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Global Strategy: Managing For The 21St Century Essay, Research Paper

Global Strategy: Managing for the 21st Century

The term “globalization” has acquired considerable emotive force. Some view it

as a process that is beneficial as well as inevitable and irreversible. Others regard it

with hostility, even fear, believing that it increases inequality within and between

nations, threatens employment and living standards and thwarts social progress. This

paper is intended to offer an overview of some of the aspects of globalization and aims

to identify ways in which countries can tap the gains of this process, while remaining

realistic about its potential and its risks. Globalization offers extensive opportunities for

truly worldwide development but it is not progressing evenly. Some countries are

becoming integrated into the global economy more quickly than others. Countries that

have been able to integrate are seeing faster growth and reduced poverty.

Outward-oriented policies brought increased activity and greater prosperity to much of

East Asia, transforming it from one of the poorest areas of the world 40 years ago. And

as living standards rose, it became possible to make progress on democracy and

economic issues such as the environment and work standards.

By contrast, in the 1970s and 1980s when many countries in Latin America and

Africa pursued inward-oriented policies, their economies stagnated or declined, poverty

increased and high inflation became the norm (Graham, 1998). In many cases,

especially Africa, adverse external developments made the problems worse. As these

regions changed their policies, their incomes have begun to rise. Encouraging this

trend, not reversing it, is the best course for promoting growth, development and

poverty reduction. The crises in the emerging markets in the 1990s have made it quite

evident that the opportunities of globalization do not come without risks. Those risks

arise from volatile capital movements and the risks of social, economic, and

environmental degradation created by poverty (Graham, 1998). This is not a reason to

reverse direction, but for all concerned to embrace policy changes to build strong

economies and a stronger world financial system that will produce more rapid growth

and ensure that poverty is reduced.

Additionally, the globalization of the marketplace has created a need for

managers who can function effectively in the international business environment

(Walter, 1997). Despite this movement toward globalization, there remains significant

environmental differences between countries and regions. Managers in an international

business must be sensitive to these differences and also must adopt the appropriate

policies and strategies for dealing with them. It is a cliche to say that we live in a

globalized world in which investment flows, communications, and the operations of

multinationals from all parts of the world have changed the character of the

international business environment (Yip, 1995). But the easy concept of globalization

poses as many questions as it answers. Additionally, many managers wonder whether

their business should have a global strategy and if so how global should the business

strategy be. In Total Global Strategy, Yip (1995) defines measures for not only

identifying the raw characteristics necessary for the successful globalization of a

business, but the tools needed in order to adequately measure success of an

implemented strategy. Finally, many other resources related to globalization and

international marketing techniques and their relevance to todays economic and political

structures will be compared to attain a better understanding of how globalization can

affect a business and how that business can have an impact on society.

Globalization Levers and Industry Drivers

First, in keeping with tradition it is of utmost importance to begin with the basics

when planning a business strategy which will ultimately have the potential to go global.

A core strategy must first be developed which includes several key elements such as

the type of product or services, customer base, geographics involved, major resources

available, and the overall investment strategy (Yip, 1995). Without a sound core

strategy on which to build, a worldwide business need not bother with global strategy.

Next, it is important that the core strategy is internationalized so that it can be

determined whether or not the company possess the qualities necessary to be effective

on a global level (Yip, 1995). The first and most important step in internationalizing

the core business strategy is to select the geographic markets in which to compete

(Yip, 1995). In deciding geographic preference one should consider market

attractiveness, potential competition and ways in which to adapt to local conditions

(Yip, 1995). Many factors must be considered such as barriers to trade, tariffs, laws,

language differences and so on (Yip, 1995). Other aspects of the internationalization

strategy to take account of are foreign needs, preferences, culture, and climate (Yip,

1995). Obviously, many considerations must be examined and scrutinized in order to

determine overall quality of the market. Finally, once a successful internationalization

of the core strategy has been implemented and determined to be effective, a

globalization of that strategy must be integrated to take advantage of business

leverage and competitive advantage (Yip, 1995). Consequently, industry levers and

drivers also play an important role in combination with the successful implementation of

a diverse and well planned global strategy to determine the overall success of a

business.

There are several direct and indirect factors affecting the process by which the

core strategy, internationalization of that strategy, and the final globalization of the

strategy are successfully or unsuccessfully integrated into the business process. The

direct factors I am speaking about, also termed levers, can be directly controlled by the

business to either negatively or positively impact a given situation or circumstance.

The indirect factors, or drivers, are not as easily controlled and consist of market

trends, overall economic growth, and the nature of marketing in a given business (Yip,

1995). Conversely, the levers are accessible and controllable by the business and

consist of market participation, product, location, marketing technique, and competitive

moves (Yip, 1995). There are four specific industry globalization drivers which exist as

defined by Yip (1995) which include market drivers, cost drivers, government drivers,

and competitive drivers. Unfortunately, drivers are primarily uncontrollable by the

worldwide business community as individuals and thus can provide the downfall for an

otherwise potentially sound organization/business. To get a better grasp of the

relevance each lever and driver has on business profitability we will examine in depth

the key lever and driver in the specific named groups to show what notable affect each

can have on a business. It is interesting to look at the different factors which effect

overall success of a business when it initially seems to be a clear cut and well defined

parameter in choosing where and what product you will sell in order to succeed. My

personal experiences, although limited to domestic applications, have also been driven

by the same industry standards (drivers/levers). For any given market there exists

parameters by which a company must operate in order to be efficient and productive.

Without giving thought to specific industry drivers a company would surely fail. A good

example of this can be seen in the airline industry where struggling airlines working on

a thin profit margin are forced to continually lower prices in order to stay competitive.

They do so because the industry has determined that the market will only tolerate a

survival of the fittest concept. This means that if smaller, more fragile airlines cannot

match the predatory pricing strategies of the industry leaders then the success of their

companies will be in jeopardy. Therefore, it can be seen over the years that airlines

such as Eastern, Pan Am, and recently ValuJet have succumb to industry pressure and

failed miserably while attempting to allude industry drivers in order to turn a higher

profit.

Thus, we you can see that a globalization strategy is multidimensional. As well,

it can be determined that many factors are present when determining effectiveness and

success. Perhaps, the most controllable lever which has been evaluated is

international marketing . The world has indeed become a smaller place. International

marketing has intensified and is evident in nearly all aspects of daily life. The shoes

we wear may come from Brazil, stockings from China, trousers from Taiwan, belts from

Korea, shirts from France, ties from Italy, and watches from Switzerland (Walters,

1997). Competitive forces are no longer restricted by local regions or national

boundaries. According to Walters (1997), to be successful in today’s economy,

companies must be simultaneously responsive to local and global market conditions,

within the context of being supportive of the company’s own overall strategies. “The

global corporation accepts for better or for worse that technology drives consumers

relentlessly toward the same common goals-alleviation of life’s burdens and the

expansion of discretionary time and spending power” (Levitt 1999). This is especially

true in a world of increasingly complex competitive structures. Companies must resolve

the strategic issues of product/market scope, long-term objectives, and functional

policies (Levitt, 1999). International marketing skills are an important ingredient for

every company, whether or not it is currently involved in exporting activities (Buzzell

1997). International marketing skills are important ingredients for every company,

therefore it is vital to identify which skills are needed. After searching the literature,

there seemed to be no studies regarding identification of the specific skills needed to

be effective in international marketing. However, three studies (Busche, 1990; Scott,

1999; and Graham, 1998) were completed to determine the general perceptions of

business people regarding their need for international trade training. Each of these

studies concluded that international marketing was the number one priority area for

international business training.

A study completed by Busche (1990) found that nearly 77 percent of the

respondents supported a need for international training. Marketing was the area

identified by nearly 64 percent as a potential problem area. Respondents showed a

special interest in international marketing with a highly perceived need for training in

six topics: (1) research on foreign markets; (2) working through agents and distributors;

(3) export marketing know-how; (4) how to find international opportunities; (5)

developing an international business plan; and (6) cultural aspects of sales to foreign

consumers (Busche, 1990). These topics were mixtures of both skill sets and areas for

knowledge acquisition, yet clearly identified the general area of international marketing

as a priority. Another study concurred with the identification of international marketing

as a topic deserving training priority. Scott (1999) found that 84 percent of the

southern California business respondents polled expressed a need for training at the

California community colleges. The course selected by 67 percent as being useful to

employees was International Marketing. Unfortunately, the conclusion of this study did

not reveal any insight about which skills were needed to be effective in international

marketing although a need still remains to identify those necessary skills needed to be

effective in this area.

Since the vast majority of international marketing studies involve context-specific

knowledge, markets and cultures are widely different across countries (Myers, 1999).

As Graham (1998) said, this may be why not much has been learned about

international marketing in the last twenty-five years. The conclusion of the study was

that research should pursue an exploratory approach to building knowledge in

international marketing. Research identifying the skills needed to be effective in

international marketing may, in fact, create the progressive portfolio of skills needed to

cut across context-specific knowledge and themes effectively (Graham, 1998). A

progressive portfolio of international marketing skills would allow employees to

accumulate skills that help them “adapt to technological and market changes, to

improve their prospects or to explore their potential” (Wills, 1998). Conclusions from

the three studies previously cited clearly point toward the necessity to identify which

skills are needed to be effective in international marketing. However, these studies

also indicate that there is much difference of opinion regarding which international

marketing skills are most important. Using the knowledge available, academic

international marketing experts could provide a sound assessment of the relative

importance of international marketing skills.

The structure of the field of international marketing has remained basically the

same over the past several decades. However, the emphasis given within the literature

clearly reveals that international marketing activities have been given diversified

breadth and depth of coverage over the years, with distinct clusters of international

marketing skills being emphasized sporadically throughout the time period from Borden

(1964) up to Smith (1998). The marketing mix elements of product, price, place, and

promotion, as understood by Neil Borden (1964), were emphasized as the basis for

marketing activities for several decades, yet a study completed by Berry (1990) which

ranked the importance of marketing mix activities, offered a distinct difference of

opinion. The Berry (1990) study identified customer sensitivity as the most important

marketing mix activity. This reflects a major shift in emphasis regarding the importance

of various types of skills-from certain skills being needed primarily by employees within

the marketing function, to certain skills now being needed by all employees whose work

affects customers, which “involves almost everyone in the business” (Hiam, 1997).

Dissimilar emphasis on the importance of various types of international



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