Strategic Management

Global Strategy
Master
Project Management

Cristina Racoceanu, PhD, MBA, MScAE

Global Strategy - external environment assesment,
what are the key forces and their implication for
the strategy.
Organisational cultures should be distinguished from national
cultures. National cultures distinguish similar people, institutions
and organisations in different countries. Organisational cultures,
the way I use the term, distinguish different organisations within
the same country or countries. Cultures manifest themselves,
from superficial to deep, in symbols, heroes, rituals and values.

Managing international business means handling both national

and organisation culture differences at the same time.
Organisational cultures are somehow manageable while national
cultures are given facts for management; common organisation
culture across borders are what holds multinationals together.

http://geert-hofstede.com/
 Managers need to be sensitive to various cultural dispositions of
members and customers, whether managing locally or abroad.

It has been argued that when organisations move into foreign

countries or when many of their new employee recruits are from
other countries, this has created many challenges for
management practices, as some of the common values that
might be shared begin to differ across national cultures (such
as, for example, providing excellent services to customers)
(Halsall, 2008).
Hofstede (1994, 2001) and Trompenaars and Hampden-Turner (2003)
 Hofstedes four dimensions

Power distance This is the extent to which a society expects a

high degree of power difference between levels in an organisation. A
high score reflects a belief in an established hierarchy, while a low
score reflects a belief in equal rights.

Uncertainty avoidance This is the extent to which society willingly

accepts ambiguity and risk. High score societies are risk averse.

Individualism (as opposed to collectivism) Societies high on

this emphasise the role of the individual and expect people to take care
of themselves and their immediate family. Low score societies are more
concerned with the greater good of the group.

Masculinity A high score here reflects a society that holds values

that in the West were traditionally male competitiveness,
assertiveness, ambition and concern for material possessions. A low
score society would reflect a more nurturing orientation, emphasising
consideration of others.
When Hofstede looked at how societies scored on these
dimensions, he found four major clusters within Europe:

A Germanic group (Germany, Austria, Switzerland), tending

towards high masculinity and low power distance.
A mainly Scandinavian group (Sweden, Finland, Norway,
Denmark but also the Netherlands) tending towards high
individualism, low masculinity and low power distance.
An Anglo-Saxon group (Britain and Ireland) with high
individualism and masculinity and low power distance and
uncertainty avoidance.
A mainly Latin group (France, Spain, Italy, Portugal, Greece, but
also Belgium) with high uncertainty avoidance and high power
distance.

Note: By comparison outside Europe, Japan scored highly on masculinity and

uncertainty avoidance, while the USA scored highly on individualism but low on
uncertainty avoidance.
Companies and Strategies

Multinational

International

Global

Transnational
 Multinational Strategy

Focus on national differences

Focus on revenues rather than cost

Differentiation of products in response to customer preferences,

industry characteristics, and government regulation

Local resources to meet local needs

Local autonomy

Inability to exploit knowledge from other national units

E.g. Unilever, Philips, Nestle

 International Strategy
Development of home innovations in order to develop competitive
positions abroad

Often involves attempt to transfer products, processes or strategies

from developed home market, to less developed ones

Weakness in both efficiency and flexibility

E.g. in US - Kraft, Pfizer, P&G, GE
 Global Strategy

Emphasis on efficiency through global economies of scale

Compromises on both flexibility and learning

High transport costs and exchange rate risks

Reduced learning through centralized R&D

E.g. Japan - Toyota, Canon, Komatsu, Mitzuno
 Transnational Strategy

Both efficiency and flexibility important

Costs and revenues must be managed simultaneously

Innovation can be found in many parts of organization

Capabilities and resources must be in part centralized and in

part decentralized

Complex!
 Multidomestic Strategy
Global Strategy
1.Market
stand alone potential for profits
patterns of investments accrue potential for global benefits
from local advantage e.g. home market of competitor
tailored to each country pattern developed

2. Product uniform approach

standardized core product with
tailored to local needs minimum on local adaptation

3. Value Added Activities

value chain activities located
value chain reproduced in each
in country with low cost for that
country
activity

4. Competitive Moves
made specific to a country integrated across countries
Main Benefits of a Global Strategy
Cost reduction
economies of scale
lower factor costs
flexibility to seek lowest cost
enhance bargaining power to reduce input costs
Improved quality
fewer products mean usually better quality control
e.g. Toyota vs.. GM

Weaknesses of a Global Strategy

Significant management costs for coordination,
staff, etc.
Product standardization may not satisfy all
customers!
Increase currency risks by activity concentration
Integrated competition may lead to losses in
particular countries
 A matrix
structure

line structures for formal relationships (managers report to functional supervisors and
area coordinator/ dual reporting led to confusion and conflict)
Information flows, including informal relationships (multiple channels of communication/ raised
level of disagreement and conflict )
Importance of meetings,committee assignments
behavior and public actions of senior management
corporate values & beliefs; vision and mission; personnel policies, practices, systems
cultural differences heightened problems
Look for ...

risk sharing

scale economies

access to markets

access to technology

converging markets (International Strategy)

Alliances or Acquisitions
?
 Alliances can make more sense than acquisitions

Flexibility and less tight formality promote efficiencies

Access to new markets and technologies
Ability to create and disband projects easily
Multiple parties share risks and expenses
Partners can retail their independent brand identification
Working with partners possessing multiple skills can create
major synergies
Rivals can often work harmoniously together
Alliances can take multifarious forms, from simple
R&D deals to huge projects
Ventures can accommodate dozens of participants

Source: Business Week Review 10/99

 How to manage alliances? (Bartlett and Ghoshal)
Choice of Partner
Managing boundaries
Structure of alliance
Managing knowledge flows
Look for: - cost reductions
- product range additions
- knowledge goals
- transfer of capabilities

Be aware of :
Strong and lasting Alliances
- complexity
- uncertainty
- difficulty in merging cultures
Compatibility and Responsibility
Equal / Fair contributions
Strong management
Separate Culture
 Building organisational capabilities,
administrative communication, interpersonal
relationships

Key success factors

RESOURCES:
Fitchard, K. (2009) Creating culture, Connected Planet, 1 July [online]
http://connectedplanetonline.com/global/nsn-creating-culture-0701/index.html (accessed 20 May 2010).
Foucault, M. (1979) Discipline and punish: the birth of the prison, London, Allen Lane.
Gabriel, Y. (1999) Organizations in depth, London, Sage.
Bartlett, Christopher A., and Sumantra Ghoshal. Managing across borders: The transnational solution. Vol. 2.
Harvard Business School Press, 1999.
Bartlett, Christopher A., and Sumantra Ghoshal. Transnational management. Vol. 4. McGraw Hill, 2000
Halsall, R. (2008) From business culture to brand state: conceptions of nation and culture in business
literature on cultural difference,Culture and Organization, vol. 14, issue 1 (March), pp. 1530.
Handy, C.B. (1999) [1976] Understanding organizations, London, Penguin.
Hatch, M.J. (1997) Organization theory, Oxford, Oxford University Press.
Hofstede, G. (2009) Geert Hofstedes Cultural Dimensions web pages [online],http://www.geert-hofstede.com/ ,
(accessed 26 September 2010).
World Business Culture (2010) World business culture web
pages [online],http://www.worldbusinessculture.com/ (accessed 26 September 2010).World Business Culture
(2010) World business culture web pages [online], http://www.worldbusinessculture.com/ 74 (accessed 26
September 2010).
Smith, P. (2002) Cultures consequences: something old and something new, Human Relations, vol. 55, issue
1, pp. 11935.Smith, P. (2002) Cultures consequences: something old and something new, Human Relations,
vol. 55, issue 1, pp. 11935.
Dowling Michael, Stratgy Formulation in a Global Environment (2005)
Rarick, C. and Nickerson, I. (2008) Combining classification models for comprehensive understanding of
national culture: metaphorical analysis and value judgements applied to Burmese cultural assessment, Journal
of Organizational Culture, Communications and Conflict, vol. 12, no. 2, pp. 9-19.Rarick, C. and Nickerson, I.
(2008) Combining classification models for comprehensive understanding of national culture: metaphorical
analysis and value judgements applied to Burmese cultural assessment, Journal of Organizational Culture,
Communications and Conflict, vol. 12, no. 2, pp. 9-19.
 Global Strategy

28.02.2017 Cristina Racoceanu, PhD, MBA, MScAE