02/02/23, 23:15 Global strategy - Wikipedia

Global strategy
Global strategy as defined in business terms is an organization's strategic guide to globalization.
Such a connected world, allows a business's revenue to not be to be confined by borders. A
business can employ a global business strategy[1] to reap the rewards of trading in a worldwide
market.

Description
A sound global strategy should address these questions: what must be (versus what is) the extent of
market presence in the world's major markets? How to build the necessary global presence? What
must be AND (versus what is) the optimal locations around the world for the various value chain
activities? How to run global presence into a global competitive advantage? The “International”
classification of a global business strategy is employed by companies who may sell in foreign
markets, but their primary focus is on their home market. These companies may include
international strategies in their business model to increase sales, but they know that their main
target consumer is local. [2]

Research
Academic research on global strategy came during the 1980s, including work by Michael Porter
and Christopher Bartlett & Sumantra Ghoshal. Among the forces perceived to bring about the
globalization of competition were convergences in economic systems and technological change,
especially in information technology, that facilitated and required the coordination of a
multinational firm's strategy on a worldwide scale.[3][4]

Industries
A global strategy may be appropriate in industries where firms are faced with strong pressures for
cost reduction but with weak pressures for local responsiveness. Therefore, it allows these firms to
sell a standardized product worldwide. However, fixed costs (capital equipment) are substantial.
Nevertheless, these firms are able to take advantage of scale economies and experience curve
effects, because it is able to mass-produce a standard product, which can be exported (providing
that demand is greater than the costs involved).

Global strategies require firms to tightly coordinate their product and pricing strategies across
international markets and locations, and therefore firms that pursue a global strategy are typically
highly centralized.[4]

Aspects
A global strategy involves thinking in an integrated way about all aspects of business-its suppliers,
production sites, markets, and competition. It involves assessing every product or service from the
perspective of both domestic and international market standards. It means embedding
international perspectives in product formulations at the point of design, not as afterthoughts. It

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means meeting world standards even before seeking world markets and being world class even in
local markets. It means deepening the company's understanding of local and cultural differences in
order to become truly global. [5]

References
1. "Why A Global Business Strategy Is Necessary For Global Domination!" (http://www.inwhatlang
uage.com/blog/global-business-strategy/).
2. Vijay Govindarajan and Anil K. Gupta 'The Quest for Global Dominance: Transforming Global
Presence into Global Competitive Advantage' Jossey-Bass. (2008). p. 20-21
3. Michael Porter (ed.) 'Competition in Global Industries' Harvard Business School Press. (1986)
4. Christopher A. Bartlett and Sumantra Ghoshal 'Managing across Borders: The Transnational
Solution' Harvard Business School Press. (1989)
5. Kanter, R. M., & Dretler, T. D. (1998, November). "Global strategy" and its impact on local
operations. The Academy of Management Executive, 12 (4), pp. 60-68.

Kanter, R. M., & Dretler, T. D. (1998, November). "Global strategy" and its impact on local
operations. The Academy of Management Executive, 12 (4), pp. 60–68.

External links
Global Strategic Management (http://www.quickmba.com/strategy/global/), QuickMBA
Global Strategy Journal (http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)2042-5805)

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