Global Strategy

From Wikipedia, the free encyclopedia

'Global Strategy' as defined in business terms is an organization's strategic guide to globalization. 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 (versus what is) the optimal locations around the world for the various value chain activities? How to run global presence into global competitive advantage? ^[1]

The twin forces of ideological change and technology revolution are making globalization one of the most important issue facing companies today.

For more and more businesses, having a sound global strategy is a must-have imperative.

Firms that pursue a Global Strategy are faced with great pressures from cost reductions but with weak pressure 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 & 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).

Increasing number of firms from Emerging Markets are entering into international business and going for global strategy as shown in research works of Prof Ghemawat and others at Harvard and Prof Rajesh K Pillania.