Friday, September 5, 2008

Global Strategy: Conceptual Framework

Global strategy is the way a business competes in the global market. The strategy plays vital role in determining the performance of a business in the global market. There are numerous prescriptions for business facing global competition. These prescription describe what is global strategy, why, and how the global strategy be implemented.

The general framework for global strategy concepts are: first, a global strategy is required whenever there are important interdependencies among a business’s competitive position in different countries. Second, the sources of these interdependencies can be identified.

Third, the critical issues that a global strategy must address include the configuration and coordination of the business’s world activities. Fourth, the organization structure should be aligned with and derived from the global strategy.

There are two theoretical approaches to global strategy. Industrial organization-based theory describe that competitive advantage is viewed as a position of superior performance that a business attains through offering undifferentiated products at low prices or differentiated products for customers are willing to pay a price premium.

Second is resource-based theory, which said that competitive advantage is residing in the inherent heterogeneity of the immobile strategic resources which business control. The two theoretical perspectives must be linked together to provide a solid theoretical foundation to study global strategy and performance.

Global strategy is not a simple choice of product standardization, standardized marketing or concentrated manufacturing. Rather, it is multifaceted course of action involving six major dimensions; include global market participation, product standardization, uniform marketing, integrated competitive moves, co-ordination of value adding activities, and concentration of value adding activities.

To implement global strategy, as managerial implications, managers must formulate the multidimensional and coherent set of actions. Specifically, managers must develop an organization-wide market orientation, be committed to global markets, nurture a kind of organization culture that is conducive to global strategy conception and implementation, create organizational capabilities, and accumulate international experience.

full paper

Related Posts

No comments: