Your mobile, is such an integral part of your life, it is the culmination of Globalisation, the lithium for the battery comes from Bolivia, the LCDs for the screen from Japan, chips from China, the software running it from India, Corporate HQ in the EU. Such a simple yet elegant reduction of what globalisation is. It’s in your palm!
There has always been a sharing of goods, services, knowledge and cultures between people and countries, but in recent years improved technologies and a reduction of barriers means the speed of exchange is much faster. Globalisation provides opportunities and challenges. Bigger markets can mean a bigger profit which leads to greater wealth for investing in development and reducing poverty in many countries. Weak domestic policies, institutions and infrastructure and trade barriers can restrict a country’s ability to take advantages of the changes.
Every company, producer, exporter, service provider, manufacturer and just about anyone connected to the markets abroad, needs to have a strategy regarding his business abroad, which is different from his strategy in the domestic market. The need for a global level strategy arises due to the organizations considering internal as well as external environments. In fact, the external environment is more crucial to be considered when you are operating at a global level because at a domestic level competition is very directional and optimized, but at international level the competition is crucially important to be considered; otherwise survival is not at all possible at global level.
Bringing us to a Global Strategy.
Strategic global business can be broken down into major heading of Planning, Marketing, Management and Pricing policy.
Planning:
Global strategic planning is a process adopted by multinational organizations in order to formulate an effective global strategy. It is a process of evaluating the internal and external environment by multinational organizations, through which they set their long-term and short-term goals and then they implement a specific plan of action in order to achieve those objectives.
Strategy formulation
The GSP of a company depends upon the internationalization approach followed by the company itself i.e. an ethnocentric organization will always formulate their GSP as an extension strategy; on the other hand a polycentric organization will formulate a more complex GSP. For strategic planning the first step is the evaluation of external and internal environment.
For external environment evaluation, organizations scan the environment for the presence of various competitors. For an internal environment evaluation, organizations analyse their total physical resources and the skills of the employees working in the organization. MNCs also conduct VCA (value chain analysis) in order to integrate various primary and supportive activities of the organization.
After environment evaluation, organizations decide their long-term and short-term goals. And then to achieve these goals, organizations implement their plan of action. Implementation of the plan involves three activities — location, selection, ownership decision and finally functional decisions i.e. arrangement of finance etc.
Control and evaluation
Implementation is not the complete story; after implementing the plan of action organizations are also required to control it. Controlling is an effort under which organizations compare the planned performance with actual behaviour of the plan, and check for any deviations. If there are any deviations, the organizations take corrective actions to control the plan. In this way Global Strategic Planning helps the multinational organizations to achieve their goals in the global business environment.
Strategic Management
A simple definition of strategic management puts emphasis on making sure the business process is humming along nicely and producing desired results. A wise business owner or manager will secure and distribute resources in the correct measure so that no one part of the business struggles to achieve its stated objective. There should be no corner of the corporation left with too much to do, and too few tools with which to do it.
For example, trying to reach a certain level of revenue may not be possible in a certain location, for example. Answering this question can be a great way to start: Where does this business fit in the current economic scene?
At this point, the process of strategic management turns to finding a way to get to the declared objective. A detailed business plan is needed at this juncture, one that identifies the resources and assets needed to make the revenue.
In addition to physical assets and a process for producing the goods and services, a strategic-management plan will put individuals in place who are correct for the task. Having this solid human-resource foundation in place early may eliminate many stressful moments at a later date.
International Marketing Strategy
Marketing can simply be defined as an organizational function and a set of processes for creating, communicating and delivering the value to the customers and managing the customer relationships in much a way that is beneficial for both the customers as well as the stakeholders. At international level, marketing can simply be defined as the process of finding out the needs of customers in foreign countries and then providing them the required entities at right place and at right price.
The basic concept of marketing is the same even at international level, but some modifications are always required. Only a few multinational organizations are lucky enough to use the same marketing strategy in the whole world, for example—a pen manufacturing organization that uses a marketing slogan “finest writing in the world” will not be required to change its marketing slogan in any part of world. But a majority of multinational organizations need to modify or specifically formulate their marketing strategy at the international level. Example a fast food retailer would definitely change its strategy nation to nation and would necessarily be ethno-centric.
Formulation of strategy
For formulating its international marketing strategy every organization follows a five step procedure.
This includes product strategy, price strategy, place strategy and promotion strategy and market assessment
The first four segments of strategy formulation are the popular 4 P’s of marketing but the last segment—market assessment—is a new factor to be considered while formulating an international marketing strategy.
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