Carr et al_2011_Should you have a global strategy
FA L L 2 0 1 1
V O L . 5 3 N O. 1
Intelligence
Should You Have a Global
Strategy?
A brief discussion of research suggesting that some companies should pursue a global strategy in the world economy, while for others a more regional approach would be better, by Chris Carr and David Collis.
REPRINT NUMBER 53103
[GLOBAL BUSINESS ]
ShouldYou Have a Global Strategy?
A globally integrated strategy isn’t right for every company. One important factor to consider is the combined market share of the largest companies in your industry — and how that’s changing.
BY CHRIS CARR AND DAVID COLLIS
Senior executives weighing strategies appropriate for today’s global economy will hear contradictory advice. Some say you need to move quickly, before competitors, to establish a worldwide presence; others cite data showing that this approach is often less profitable. Those making the case for taking a global approach, including Thomas L. Friedman in his book The World Is Flat, argue that success requires treating the world as a single entity. Those advocating a more geographically restricted, regional strategy say that the world is, at best, semi-integrated, and that smart companies can capitalize on regional and country differences. The reality is that neither approach is appropriate for every circumstance. Therefore, executives need to
Companies such as Electrolux leveraged domestic scale before expanding their geographic footprints to understand when to pursue one route and further economies of scale. when to pursue the other.
In our view, the criteria need to be tied to the dynamics of the particular industry, spewe think leading players need to accifically the concentration levels of the four largest competitors (what we call the global knowledge their interdependence and concentration ratio, or CR4). Our analysis of 50 industries reveals extremely high global adopt a global strategy. Even where the concentration ratios — averaging
V O L . 5 3 N O. 1
Intelligence
Should You Have a Global
Strategy?
A brief discussion of research suggesting that some companies should pursue a global strategy in the world economy, while for others a more regional approach would be better, by Chris Carr and David Collis.
REPRINT NUMBER 53103
[GLOBAL BUSINESS ]
ShouldYou Have a Global Strategy?
A globally integrated strategy isn’t right for every company. One important factor to consider is the combined market share of the largest companies in your industry — and how that’s changing.
BY CHRIS CARR AND DAVID COLLIS
Senior executives weighing strategies appropriate for today’s global economy will hear contradictory advice. Some say you need to move quickly, before competitors, to establish a worldwide presence; others cite data showing that this approach is often less profitable. Those making the case for taking a global approach, including Thomas L. Friedman in his book The World Is Flat, argue that success requires treating the world as a single entity. Those advocating a more geographically restricted, regional strategy say that the world is, at best, semi-integrated, and that smart companies can capitalize on regional and country differences. The reality is that neither approach is appropriate for every circumstance. Therefore, executives need to
Companies such as Electrolux leveraged domestic scale before expanding their geographic footprints to understand when to pursue one route and further economies of scale. when to pursue the other.
In our view, the criteria need to be tied to the dynamics of the particular industry, spewe think leading players need to accifically the concentration levels of the four largest competitors (what we call the global knowledge their interdependence and concentration ratio, or CR4). Our analysis of 50 industries reveals extremely high global adopt a global strategy. Even where the concentration ratios — averaging