products in many countries, offers standardized products in all country markets. It manufactures at any site, uses any plant sizes that minimizes delivery cost of products across its markets. It organizes itself in a way that facilitates efficient manufacture, marketing and distribution of its products.

Why Strategic Management?

Business decision making is so complex and sophisticated that for a firm to deal with it effectively and grow profitably, requires strategic management. Strategic Management, according to Pearce and Robinson (1985) is a set of decisions and actions that results in the formulation and implementation of strategies that will help the organization achieve its objectives. It involves planning, directing, organizing and controlling of the decisions and actions of the organization. It deals with nine initial areas: 1. Determining the organization’s mission, philosophy and goals 2. Internal analysis of strengths and weaknesses

3. External analysis of opportunities and threats
4. Identifying the present and desired situations
5. Identifying and defining the problem
6. Identifying alternative strategies
7. Strategic choice of the best alternative strategy
8. Implementation of the best strategy and
9. Review of the evaluation of the success of the process as basis of control and future decision making.

Strategic Decisions

The strategic decisions have six dimensions. They require top management decisions, they involve allocation of large amounts of resources, they have significant impact on long-term prosperity of the organization, they are future oriented, usually have major multi-functional consequences on the organization’s strategic Business Units (SBUs) and they usually impact and are impacted by the organization’s external environment, (Pearce &...
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