405 – Global Strategic Management

COURSE OUTCOMES
1 Define the concept and key terms associated with the global strategic
management
2.Describe in detail global strategic alliance, merger and acquisitions.
3.Demonstrate various global organization models in global strategic
management context.
4.Examine various entry and business-level strategies from global
strategic management prospective
5.Explain globalization, innovation, and sustainability and challenges
to strategic management.
6.Design global strategies and understand their relative merits and
demerits
 Globalisation -Localisation and
Glocalization
• Globalisation
• Globalization is the word used to describe the growing
interdependence of the world's economies, cultures, and
populations, brought about by cross-border trade in goods
and services, technology, and flows of investment, people,
and information.
• Globalization, is the process of interaction and integration
among people, companies, and governments worldwide.
Globalization has accelerated since the 18th century due to
advances in transportation and communication technology.
 What is localization

•  Localization is the process of adapting content, products, and

services to specific local markets. 
• Localization may also include adaptations to images or colors,
formatting, UI, or design, and even payment methods, to
name a few.
• Localization will help you enter new markets easily
• Localization will give you a competitive edge
• Localization will increase customer satisfaction
• Localization will increase brand loyalty
• Localization will Increase your revenue
 What is Glocalization

• Glocalization is a combination of the words “Globalization" and

"localization." The term is used to describe a product or service
that is developed and distributed globally but is also adjusted to
accommodate the user or consumer in a local market.
• A common example would be cars that are sold worldwide but
adjusted to meet local criteria such as emissions standards or
what side the steering wheel is located. It could also focus on
more cultural aspects, such as a global fast-food chain offering
geographically-specific menu items that cater to local tastes.(Mc
Donald)
• The process can be expensive and resource-intensive, but it
often pays off for companies that practice it.
 Advantages of Globalization
• Principle of Comparative Advantage
• Benefit from Economies of Scale
• worldwide access to sources of cheap raw materials, and
this enables firms to be cost competitiveness in their
own markets and in overseas markets.
• Meet Trade Regulation by locating production in
countries with regulatory regimes, such as those in
many Less Developed Countries(LCDs)
•  Increased flows of Investment between countries.
• In the long term, increased trade is likely to lead to
the creation of more employment in all countries
that are involved.
 Disadvantages Of Globalization
• Over-standardization of products through global branding is a
common criticism of globalization.
• Leads to a lack of product diversity, as well as presenting barriers
to entry to small, local, producers.
• Large multinational companies can also suffer from diseconomies
of scale, such as difficulties associated with coordinating the
activities of subsidiaries based in several countries.
• Unfair free trade. This view certainly accounts for the some of
the rise in nationalist movements in many developed
economies, along with the push for increased protectionism.
• Globalisation generates winners and losers, and for this reason
it is likely to increase  inequality, as richer nations benefit
more than poorer ones.
 Advantages of Globalization in India
• Indian society is changing drastically after urbanization and globalization. The
economic policies have had a direct influence in forming the basic framework
of the economy.
• Economic policies established and administered by the government also
performed an essential role in planning levels of savings, employment,
income, and investments in the society.
• Cross country culture is one of the critical impacts of globalization on Indian
society. It has significantly changed several aspects of the country, including
cultural, social, political, and economical.
• However, economic unification is the main factor that contributes maximum to
a country’s economy into an international economy.
• Increase in employment
• Increase in compensation
• High standard of living
 The localization ‘Push’
Localization will give you a competitive edge
Local competitors: Going up against companies that are native to the local market can be tough. Local
businesses may be able to gain the trust of an audience much more easily than an outside player. Localizing
your product will help level the playing field.
Global competitors: If your competitors aren’t localizing their product, you will have a clear advantage and be
able to get a firm foothold in the new market.
Localization will increase customer satisfaction
Localizing your content will show your commitment to your customers. If you are addressing your customer’s
needs in a way they understand and are comfortable with, they are more likely to buy your product or service.
From user manuals, payment methods, and even customer support, localizing all parts of the customer journey
will help your customers make a buying decision much more easily.
Localization will increase brand loyalty
If you provide your buyers with a satisfying user experience you will start to gain their trust, which is essential
for brand loyalty. Communicating with your users in their native language and tailoring your product will help
you gain their trust. Satisfied customers will be loyal to your brand and are likely to stick around to become true
advocates of your product.
Localization will Increase your revenue
A bigger audience means a huge potential for more revenue, and if you localize your product effectively, you’re
bound to see an increase. By optimizing your localization process you’ll be sure to get the most out of your
localization resources and capitalize on technologies
This will ensure a sizable return on investment that will impress all the stakeholders in your company.
Global Integration Grid
Local Responsiveness Grid
 Types of Global Strategies
1 Global strategy
Where all operations and activities are managed fairly similarly worldwide. A global
strategy is based on the assumption that the world is extremely interconnected and
that patterns of consumption and production are fairly homogeneous worldwide. A
good example of a global strategy is the one pursued by Ford Motor Company.
2.Regional strategy
Where the multinational adapts activities and operations to regional requirements.
A regional strategy is one in which the company decides that it makes sense to
organize its functional activities, such as marketing, finance, etc., around
geographical regions that play a critical role in terms of sales. Toyota is an example
of a company that has successfully implemented a regional strategy.
3.Local strategy
Company’s operations are adapted to fit some specific countries. The local strategy
is the one in which a company adapts its products to meet the needs of the local
market. For instance, experts argue that despite the perception that customers
want global products, significant cultural and national value differences still suggest
that some level of customization is necessary
An example of a local strategy is McDonald’s product offerings in India.
 Global Strategy-Formulations
The 8 step Process
1.Set Goals for Your Globalisation Strategy
Before you do anything, take the time to understand what you want to get out of your international strategy.
Every business wants to gain more customers, but your goals should be more specific than that. What are your
sales goals for year one, year five, and beyond? What kind of customer retention can you realistically expect? How
much time and money do you expect to spend on the expansion? How long will it take to see a return on
investment?
2.Identify Your Product/ Service
you need to know what you’re going to sell in the new market. If your company only has one product or service,
this step will be easy. If you have numerous offerings, decide which ones you will begin your expansion with .
3 Research New Markets.
With your goals in hand, look for international markets where you can meet or exceed those goals. Cast your net
wide by looking at several markets. Many governments and trade associations offer resources to help
you understand foreign markets Read through their reports to see how your product/service will resonate with
the local consumer base.
While you will need to have someone providing reports and statistics, you can’t truly understand a foreign market
remotely. Attend trade shows in your target markets to make new contacts and learn about the local business
culture.  You can learn a lot about how to market your product/service offerings by experiencing the local life and
culture.
Market research should also include the local regulatory environment. Every market has its own set of legal
requirements to protect workers and consumers. 
 Global Strategy Formulation- The 8 step process Contd
4. Understand Your Competition
• To do well in any market, you need to understand the local competition and how they approach the market. Each market has its
own mix of competitors and cultures that define how an industry works.
5. Plan Your Marketing Strategy
Even before you choose a target market, think about your overall marketing strategy
• . Do you want to have a different advertising message in each market you enter? Do you want to maintain a global brand? Or do you
want a consistent, global brand that is slightly tailored for each marketplace? Choose whichever strategy will most clearly
communicate your competitive advantage to new markets.
6. Plan Your International Organizational Structure
• Entering one or more international markets will affect your organizational structure. A proactive plan will keep your staff focused on
their individual responsibilities and promote efficient work. Consider how you will staff each market and how teams from different
markets will communicate to share ideas.
7. Determine Your Distribution Strategy
• Direct to end-user
• Distributors in-country
• Your e-commerce website
• A third-party e-commerce platform
• Supplier to a large company with international sale
• Franchise your business.
8. Assemble a Strategy Document
Develop a written international strategy before moving into international markets. A written plan keeps your team aligned and can
guide your organization as it begins an International Journey This plan should every important details including all about proposed
Project Management teams and the Deployment Matrix for each of the major functions
.
 Strategy Options/Choice
Globalisation Stretegies
1.Exporting.
2.Licensing and Franchising.
3.Contract Manufacturing.
4.Management Contracting.
5.Turnkey Contracts.
6.Wholly Owned Manufacturing Facilities Companies.
7.Assembly Operations.
8. Joint Ventures.
9. Third Country Location.
10.Mergers and Acquisition.
11.Strategic Alliance
12.Counter Trade.
Global Strategy Implementation
Prerequisites of a Business Plan for global
Strategy
Global strategy Management
 ‘Strategic Flexibility’ In Global business

• Strategic flexibility is the organization's capability to identify major changes in the

external environment, quickly commit resources to new courses of action in
response to those changes, and recognize and act promptly when it is time to halt
or reverse existing resource commitments.
• Organizational Preparedness to reverse Ineffective Strategic Decisions
• In a highly uncertain and changing environment strategic flexibility is very important
to quickly respond to problems and issues on priority
• Ensuring effective strategic flexibility is one of the very important but is also a very
difficult task for an organization in dynamic global environment
• The difficulty in ensuring strategic flexibility is caused on account of Psychological
and organizational biases influencing managements attention assessments and
reversing earlier decisions to get over new and sudden problems and issues
• The strategy team may become unconsciously trapped in viscious cycle of
insensitivity, self- serving interpretations and inaction -Cost a delayed action is
greater than cost of an occasional mistake
 Strategic flexibility… contd

Barriers to Strategic flexibility

1.Barriers to Attention
Psychological and organizational insensitivity to negative feed back
2.Overconfidence of the execution team that they cannot fail –ignore
decision out comes
3.Barriers to assessments- ‘self-serving’ interpretations on negative feed
back In a culture where success is highly praised and mistakes severely
punished managers avoid admitting mistakes(Push below the carpet)
4.Barriers to Action-Uncertainty and resistance to maintaining
commitments or change from a risky preposition is not solely evaluated in
terms of economic calculations.
Poor results may be the outcome of inadequacy of earlier strategies and in
implementation and mitigating environmental factors
 Strategic flexibility… Contd

Ensuring strategic flexibility

1 Consistently measure and monitor decision out comes
2.Stimulate decision making process
3.Create dynamic mechanisms to gain new ideas and perspectives
from out side of the organization (independent Directors, appoint
advisors and critics)
4.Evaluate limitations of the existing norms of execution and
governance
5.Expand decision making horizon formulate decision port folios and
cross functional team assessments
6 Analyse and measure and record learning out comes for future
eventualities
 Global Strategy-learning organisations

• What are ‘Learning organisations’?

• A learning organization is an organization skilled at creating,

acquiring, and transferring knowledge, and at modifying its
behavior to reflect new knowledge and insights and accumulating
learning aspects for strategy Reviews
• where people continually expand their capacity to create the
results they truly desire, where new and expansive patterns of
thinking are nurtured, where collective aspiration is set free, and
where people are continually learning how to learn together.”
• Examples :Mahindra& Mahindra(Post BPR-MMS) Whirlpool of
India, Bajaj Auto(post MOEST Implementation)
 Global Competitive Strategy 
shows how we can do this by providing a unique set of strategic tools for international business. Such tools that
allow strategy makers to integrate geographic strategy with market responsiveness about the global business
environment.
1.Low Cost strategy:
Ability to manage all costs which decide the Selling price of product as the lowest compared to
competition for similar products there by achieve competitive advantage driven by selling Cost of
a product or service
2. Differentiation Strategy :
Ability to manage competitive advantage on comparable products/services by offering technical
superiority and qualitative/performance features including product appeal and service qualities
3 Focus Strategy.
The focus strategy has two variants- cost focus and differentiation focus. These strategies can
be adopted based on competitive positions as also they can be simultaneously adopted and
implemented
4.Best Cost Strategy : Manage costs just above market trends and claim better price along with
differentiation.
 
Competitive Positioning for Globalisation strategies

Major aspects of Achieving and Sustaining Competitive advantage in Global Strategic Management

1.Price positioning

2.Quality positioning

3.Innovation positioning

4.Service positioning

5.Cost benefit positioning

6.Tailored positioning Strategic leveraging

7.Compliance to regulatory and Governance norms

8.Competitive Intelligence Capability

 Achieving and sustaining Competitive
Advantage position in Global Business
Sustainable competitive advantage is the key to business success. It is the force
that enables a business to have greater focus, more sales, better profit margins, and
higher customer Loyalty and Talent retention than competitors

Five steps to developing a sustainable competitive advantage

1.Understand the market and its segments. Look for those niches that aren’t well
serviced by competitors and can be profitably targeted and sold to.
2Develop an understanding of what customers really want and establish a value
proposition that grabs their attention.
3.Work out the key factors that you need to do really well to support and deliver
the value proposition. For example, service levels, quality, branding, pricing etc
4.Understand what your strengths and core competencies are and how you can use
these in innovative ways to provide value to your chosen market.
5.Design your business model to support and deliver the value proposition.
Managing Competitive Advantage
 Sustaining Competitive Advantage
through Competitve Intelligence

• It is difficult to sustain a significant competitive advantage over a

time without periodically revisiting the firm’s identity and
purpose. For instance, reducing costs is not a true strategy because
it simply provides a breathing space for the organization to
formulate an appropriate strategy. The length of time over which a
firm can maintain its competitive advantage is dependent on
• Replicability: how easy it is for the competitors to duplicate it.
• Transferability: how easy it is for the competitors to acquire the
same resources and capabilities.
• Transparency: to what degree can the competition tell what a firm
is doing strategically.
• Durability: how long can the firm keep its competitive advantage.
Sustaining Global competitiveness-- Contd
Sustaining Global Competitiveness--Contd
Country Attractiveness Vs Company strength
Risks in Global Strategies