The document discusses global strategies and how companies can globalize. It defines a global strategy as treating the world as a single market by standardizing products across countries. A multi-domestic strategy involves customizing products for each local market. Sources of competitive advantage from a global strategy include economies of scale, exploiting differences in resources between countries, and strategic flexibility. The document also discusses types of global strategies like foreign direct investment, joint ventures, contractual agreements, and licensing.

1. Presented by:-
Presented to:-
Rampal
Chitwan Mam
Gautam Dhanda
(Faculty member)
Ankit Paul

2. Global strategy:-
 Organization's strategic guide to globalization.
 A sound global strategy should address these
questions:
o what must be (versus what is) the extent of market
presence in the world's major markets?
o How to build the necessary global presence?
o How to run global presence into global competitive
advantage?

3. Contd..
 It is appropriate in industries where firms are
faced with strong pressures for cost reduction.
 Global strategies require firms to tightly coordinate
their product and pricing strategies across
international markets and locations.
 Firms that pursue a global strategy are typically
highly centralized.

4. Why globalize?
 Expand global market share
 Restructure value chain on a
global scale.
 Ultimate goal.
 Diversification.
 Expansion.

5. Types of global
strategies:
•
Global strategy Multi-domestic strategy Transnational strategy

6. Multi-domestic vs. Global Strategy:-
Multi-domestic Strategy
 Product customized for each market
 Decentralized control - local decision making
 Effective when large differences exist between countries
 Advantages: product differentiation, minimized political
risk, minimized exchange rate.
Global Strategy
 Product is the same in all countries.
 Centralized control - little decision-making authority on
the local level
 Effective when differences between countries are small
 Advantages: cost, coordinated activities, faster product
development

7. Philips followed multidomestic strategy:-
 Innovation from local R&D
 Entrepreneurial spirit
 Products tailored to individual countries
 High quality due to backward integration
Matsushita followed a global strategy :-
 Strong global distribution network
 Financial control
 More applied R&D
 Ability to get to market quickly

8. Sources of Competitive Advantage from a Global Strategy
Efficiency
 Economies of scale from access to more customers and
markets
 Exploit another country's resources - labor, raw materials
 Extend the product life cycle-
 Operational flexibility - shift production as costs, exchange
rates,
Strategic
 First mover advantage and only provider of a product to a
market
 Cross subsidization between countries
 Transfer price

9. Contd…
Risk
 Diversify macroeconomic risks (business cycles
not perfectly correlated among countries)
 Diversify operational risks (labor problems,
earthquakes, wars)
Learning
Broaden learning opportunities due to diversity
of operating environments
Reputation
 Crossover customers between markets -
reputation and brand identification

10. Globalization & Global Strategy —
• GLOBALIZATION ?
--Something to do with increasing interdependence between countries.
• GLOBAL STRATEGY
--At simplest level: Treating the world as a single market
E.g. Japanese companies during the 1970s & 1980s,
(YKK, Honda) standard products, developed &
manufactured within Japan.
--At more sophisticated level: Strategy that recognizes
and exploits linkages between countries (e.g. exploits
global scale, national resource differences, strategic
competition)
World as
World as World as inter- separate
single mkt. related mkts. national mkts.
global strategy multidomestic
strategy

11. 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.
Sources of Competitive Advantage
Strategic
Objectives National
Scale Economies Scope Economies
Differences
Sharing
Efficiency in Exploit factor cost Scale in each
investments and
Operations differences activity
costs
Balancing scale
Market or policy
Flexibility with strategic & Portfolio
induced changes
operational risks diversification
Societal
Experience – cost
Innovation and differences in Shared learning
reduction and
Learning management and across activities
innovation
organization

12. GLOBAL STRATEGIES
Four basic avenues that companies can take to market their
products or services globally:
 Foreign Direct Investment
 Joint ventures
 Contractual agreements.
 Licensing (includes franchising)

13. Joint venture :--
Moscow, June 8, 2011 – Ford Motor Company
and Sollers OJSC have signed agreements to
establish a 50-50-owned joint venture in
Russia. The new business, named Ford
Sollers, is scheduled to start operations later
this year.

14. BENEFITS FROM JOINT
VENTURE :--
 New technology used :-
 Basically it replaces the very expensive batteries
with much smaller and inexpensive ones. This
affords to position a car at much lower price. In any
case it is a new product.
 It would help ford to increase the sales and
production to regain the no.1 position in U.S or other
markets.

15. Mergers and Acquisitions:-
 In 1999, Global Crossing
acquired Frontier Corporation, the
former Rochester Telephone
Corporation
 Renamed the company Global
Crossing North America, Inc.
 It sold the local telephone
operations it owned, including the
Frontier name, to Citizens
Communications in 2001, which
renamed itself Frontier
Communications in 2008.