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, refers to the commercial activities that the company carries out externally in a country that is not the one 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 seeking a stake in the international market particularly, transnational companies whose impulse is from globalization industrial.

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 said key strategy through the expansion of internationalized activities and a respective 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 strategic areas of activity, such as: global strategies, international strategies and multinational strategies, which refer to different strategies designed in order for the organization to achieve its objectives and goals of international expansion, which will also depend on the resources that the company has, its capabilities and its 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 spreads its activities internationally, it is achieved with very different markets, for which It is necessary to adapt a specific strategy to their 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 so that they see and treat the world as a huge market with limited differentiations 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 be successful, the company must bear in mind:

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

Benefits of a global strategy

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

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

Disadvantages of a global strategy

Just as a global strategy brings benefits, it is also true that it has certain disadvantages, among these we can mention:

• The globalization process can lead to administrative expenses high, with respect to the increase in operational coordination.
• The administrative centralization from the parent company, it can demotivate local staff and cause low administrative efficiency in the countries where it is involved.
• The standardization of production in the productive process can cause unfavorable consequences in the Customer satisfaction, due to the different tastes and characteristics that occur in each country involved.
• The perception and sensitivity of the product is minimized, with respect to the needs of the clients.
• There may be greater economic risk as a result of currency fluctuation.
• There is a high risk from competition.