GLOBAL

STRATEGY
What is global strategy?
Global Strategy is a shortened term that covers three areas: global, multinational and
international strategies. Essentially, these three areas refer to those strategies designed to
enable an organisation to achieve its objective of international expansion.

Global strategy as defined in business terms is an organization's strategic guide to

globalization.
 PRESSURES FOR GLOBAL INTEGRATION

• Managers may have several reasons to went or need a common global strategy
rather than one tailor to individual markets These factors includes the existence of
universal needs, pressure to reduce cost, or the presence of competitors with a
global strategy.
• Universal needs creates strong pressure for a global strategy. Universal needs exist
when the taste and preferences of consumers in different countries with regard to
a product are similar.
• Competitive Pressures to reduce cost may cause managers to seek to integrate
manufacturing globally. Cost can be particularly important in the industries in
which price is the main competitive weapon and competition is intense.
• The presence of competitors engaged in global strategic coordination is another
factor that creates pressure for global integration.
 PRESSURES FOR LOCAL RESPONSIVENESS

• Managers need to make sure that their companies are able to

adapt to different needs in different locations. Strong pressure
for local responsiveness emerge when consumer tastes and
preferences differ significantly among countries.
• Pressures for local responsiveness also emerge when there
are different in tradional practices among countries.
• Difference in distribution channels and sales practices among
countries also may create pressure for local responsiveness.
 CHOSSING A GLOBAL STRATEGY
• Managers can use four approaches to international
competition, depending on their companys position
on the integration responsiveness grid.

• 1. International Model
• 2. Multinational Model
• 3. Global Model
• 4. Transnational Model
 INTERNATIONAL MODEL

An organization model that is composed of a

companys overseas subsidiaries and
characterized by greater control by the parent
company over the research function and local
product and marketing strategies.
 MULTINATIONAL MODEL

An organizational model that consist of the

subsidiaries in each country in each country in
which a company does business, with ultimate
control exercised by the parent company.
 THE GLOBAL MODEL

An orginazational model that consisting of a company

overseas subsidiaries and characterized by centralized
decision making and tight control by the parent
company over most aspects of world wide operations,
typhically adopted by organization that base their
global competetive strategy on cost considerations.
 THE TRANSNATIONAL MODEL

An organizational model characterized by centralizing

certain functions in locations that best achieve cost
economies; basing other functions in the company's
national subsidiaries to facillitate greater local
responsiveness.
ENTRY
MODE
 The five basic ways to expand
overseas are.

. 1. Exporting
2. Licensing
3. Franchising
4. Joint Ventures
5. Wholly Owned Subsidiaries.
Exporting is the process of selling
goods and services produced in
one country to other countries
Two Types of Exporting

1. Direct Export
2. Indirect Export
 Direct exports represent the most
basic mode of exporting made by a
company. Capitalizing on economies of
scale in production concentralized in
the home country and affording better
control over distrbutions.
 Indirect Export is the process of
exporting through domestically based
export intermediaries, and the
exporter has no control over its
product in the foreign market.
LICENSING is an arrangement by which
a license in another country buys the
right to manufacture a company's
product in its own country for a
negotiated fee (typhically, royalty
payments on the number of units
sold).