Strategic Management in a Global Business Environment
Strategic management in a global business environment can be defined as the authoritative, large-scale plans and actions developed by a company’s managerial leaders to advance owners’ interests. This is done with a view of the type of resources available and an evaluation of the environment within which the organization operates. To them, the global dimension adds complexity because of cultural, legal, and economic variations across the world.
Understanding the Global Environment
To operate in the international business environment, individuals need to comprehend the differences in cultures, politics, economy, and laws. This calls for a need to undertake market analysis and research to discover potential opportunities and threats within different markets. For example, it would require the application of different strategies in a certain country depending on consumer preferences and regulations in that country. These require the firms to conduct an environmental analysis and the business organization’s SWOT analysis to obtain relevant information for strategizing.
Strategic Formula
A global strategy entails identifying the mission, and the goals of the organization, and then figuring out how to achieve these goals. The management adopted strategies such as exporting, licensing, joint ventures, and establishing wholly owned subsidiaries as important strategic decisions. Every one of them has its benefits and shortcomings. For example, the joint venture allows for providing local experience and sharing risks while possessing full control in a wholly owned subsidiary requires a huge amount of investment.
Porter’s Generic Strategies are typically used in a global setting and include cost leadership, differentiation, and focus strategies. IKEA has been a classic example of companies that have effectively implemented the cost leadership strategy by standardizing their products and thereby achieving economies of scale. On the other hand, status brands such as Louis Vuitton try to create differentiation through the quality and exclusivity of their products.
Strategic Implementation
Global strategy management can be a complex process that needs to be well-planned and managed. This entails ensuring that organizational structure, culture, and business processes are aligned with the strategy. Some of the common issues that companies encounter when operating in multiple areas include coordination and Control. Therefore, leadership is important in the management of people and in facilitating coordination among the various subunits of the organization to achieve organizational goals.
Human resource management has a significant role in the process of strategy execution. Companies must attract, develop, and maintain employees with global skills. Cultural training and cultural orientation programs to enhance the global readiness of employees for assignments in global contexts.
Monitoring and Control
It means that constant monitoring and supervision are required to assess whether the strategy remains effective in the context of the global environment. Performance measures include KPIs and BSCs in measuring performance and progress. Management must be able to act quickly and adapt to changes in the international business environment including changes in economic systems, technology, and competitor actions. To make necessary adjustments and improvements the organisation can use strategic reviews and feedback loops.
