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Unit 15: Global Strategic Management and Business Ethics

configuration and coordination, standardization, and integration dimensions. The discussion notes
that follows describes the three sets of dimensions in more detail.
l z The first major dimension of global strategy is coordination and configuration of the
multinational firm’s activities across countries. According to this view, global strategy
is the process of exploiting the synergies that exist across different countries, as well
as the comparative advantages offered by different countries (Zou and Cavusgil 2002).
Comparative advantages offered by different countries include resources that are inherited-
such as a country’s location, climate, size, or stock of natural deposits-and resources that are
the subject of sustained investment over a considerable period of time-such as a country’s
education system and specific skills, its technological and organizational capabilities,
its communication and marketing infrastructures and its levels of labour productivity.
According to the configuration and coordination perspective, multinational firms must
configure their operations to exploit the benefits offered by different country locations, and
coordinate their activities across countries to capture synergies derived from economies of
scale and scope (Zou and Cavusgil 2002).

l z The standardization dimension expressed by Levitt (1983) defines global strategic
management as the process of offering products across countries. According to this view,
multinational firms pursuing a standardization strategy have a global strategy, while
multinational firms pursuing an adaptation strategy should be referred to as implementing
an international strategy. It is important to note that for strategy to be global absolute
standardization across countries is not necessary. Rather, it suffices if core elements of
the product or service are applied consistently across countries with minor adaptations to
local peculiarities. For example, IKEA offers its standard products worldwide but makes
necessary adjustments to satisfy local customers and meet different legal standards.

l z The third perspective is the integrations view. According to this view, global strategy is
concerned with the integration of competitive moves across country markets (Zou and
Cavusgil, 2002). Here, a firm makes competitive moves not because they are best for the
particular country or region involved but because they are best for the firm as a whole. The
ability of a firm to coordinate activities globally across markets depends on its ability to
cross-subsidize, explicitly or implicitly, across markets. Yip (2002: 15) noted that in a global
competitive strategy, competitive moves are made in a systematic way across countries,
and that a competitor could be ‘attacked in one country in order to drain its resources for
another country, or a competitive attack in one country is countered in an-other country’.
Each of the above dimensions offers a partial explanation of global strategy. In this book we
adopt a broad definition of global strategy that integrates the above three dimensions. We take
it that the pursuance of one dimension does not preclude a multinational firm from pursuing
another. A multinational firm may provide globally standard products, coordinate its activities
globally, and integrate its competitive moves across countries simultaneously.
It must be noted that a global strategy is the process towards one, two, or all the three dimensions,
as opposed to the extreme points of the perspective (Zou and Cavusgil, 2002). For a strategy
to be global does not require absolute standardization across countries, complete coordination
between countries, and fully integrated competitive moves.

15.2 Peculiarities of Global strategic management

A well designed global strategy can help a firm to gain a competitive advantage. This advantage
can arise from the following sources:

l z Efficiency
™ z Economies of scale from access to more customers and markets
™ z Exploit another country’s resources-labor, raw materials

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