Managing Global Strategy

Developing an Effective Strategy in International Business

William H. A. Johnson

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000201475
• Edition: 1
• Topic: Business
• Subtopic: International Business
• Index: Business

This concise, practical textbook clearly explains how to go about developing and implementing a global strategy for any organization, from Born Global start-ups, to more established large companies struggling to manage their global extensions, to nonprofits including non-governmental organizations (NGOs) and charities.

Written clearly and concisely, this volume brings together multiple tools, models and frameworks into one resource to guide a successful global strategy development and implementation process. Issues covered include:

• Internal and external environmental analyses;

• Cross-cultural communication;

• Structural considerations;

• Leadership and motivation;

• Foreign market entry, mergers, alliances and acquisitions.

Upper-level undergraduate and postgraduate students of global business will appreciate this accessible guide to a highly complex endeavor, as will practicing managers in global organizations seeking a ready reference. Instructors will also value the outline of a semester-long project keyed to the book, developed and tested by the author.

PART 1

Setting the Context

1Introduction to Strategy in a Global Context

Learning Objectives

By the end of this chapter, you will:

•Understand what is meant by strategy and, in particular, strategy in a global context;

•Appreciate what the external aspects of strategy are and how they are useful in developing strategy;

•Appreciate what the internal aspects of strategy are and how they are useful in developing strategy;

•Comprehend how strategy can be used to manage the process of globalization for an organization.

Practice Objectives

By the end of this chapter, you will be able to:

•Define the basic aspects of strategy for an organization that is either for-profit or not-for-profit;

•Define the hierarchy of strategies within a complex organization;

•Identify an existing public company and describe its strategy and global perspective.

Imagine that you are an entrepreneur who has successfully developed a new product that you believe can be sold worldwide. For expository purposes, let’s assume that it’s a new software app that with the power of the internet and social media can be marketed and sold anywhere in the world. As such, you want to make sure that you can benefit from as much exposure as possible, and you decide to take your newly formed company global. That is, you are the proud owner/manager of a Born Global company—one that is simultaneously domestic and foreign right from the time of its inception. So, what are the management issues that you need to understand to be successful?

This primer is about answering that question and explaining how to go about preparing your company for success. Notably, it’s also about preparing you and your company team for the issues that you will encounter along your journey towards implementing a successful global strategy. It is important to point out that, before we get to the specific global/international issues we will confront, we must first understand a little about the basic elements and concepts of strategy. (We’ll get to defining strategy a little later.)

Many of these issues will be appropriate for larger, more established companies as well—such as Fortune 500 giants Walmart and Amazon. The same goes for not-for-profit organizations. As we will see throughout the book, context is important for understanding what things need to be focused on and what things are less important. However, in the end, the basic frameworks that have been useful for strategy and management in organizations can be applied in almost all of the situations you encounter. It is just the specific details that may be different. For example, a not-for-profit organization will still need to define its “reason for existing” and develop a strategy for sustaining itself, just as a for-profit firm must do. The major difference is the lack of a profit motive being paramount to the success of the not-for-profit firm.

Here are three different examples of organizations that are of interest to us. We can apply each of the tools, models and frameworks discussed in this book for each organizational situation. The first example is a situation similar to the company mentioned in the first paragraph above—the small entrepreneurial Born Global company. The second example is of larger, more established companies such as the Walmarts and Amazons of the world, which may already have extensive global reach but are still struggling with managing those extensions properly. Finally, because not all organizations that exist and perform important duties are for-profit, the last example are situations involving not-for-profit organizations, like non-governmental organizations such as Doctors Without Borders and the Red Cross, or charitable organizations like the United Way.

Note that, throughout the book, the terms “company”, “firm”, “enterprise” and “organization” are meant to be similar in nature but with subtle differences. The first three terms are consistent with for-profits and are specific in nature. The latter term is more general and is useful for also including not-for-profits and governmental entities. As such, I use “organization” when referring to the general concept of an entity managed by managers (whether not-for-profit or for-profit) and the other terms when being more specific.

The Normative Imperative

Many of the frameworks, models, ideas, etc. that are useful in managing organizations are based on various perspectives of “viewing” the way things should be done. This is a normative approach: It’s about how things “should be” done based on logic and experience (i.e., of situations that appear to lead to a higher probability of success). The important thing to note is that this is not necessarily how things are actually done in practice. That is, based on careful analysis, we can determine what should be done for an organization and offer a strategy as the basis for action. This does not mean that the organization will enact that strategy nor does it mean that things will not change to create a need for a different strategy. This explains how some successful companies of the past can often become examples of what not to do when the (environmental) context of their success changes.

Strategy is complex and enacted over time (usually a long time)—so it is difficult to see how everything fits together and creates success at any single point in time. As shown in the matrix of Table 1.1, while strategy can lead to successful outcomes for an organization through the logical implementation of its premises, luck can also play a role in some successful outcomes. However, normatively (that is, a logical approach based on experience and practice), long-term success is possible only with an appropriate strategy that links external aspects of the (competitive) environment with the organization’s internal resources and capabilities to create and manage a efficient and determined effort. So, let’s look at these concepts in more detail …

Table 1.1 Contingencies towards success

		/----------------Strategy----------------\
		Well done	Well done	Poorly done	Poorly done
Implementation	Well done	Ultimate success	Temporary setback	Temporary success	Turnaround candidate
	Poorly done	Temporary success	Difficult to succeed	House of cards	Total failure
		Good	Bad	Good	Bad
		\------------------Luck------------------/

Levels of Management

There are two basic levels of management issues for any organization, and we will follow this logic throughout this book. The first is the macro level. As the name implies, it deals with issues that are large in nature and general to the organization. As such, dealing with macro issues is also sometimes called general management (hence the term “general manager” as the CEO, usually used for smaller firms). Macro issues are at the strategic level and may include such questions as these: In what businesses/practices is the organization going to be involved; how will it manage external factors towards success in those businesses/practices? Thus, the macro level is about managing the main goals of the organization and the “general” methods of obtaining them.

The second basic level of management for any organization is the micro level. This tends to be at the operational perspective and tends to follow from the macro issues of strategy in terms of implementation. Micro-level issues involve the management of people and the structural framework of an organization—generally, human resources (HR) and organizational structure issues. Thus, the micro level is about implementing the macro strategy, and therefore (while ideally based on that strategy) is operational in nature.

These two levels are conceptual frameworks for studying the complex relationships within the globalized organization. (That is, they help us “slice and dice”, or compartmentalize, the organization into parts so that we can study it and more easily understand what’s going on.) In general, the macro issues logically come first in the creation and communication of effective strategy, which we will, naturally, study...