Introduction to Global Strategy

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.

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.