Introduction to Global Strategy

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Questions and Answers

What is the definition of the word "strategy"?

A strategy is a plan of action designed to achieve a particular long-term goal.

Which of the following individuals are associated with the definition of "strategy"?

Alfred Chandler

Michael Porter

Peter Drucker

Henry Mintzberg

All of the above (correct)

What are the three horizons for strategy?

The three horizons of strategy encompass short-term, medium-term, and long-term goals that guide an organization's future path.

Which of the following are elements of strategy? (Select all that apply.)

Strategy Statement Signup and view all the answers

What is the difference between a 'global firm' and a 'multinational firm'?

A 'global firm' operates as a network, transcending geographical boundaries, while a 'multinational firm' mainly operates from its home country and invests in foreign countries. Signup and view all the answers

Which of the following is a key driver of globalization?

All of the above Signup and view all the answers

What is the importance of a "value chain" in a business context?

A value chain outlines the primary and support activities a business undertakes, from procurement to delivery, showcasing how value is created and added for customers. Signup and view all the answers

What are the key benefits of globalization for companies?

Globalization offers companies the advantages of accessing wider markets, procuring resources more efficiently, leveraging economies of scale, and diversifying their operations for less risk. Signup and view all the answers

What are the main benefits of localization for companies?

Localization offers companies flexibility to tailor their products and services to local customers, greater responsiveness to their needs, and a closer proximity to the market for faster delivery and better understanding of local preferences. Signup and view all the answers

Match the internationalization strategies with their corresponding descriptions:

Global Strategy = Involves treating the world as a single market, with standardized products or services across all countries. Transnational Strategy = Seeks to balance efficiency of global operations with the need for local responsiveness and maximizing knowledge exchange. Export Strategy = Involves producing goods in the home country and exporting them to foreign markets. Multidomestic Strategy = Tailors products, services, and marketing to fit the specific needs and preferences of each local market. Signup and view all the answers

Study Notes

Global Strategy Introduction

Fotini Claire Parnassa presented an introduction to global strategy.

Entities Involved in Global Strategy

Global Companies
National Governments
Press/Media
Trade Labor Unions
Scientific/Academic Institutions
NGOs
National Companies
Religious Groups/Churches
United Nations

Net Trust in Institutions (2015)

The average trustworthiness of 22 countries in 2015 is represented in a graph.
Scientific/academic institutions ranked highest, with a score of 52.
NGOs ranked second, with a score of 28.
National companies came in with a score of 14.
Religious groups/churches received a score of 11.
Global companies and national governments received the lowest scores, each achieving 1.

Strategy Definition

Originating from Greek words "stratos" (army) and "agein" (to lead).

Battle of Thermopylae (480 BCE)

Xerxes I, King of Kings of the Persian Empire, led a force of 150,000 warriors against Leonidas, King of Sparta, and his 7,000 soldiers.
The outnumbered Greeks held off the Persian army for three days, with one Greek warrior having to kill 21 Persians.

Sun Tzu's The Art of War

Ancient Chinese military treatise.

Strategy Questions

Define strategy (Alfred Chandler, Michael Porter, Peter Drucker, Henry Mintzberg)
Three Horizons for Strategy: vision, mission, values, objectives, strategy statement.
Generic Business Strategies (examples needed)
Corporate Strategies and Ansoff Matrix (with examples)
Value Chain
SWOT, TOWS, PESTEL, Porter's 5 Forces, VRIO

Old and New Paradigms of Global Firms

Old Paradigm: Global firms are home-country firms investing in foreign countries.
New Paradigm: Global firms aren't necessarily located in their country of origin. They operate as integrated networks from central "centers" (transnational/metanational).

Globalization Concept Before and After 1970

Before 1970s, companies were largely multinational, though not globally recognized.
Early 1970s marked the rise in the global concept itself.

Globalization Definition

Increased interconnectedness and interdependence among countries (economies, cultures, societies, political systems).
Includes flow of goods, services, capital, information, technology, and people across national borders.

Interconnectedness of Financial Institutions

Several financial institutions (e.g., Royal Bank of Scotland, Deutsche Bank) are shown to have interconnected relationships, as a network diagram.

Globalization in Markets and Production

Markets: Historically distinct national markets merge into one large global marketplace.
Production: Sourcing of goods/services from around the globe for cost/quality differences.

Value Chain

A framework illustrating the activities firms perform to create value from start to finish.
This includes primary activities (e.g., inbound/outbound logistics, operations) and support activities (e.g., human resource management, firm infrastructure).

Global Value Chains

Global value chains matter for economic and regional development.

Drivers For Companies to Globalize

Markets: Capture new markets
Resources: Natural resources, knowledge, security of supply.
Competitiveness: Economies of scale, costs, networks, risk spreading.

How Companies Globalize

Traditional Path (export, internationalization, global integration)
Born Global Companies (new companies entering the global marketplace from the outset, e.g., Spotify and Zoom)

OTIS Example

Case study of how a global company, e.g., OTIS, works across various countries.
- Illustrates both internationalization and globalization.

Why Companies Globalized in 1960s

European Economic Community (EEC) simplified the barriers to entry into various countries.
Economies of scale, lower prices and greater profit margins.

How Companies Globalize: Another Approach

Some companies are effectively "born global" at the onset, such as Spotify and Deezler.

Drivers of Globalization

Political/Economic: Trade policies, stability, economic reforms, international institutions.
Tech: Transport, Communications, Manufacturing, FinTech, Digital Marketing.
Social/Market: Cultural convergence, global mobility, global media, urbanization, consumer needs.

Benefits of Globalization

Cost: Economies of scale, bargaining power, sourcing.
Timing: International product lifecycle.
Arbitrage: Reducing risks, diversification.
Learning: Pilot programs, transfer of best practices.

Push for Localization

Factors driving companies to adapt to local markets:
Political/Legal: Regulations, national security.
Tech: Standards, transport, spatial presence, languages.
Cultural: Attitudes, behaviors, tastes, social codes.
Commercial: Distribution networks, customization, responsiveness.

Benefits of Localization

Flexibility: Adapt to varied customer demands.
Proximity: Being close to the local market.
Quick Response: Respond promptly to customer needs.

Global Integration/Local Responsiveness Grid

Grid for positioning businesses according to the interplay of global/local forces.
Companies are positioned in the grid to aid in visualizing if the strategy is suitable.

Four Internationalization Strategies (Bartlett & Ghoshal)

Global Strategy: Standardized products/services worldwide.
Transnational Strategy: Balances global efficiency with local responsiveness.
Export Strategy: Selling products abroad, mainly without customization.
Multidomestic Strategy: Tailoring products/services to the specific needs of each local market.

Important Tools for Identifying Business Opportunities

SWOT analysis, Value Chain analysis, VRIO framework.

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Description

Explore the foundational concepts of global strategy, including the various entities involved and their roles. This quiz also covers the net trust in institutions, highlighting the trustworthiness of different organizations as of 2015. Understand the historical context with references to significant events like the Battle of Thermopylae.