Global Strategic Management
During the last half of the twentieth century, many barriers to international trade fell and a wave of firms began pursuing global strategies to gain a competitive advantage. However, some industries benefit more from globalisation than does others, and some nations have a comparative advantage over other nations in certain industries. To create a successful global strategy, managers first must understand the nature of global industries and the dynamics of global competition.
Sources of Competitive Advantage from a Global Strategy
A well-designed global strategy can help a firm to gain a competitive advantage. This advantage can arise from the following sources:
*Efficiency
*Economies of scale from access to more customers and markets
*Exploit another country's resources - labour, raw materials
*Extend the product life cycle - older products can be sold in lesser developed countries
*Operational flexibility - shift production as costs, exchange rates, etc. change over time
*Strategic
*First mover advantage and only provider of a product to a market
*Cross subsidisation between countries
*Transfer price
*Risk
*Diversify macroeconomic risks (business cycles not perfectly correlated among countries)
*Diversify operational risks (labour problems, earthquakes, wars)
*Learning
*Broaden learning opportunities due to diversity of operating environments
*Reputation
*Crossover customers between markets - reputation and brand identification
Sumantra Ghoshal of INSEAD proposed a framework comprising three categories of strategic objectives and three sources of advantage that can be used to achieve them.
Assembling these into a matrix results in the following framework:
The Nature of Competitive Advantage in Global Industries
A global industry can be defined as:
*An industry in which firms must compete in all world markets of that product in order to survive.
*An industry in which a firm's competitive advantage depends on economies of scale and economies of scope gained across markets.
Some industries are more...
Reasonably well written
Informative but lacks depth in explanation. References are missing too. Overall a reasonably well written papaer
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