How to Take Your Company to the Global Market
George S. Yip
Pierre M. Loewe
Michael Y. Yoshino
Deciding how to deal with the globalisation of markets poses tough issues and choices for mangers. There are both external business forces, and internal organisational factors to consider. External business forces revolve around the interaction of industry drivers of globalisation and the different ways a business can be global. Understanding this interaction is key to formulating the right global strategy. Internal organisational factors play a major role in determining how well a company can implement global strategy. This paper provides a systematic approach to developing and implementing a global strategy.
MOST MANAGERS have to face the increasing globalisation of markets and competition. That fact requires each company to decide whether it must become a worldwide competitor to survive.
This is not an easy decision. Take the division of a multibillion-dollar company, a company that's very sophisticated and has been conducting international business for more than fifty years. The division sells a commodity product, for which it is trying to charge 400% more in Europe than it does in the United States. The price was roughly the same in the United States and in Europe when the dollar was at its all-time high. The company built a European plant which showed greater return on investment with that European price. But the dollar has fallen and, if the company drops its European price to remain roughly the same as the US price, the return on the plant becomes negative, and some careers are in serious jeopardy. So it is attempting to maintain a 40% European price premium by introducing minor upgrades to the European product.
But its multinational customers will have none of it. They start buying the product in the United States and transhipping it to Europe. When the company tries to prevent them from transhipping, they go to a broker, who...