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Unit 15: Global Strategic Management and Business Ethics

6. The first major dimension of global strategy is ................. and ................. of the multinational notes
firm’s activities across countries.
7. The ................. dimension expressed by Levitt (1983) defines global strategic management
as the process of offering products across countries.

15.4 Global strategic management Process

Modern corporations stretch around the world and are not bound by a single country. In this
modern, global world it is increasingly important for managers to understand the global strategic
management process. Understanding this process will help managers to choose markets, enter
markets, and develop the firm in these new markets and to continually manage and develop the
firm internationally.

selecting foreign markets

The foundation of international strategic management is selecting the right markets to enter.
There are a wide variety of factors to consider when choosing a market, including the size of
the market, the strength of the market and local resources (including natural resources, capital
resources and human resources). Managers must also be aware of the cultural, economic,
geographic and administrative distances between countries because large distances can make
doing business difficult.

entering markets

A good manager is highly strategic in his market entry strategy. The simplest way to enter a
market is to open a wholly owned subsidiary. This can place a foreign firm at considerable
disadvantage, however, because it means that the firm must quickly adapt to the local market
without much local knowledge. Better options for gaining local knowledge include entering
via a local acquisition or merger, either of which gives the firm access to local employees and
knowledge.

Building the firm

Once a company has entered a market, it must develop a strategic plan for growth. This involves
building the local reputation and market share, but it also involves building local competencies.
Local competencies are based on the locally available resources. For example, a firm’s Indian
branch might focus on the competence of information technology because the Indian market has
a large population of IT engineers.

continuous management

Continually developing is an important part of the global strategic management process.
Managers must continually monitor the market to determine if the market is still appropriate
and if the firm is properly positioned in the market. When the market changes, the business must
either adapt to the local changes or, in drastic cases, exit the market altogether.

15.5 collaborative strategies

Firms use four basic strategies to enter and compete in the international environment: an
international strategy, a multi-domestic strategy, a global strategy, and a transnational strategy.
Each of these strategies has its advantages and disadvantages. The appropriateness of each
strategy varies with the extent of pressures for cost reduction and local responsiveness.

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