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MSU prof on total global strategy

Tuesday 24 January, 2012

While in Mumbai for a week, I saw a presentation given by Tomas Hult, the director of the International Business Center @ Michigan State University’s Broad School of Business on how to devise a total global strategy.  He also happens to have authored a book by the same title.  He spoke @ the consulting session of the Academic Conclave @ S.P. Jain Institute of Management & Research.

Hult & his co-author G.S. Yip queried 440 industries to determine the differences & universal factors to success in international business.  They found cross-border business growing exponentially in terms of exports, etc.  However 140 countries of the world still need to improve their infrastructure to compete globally.  Certain industries have become global, such as electronics, while others have not, such as furniture.  The new landscape of the world economy equates 1/2 of the economic power in the world to countries & the other half to MNC’s.  Disney & Sony introduce new products every 3 & 20 minutes respectively.  HP earns 70% of its revenues from products introduced in the last year.

Here are the components of Total Global Strategy:

  1. develop 1 core business strategy
  2. internationalize that strategy by country
  3. globalize that strategy across countries

Hult creates a triangle to align globalization drivers for industry, strategy, & the organization.  Markets, competition, cost differences, & government policies all impact upon industry drivers.  companies need to pick strategic markets in which to compete, not always determined by market criteria, such as Finland when Nokia was strong. E-business has significantly increased the potential to reach globla markets.  The key tradeoff is between global consistency & local responsiveness.  India leverages it’s scale while the US balances both.

Which markets you choose, which products/services to offer where, where you locate specific operations, & how you go to market are all strategic levers.  Global market participation depends on strategic importance, growth potential, & synergies with other businesses.  In the hexagon of competitive advantages, a firm needs to have at least 1 of the 6 to be successful.  The best global products/services are those that are designed to be global & that maximize the amount of common global care.  In locating global activities by country, companies still need some redundancy to protect against unforeseen circumstances, but balance this against multilocal value chains with too much redundancy.

Global marketing addresses variations in content & coverage.  For example, Swedes don’t drink Coca Cola in the morning, but Americans do.  Marketers need to evaluate benefits vs. flexibility & degree of uniformity.

Organizing the structure, management processes, people, & culture to build a global organization can’t be successful today if the organization has a board of directors from just 1 country.  Ikea is a rare exception.

Other important issues to address are regional strategies, measurements, & global strategy analysis of plotting actual results against their targets.  Templates & scorecards are given in the book.

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