The Essence of Global Strategy

By M. Isi Eromosele

The essence of global strategy is an expansive world vision that considers the possibilities of every location as a market and as a source of competitive advantage, both alone and when integrated with the rest of the firm.

Global enterprises must craft strategies for international expansion, diversification and integration to develop, protect and exploit their resources and capabilities.

Determinations of geographical scope and degree of coordination must be taken with respect to a world-wide competitive environment. Concerns for both strategy processes and strategic goals and objectives are deepened in the transnational setting.

How has global strategy co-evolved with an emerging global marketplace? To what extent have the drivers of global growth and diversification changed in today’s “new normal” of increased uncertainty and rapid change? How are multinational sourcing strategies driving ongoing internationalization and globalization?

Assembling The Global Enterprise

In order to pursue their strategic objectives, global enterprises must access a wide range of resources, capabilities, brands, markets and technologies from world-wide locations.

This process of building a resource base for the enterprise may involve cross-border mergers and acquisitions, international alliances and joint ventures, formal and informal networking, internal development and offshore/outsourced value-adding activities.

Determinations of the breadth of international dispersion and the degree of global integration of resources and activities are increasingly essential to competitive success, but standard models of transactional governance seem to have limits in an interactive, integrated environment.

How do multinational firms identify and access location-specific resources in a diverse global environment? How have the roles of assembly strategies such as acquisitions, alliances or licensing changed in response to global sourcing opportunities and market demands? How do dynamic capabilities for organizational assembly both drive and delimit the structure and performance of global firms?

Global Strategy Networks

While multinational enterprises may be network organizations, they are also widely seen as entities functioning within larger networks of affiliated, but not internalized firms, institutions and activities.

Collaboration at all stages of the value chain across organizational as well as national boundaries has become an essential feature of global strategic management, as has cooperation with partners on a smaller scale within many local host settings.

The global firm may function as the leader or flagship of its network, but it must do so through communication and collaboration mechanisms rather than the command and control relationships of internalized hierarchy.

Does ownership matter, or is access to resources and capabilities a more efficient position in a changing world? How can inter-organizational supply and distribution network relationships be managed to generate competitive advantage for global enterprises?

Strategic Management Of The Global Enterprise

An important aspect of international strategic management involves selecting and developing the governance structures and functions of global firms and their component organizations, including organizational architecture, management systems, managing resources and capabilities, networking of subsidiary organizations and managing operational strategies and information sharing in organizations engaged in substantial operations across national borders or located in multiple national environments.

Managing the internationally dispersed and often deeply integrated activities of global multi-business enterprises is a complex, evolving, but essential capability of such firms.

Non-market strategies of pursuing corporate social responsibilities and working with critical stakeholders in host nations or on a global basis are increasingly important to pursuing competitive advantage and reducing environmental and competitive risks for global organizations.

What strategic imperatives will drive new forms of global organization in the 21st Century? Global enterprises are described as network organizations – what does this mean for internal management processes, innovation and collaboration across borders? How will the sources of stability and growth of global organizations be redefined in a hyper-competitive global market?

Global Strategy And Performance

Consistently relating the activities of the organization to its performance is essential to a strategic perspective. Performance is a broad concept with many manifestations, made even more complex by operations in multiple markets with varying degrees of global integration.

Defining and measuring the many aspects of performance for global organizations, and establishing their limits, are constant and evolving challenges. Strategic performance must consider the risks and uncertainties involved in most actions, considerations that again are more complicated in the global environment.

Are the drivers of performance for global organizations in a rapidly evolving world strategic or managerial in nature? How is performance best defined, measured and delimited for different actions in the international setting? How do widely dispersed organizations balance local and global performance levels?

Global Innovations And Knowledge Strategies

Managing innovation and knowledge transfer is clearly an aspect of strategic management in any setting, but the importance of these activities to the modern multinational, transnational or global multi-business firm suggests that such strategies merit specific emphasis.

Current models see the global enterprise primarily as an arbitrageur and combiner of knowledge derived from multiple sites and brought together in some centralized process.

Concerns for intellectual property development and protection, multinational and global R&D, moving knowledge across borders and distance and the global architecture of innovation and application of knowledge are core concerns.

How do global firms access knowledge held in multiple locations? How can unique knowledge be moved effectively and efficiently through intra- and extra-organizational networks of alliances? What is the function of the headquarters in a global knowledge-driven strategy?

Global Strategy And Location

The overall global business environment affects enterprise-level strategies, but the specific characteristics of local environments are equally important to choosing locations for expanding markets or resource bases, setting up offshore operations and diversifying operating risks.

Concerns about cultural, institutional, geographical, economic, technological and development distance affect decisions about where and how to sell products, source inputs and resources and establish operations.

Avoiding the hazards and exploiting the benefits of differences between locations is the essence of global strategy.

How are sovereign risk factors manifested and managed in an integrated global environment? How do distance effects and the liabilities of foreignness impact entry strategies, subsidiary governance and performance outcomes? When and how do locational differences limit integration strategies?

Global Strategy And Emerging Economies

The importance of the global environment and of specific locations to global and international strategies has been established. However, the rapid emergence of new market economies has profound implications for the world economy and for the practice and study of global strategy.

Doubling the size of global consumer markets has begun a fundamental revision of the “relevant global market” far beyond the concept of the Industrial Triad, whether looking at emerging middle classes or the “bottom of the pyramid”.

Offshore production of goods and services in emerging nations has energized international political discussion, brought new focus to the non-governmental social welfare sector and redefined the concept of relevant stakeholders as well as expanding the scope of global sourcing strategies.

Multinational enterprises from emerging economies are absorbing established firms in industrial nations and may well dominate international merger and acquisition activities in the near future while traditional global enterprises are facing fundamental changes in their non-market strategies.

How must global strategy adapt to emerging markets with their large numbers and large income disparities? Is offshoring value adding activities to emerging economies a strategic benefit or an existential threat to the industrial world? How will “reverse foreign direct investment” through acquisition and startup from these countries into the established industrial economies engender fundamental change and force development of new strategies in these countries? How will enterprise-level strategic positioning be affected by newly emerging patterns in international capital markets and

national financial assets?

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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