Global strategy and management
Chapter 1: Understanding Global Strategy
What is global strategy?
Traditional global strategy is treating different countries as one worldwide all global market.
Some companies are considering the world as one big country. For example Coke is distributed around the world. But that strategy has backfired repeatedly. For example, the Toyota Camry is the best-selling car in the U.S., but not even top five best-selling cars in Japan. A more balanced view covering both global and local (non global) aspects is necessary.
Keys to a successful total global strategy:
The total global strategy three separate components:
1. Developing the core ...view middle of the document...
The purpose of internationalization is to make localization easier, faster, higher quality and more cost effective.
Steps in internationalizing the core business strategy:
* Select the geographic markets
* Adapt products and programs to take account of foreign needs, preferences, culture, language, climate, and so one.
Developing a globalization strategy:
To overcome those disadvantages created by internationalization, companies need a globalization strategy that integrates and manages for worldwide business leverage and competitive advantage.
Industry globalization drivers:
For groups of “industry globalization drivers “represents the industry conditions that determine the potential and need for competing with the global strategy.
* Per capita income converging among industrialized nations
* Convergence of lifestyles and tastes
* Increasing travel, creating global consumers
* Organizations beginning to behave as global customers
* Establishment of world brands
* Push to develop global advertising
* Location of strategy to resources
* Differences in country costs
* Potential for economies of scale
* Transportation costs
* Global competitors: the existence of many global competitors indicates that the industry is ripe for globalization. Global competitors will have a cost advantage over local competitors.
* When competitors begin leveraging their global positions through cross-subsidization, an industry is ripe for globalization
* Trade policies
* Technical standards
The furniture industries an example of an industry that did not lend itself to globalization before the 1960s for several reasons: furniture is easily damage in shipping, transport costs traditionally were high; government trade barriers also were unfavorable. IKEA was a pioneer in the process of globalization. However, after successfully expanding to several countries, IKEA ran into difficulties in the U.S. market for several reasons:
* Different tastes and furniture and a requirement for more customized furniture
* Difficult to transfer IKEA’s frugal culture to the US
* Stock outs due to the one to two month shipping time from Europe
* More competition in the US than in Europe
Global strategy levers:
Globalization strategy is multidimensional.
There are five dimensions:
* Market participation : choice of country to conduct business and the level of activity