Global Strategy (Definition and advantages)

A business strategy seeks to establish an action plan for the development of a competitive advantage of the company with which it can achieve growth and expansion in the market, also causing the reduction of its competition.

Regarding the term Global, it refers to the commercial activities that the company deploys externally in a country that is not that of its origin, channeling its strategy in a comprehensive and global way.

We invite you to know everything about the global strategy, including its key points, advantages and disadvantages.

What is a global strategy?

It is the set of tactics and mechanisms used by companies that seek a participation in the international market in particular, transnational companies whose impulse is of industrial globalization.

A global strategy implies the participation of the company in the world market and is based on:

  1. The development of some key strategy that establishes a competitive advantage that is sustainable.
  2. The internationalization of this key strategy through the expansion of internationalized activities and a corresponding adaptation to implement a global strategy.
  3. The execution and implementation of the internationalized global strategy, making a strategic integration by countries.

This concept of global strategy covers areas of strategic activity, such as: global strategies, international strategies and multinational strategies, which refer to different strategies designed so that the organization achieves its objectives and goals of international expansion, which goes to depend in addition to the resources that the company has, the capabilities of the company and the current position internationally.

A company that mainly focuses its market in the country of origin, its activity outside the local market is considered its international strategy.

As the Company propagates its activities internationally, it is achieved with very different markets, for which it is necessary to adapt a specific strategy to its conditions, as a whole, these strategies are part of a multinational strategy.

The company whose international activities have been developed on a large scale, so much that they see and treat the world as a huge market with differentiations limited to each country or region. It can be said that they carry a global strategy.

Key points of a global strategy

For a global strategy to succeed, the company must keep in mind:

  • It must be basic to be sustainable.
  • It must be generalized through international expansion strategies.
  • A global strategy must be integrated in the rest of the countries.
  • You must carefully choose the markets where you intend to enter and compete.

Benefits of a global strategy

This type of strategy brings multiple benefits, the most notable are:

  • The reduction of operating costs worldwide, mainly due to the advantage of bringing production to countries where labor is cheaper, that is to say it has a lower cost.
  • Significant progress in product quality, taking into account the quality of inputs.
  • It allows to increase customer preference.
  • Greater efficiency and competitiveness is achieved.

Disadvantages of a global strategy

Just as a global strategy brings benefit it is also true that it has certain disadvantages among these can be mentioned:

  • The globalization process can lead to high administrative costs, compared to the increase in operational coordination.
  • The administrative centralization of the parent company can demotivate the local staff and cause low administrative efficiency in the countries where it ventures.
  • The standardization of production in the production process can cause unfavorable consequences for customer satisfaction, due to the different tastes and characteristics that are presented in each country involved.
  • The perception and sensitivity of the product is minimized, regarding the needs of the customers.
  • Higher economic risk may occur, as a result of currency fluctuation.
  • There is a high risk for competition.