Overview of globalization strategy

The globalization strategy also called global strategy, refers to that the multinational companies, from the global point of view, utilize the regional comparative advantage of different countries and regions, disperse and configure various links and functions of value chain and organically combine them to implement integrated management, endeavor to reduce the cost of production and management so as to obtain long-term and stable global competitive advantage and achieve the maximization of the global efficiency.

Global strategy refers to that from a global perspective, multinational companies properly arrange limited resources, seize global opportunities, carry out global selection and deployment, and determine global strategic goals. The decision makers, free from the restrictions of the nation or country, consider the optimal allocation of the resources on a global scale, to achieve the best overall benefits for long time. In other words, it is the strategy that the multinational companies make to achieve long-time survival and development in the changing international business environment instead of considering the market and resources of a single country in isolation. The global strategy focuses on the greatest economic gains on a multi-country basis rather than being preoccupied by immediate losses in international business activities. From a historical point of view, the global strategy is the outcome of the large-scale development stage of the multinational corporation.

Advantages and Disadvantages of Globalization Strategy

The advantage of the global strategy is the centralization of the competitive advantages of the company.

It enables the company to locate its production and operation facilities in the country where it has most favorable conditions to centralize or decentralize the facilities and coordinate their strategic actions.

It also enables the company to link its activities in different countries, transfer on a timely basis the achievements of its technological development and management innovation and know the most favorable place to challenge the rivals. All these facilitate the company to build the lasting competitive advantage.

Disadvantages of Globalization Strategy

The disadvantage of the global strategy is the difficulty to adapt to the characteristics of the host countries and different situations of various countries

The goal and management of the global strategy

The goal of the global strategy is divided into the general goal and the sub goal. The general goal is to consider the company's market and resource distribution from a global perspective in the increasingly complex environment, boost competitiveness, enhance competitive position and maximize the overall interests. The overall goal of this strategy can be divided into:

Core objective: to maximize the competition with stronger competitors and make progress in some new and even unfamiliar fields. The core goal determines the monopoly advantage of winning the advantage.

Basic objective: to make the company's current business activities beneficial overall and to properly manage the possible business risks arising from these benefits. The basic objective determines whether the company can survive or not in a certain period, and lays foundation for further development of the company.

Development objective: to cultivate the learning ability within the company to achieve continuous innovation and development, and adapt to the challenges of the future environment. The development objective is the key to the company to maintain and improve the global competitiveness.
The means of implementation of the global strategic objectives

There are many ways to achieve the company's global strategic objectives. Under the situation of global strategy, there’s no distinction between domestic market and foreign market and all the global markets are equally treated, so the company can choose various means.

The balance between scale economics and flexible management

The balance between standardized production and differential production

Cooperation advantage and diversification policy

Making a survey of the current major multinational companies, we can find that there is a lot in common in the research and development activities under the global strategy. Generally speaking, there are the following basic programs:

To establish a technical guidance committee within a multinational corporation

To select new research and development institution

To select location for research and development institutions