Monday, January 14, 2013

Define and Explain Global Business Strategy


Global Business Strategy can be defined as the business strategies engaged by the businesses, companies or firms operating in a global business environment and serving consumers throughout the world. (Ref Economy Watch.Com )

The company adopting a global strategy chooses to maximize integration. This decision spurs a company to make and market a standardized product, such as razor blades, or service, such as package delivery, for a specific global market segment.

The global strategy pushes companies to think in terms of creating products for a world market, manufacturing them on a global scale in a few highly efficient plants, and marketing them through a few focused distribution channels. Thus, companies that adopt the global strategy see the world as one market  and assume  there are either no differences among  countries  with regard to consumer  tastes and preferences or, if there are, then consumers will sacrifice them if given the opportunity to buy a comparatively higher-quality product for a lower price.

Operationally, MNEs that adopt a global strategy aim to become the low-cost player in their industry.

Whether it is a sneaker factory in Vietnam, an auto parts maker in China, or a service call center in India. In other words, managers aim to convert the gains of efficient operations into cost reductions that drive profitability.

Strengths of Global Strategy: Generally, the global strategy is best suited for those industries that put strong pressures on efficient operations and where local responsiveness needs are either nonexistent or can be neutralized by offering a high-quality product for a lower price than the local substitute.

Similarly, the credit card industry has specified a range of standards and rules for electronic payment protocols that supports customers using and merchants accepting this mode of payment around the world. In both cases, firms act accordingly; in wireless, Nokia and Texas Instruments, and in credit cards, American Express, all pursue a global strategy.

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