hird in a series of four posts.
By W Gary Winget, FasTrack Global Expansion Solutions
Why globalize a company’s strategy? A globalized strategy can lead to the integration of a company’s domestic and country-based strategies into a single, coordinated, worldwide strategy and the acceleration of a company’s success in the global marketplace.
How does a company globalize its strategy? To globalize a company, the company needs to analyze the strategic characteristics of its global environment and develop a strategic fit between its long-term strategies and its assumed future global environment.
The third step in the globalization process is to define your company’s global strategies and assure that they are matched and in balance with your level of the company’s industry’s globalization forces. The following strategies should be considered.
- Country presence strategies
- Location strategies
- Product strategies
- Marketing and sales strategies
The final task will be to balance your globalization strategies with the level of your industry’s globalization forces.
A comprehensive set of global strategies will become the primary vehicle through which your company will:
- Pursue global competitive advantage
- Integrate domestic and country-based strategies into a single coordinated global strategy
- Take full advantage of the globalization potential of the industry
This step defines the specific strategies to be globalized and the level to which those strategies should be globalized. The level to which your company globalizes its strategies is effectively limited by:
- The level to which the globalization forces have globalized your industry
- The ability of your company to implement new globalized strategies
- The level to which the strategies of your competitors are being globalized
The preemptive use of specific or sets of globalized strategies can have a significant impact on your success in the global market and accelerate your movement toward a position of global competitive advantage.
The following steps will assess the key global strategies that need to be matched with your industry’s globalization drivers and the level to which those strategies need to be globalized in order to be in balance with the globalizing forces.
Apply Country Presence Strategies
The country presence strategies determine the country markets in which your company decides to conduct business.
The country markets to consider will likely be those in which major strategic players are represented – countries with strategic buyers, strategic market segments, strategic competitors, as well as the strategic country markets. For example, a company that supplies the fast food industry may decide to have a presence in all country markets with a significant representation of this global market segment.
Long-term considerations in determining country presence might include targeting countries that will represent a significant share of the global market for your product and achieving a workable balance for the geographic spread of sales in the total market. Applying the country presence strategy may lead to the creation of synergies with specific types of global strategic players.
The country presence strategies are:
- Buyers. Establish a presence in countries where strategic buyers are present.
- Market Segments. Establish a presence in countries where strategic market segments are present.
- Country Markets. Establish a presence in strategic country markets.
- Competitors. Establish a presence in countries where strategic competitors are present.
Apply Location Strategies
The location strategies consist of the placement of specific value-added activities that will maximally contribute to the reduction of costs, improvement of quality, and increase in competitiveness.
Each activity in the value chain needs to be located in the country market where it is most appropriately conducted, is most effectively integrated into the global value-added activity, where it can best achieve the goals of the global business, and where it can still serve the needs of the target country markets. For example, an aspect of your company’s R&D activity might be located in the home market of one of your strategic competitors as a means to maintaining a heightened awareness of the competitor’s newest product innovations or its state-of-the-art technologies. Your company may decide to locate a warehouse and inventory in markets with a global market segment presence to better serve customers in that segment.
The location strategies are:
- R&D and Innovation. Locate in countries where there is significant R&D and innovation taking place in the company’s product line.
- Purchasing. Locate in countries where the company can maximize cost reductions and other factors in the purchasing of input materials and services.
- Manufacturing. Locate in countries where the company can maximize cost reductions and most efficiently and effectively supply its customers.
- Sales & Profits. Locate in countries where a local presence will increase the company’s sales and profits.
- Distribution. Locate in countries where the company can more effectively and efficiently serve its customers.
Apply Product Strategies
The product strategies will be a response to the global forces that open the opportunity to apply product and other relevant standardization strategies on a global basis.
Product strategies can lead to lower production costs, improved product and service quality, and enhanced customer preference on a global basis. This can be achieved through the standardization of the core product and other product features. A globalized product might be composed of globally standardized components at its core but modified in other ways (e.g., color) to adapt to the needs and preferences of specific markets.
Use the Product Strategies worksheet (8C3) for this step. First, check each of the globalization forces you determined to have a high degree of impact on your industry.
Examples of product strategies include the following:
- Product Core. Standardize the core components of a product and, if necessary, modify it in other minor ways to adapt to the needs and preferences in a specific market.
- Products Offered. Standardize the products offered with a core mix of products offered to all markets and, if necessary, supplement the mix with unique products to meet the needs of specific markets.
- Brand Elements. Standardize the brand elements of the product across all markets.
- Positioning. Standardize the positioning of a product across all markets.
Apply Marketing & Sales Strategies
Your company can match the standardization of marketing and sales strategies with globalizing forces and other globalized strategies by moving toward a uniform set of marketing and sales strategies across marketing segments and country markets.
To the extent that the marketing and sales strategies can be standardized, your company may lower costs and improve overall effectiveness. Two aspects of the marketing mix that may be considered for standardization are advertising and promotions. The organization and standardization of sales and distribution strategies will be dependent on the degree to which various forces have been globalized. A product for which there are common buyer needs and globally attended industry trade shows, for example, would lend itself to standardization.
Trade agreements, similarities in country laws, and other common trade forces can lead to standardization of many policies and, thus, lower the cost of doing business in many markets.
Marketing and sales strategies your company might consider include:
- Advertising Elements. Standardize the advertising elements with a uniform mix of content across all markets with adjustments to meet the needs and preferences of specific markets.
- Promotions. Standardize the promotions with a uniform mix of content across all markets with adjustments to meet the needs and preferences of specific markets.
- Sales Programs. Standardize the sales program with a uniform mix of content across all markets with adjustments to meet the needs of specific markets.
- Marketing Channels. Standardize the channels through which the marketing program is implemented across all markets to the maximum extent possible.
- Policies. Standardize policies, including price and terms, across market segments and country markets.
Apply Competitive Strategies
The globalization of competitive strategies utilizes various types of competitive moves, depending on market and competitor circumstances, and coordinates those strategies into an integrated and unified global strategy. Using one of these strategies, your company might confront a competitor in one market and avoid that competitor in another market based on the situation in each of the markets.
Three types of competitive strategies may be considered are:
- Country Market Subsidization. Use profits from one country market to subsidize the startup of operations in a new country market.
- Attack/Counter Attack. When a competitor attacks your company in a market where you are weak, use a counter attack against that competitor in a country market in which your company has a strong position.
- Avoid/Cooperate. Use a combination of avoiding and cooperating with competitors in specific country markets in order to minimize head-to-head competition with a stronger competitor.
Balancing Globalizing Forces & Strategies
The following are examples of how the globalizing forces which are determined to be high in your industry might be matched and balanced with selected globalized strategies described above.
Player Forces
- If the Strategic Buyers Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Buyers, Product Core, Products Offered, Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, and Marketing Channels.
- If the Strategic Market Segments Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Buyers, Product Core, Products Offered, Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, and Marketing Channels.
- If the Strategic Country Markets Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Buyers, R&D/Innovation, Sales & Profits, Distribution, Product Core, Products Offered, Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, Marketing Channels, and Country Market Subsidization.
- If the Strategic Competitors Force score is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Competitors, R&D/Innovation, Country Market Subsidization, Attack/Counter Attack, and Avoid/Cooperate Strategies.
Market Forces
- If the Shared Buyer Needs Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Product Core, Products Offered, Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, Policies.
- If the Global Distribution Channels Force score is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Product Core, Products Offered, Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, Marketing Channels, Policies.
- If the Global Marketing Elements & Channels Force score is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, Marketing Channels, Policies.
Firm Forces
- If the Global Economies of Scale Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Product Core, and Products Offered.
- If the Low Shipping Cost Force score is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Purchasing and Manufacturing.
- If the High Product Development Costs Force score is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Purchasing and Manufacturing.
Trade Forces
- If the Similar Product Compliance Requirements Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Product Core, and Products Offered.
- If the Low Trade Barriers Force is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Product Core, Products Offered.
- If the High Export of Production Force score is determined to be a high globalizing force, then consider responding with one or more of the following strategies: Buyers, Market Segments, Country Markets, Product Core, Products Offered, Brand Elements, Positioning, Advertising Elements, Promotions, Sales Programs, Marketing Channels, Policies, Country Market Subsidization, Attack/Counter Attack, Avoid/Cooperate.
Next Step. Developing a Globalized Strategic Profile.
Reference. FasTrack Export Step-by-Step Process, pages 386-396. www.FasTrackGlobalizer.com
Contact Tony.Kramer@FasTrackGlobalizer.com for more information.
