We presently live in a world where there are seemingly no barriers among countries in terms of trade. Many economies have truly benefited from international trade as they continue to pursue global strategies in gaining competitive advantage. Without a doubt, strategic management has a big role in the global market, especially in giving countries, industries, and businesses the required competitive advantage to stand high above the others. This simply emphasizes the importance of creating a successful global strategy as a result of having a sound understanding of the nature of different global industries, as well as the forces that drive global competition.
Competitive advantage can be gained through the development of a well-designed global strategy. Competitive advantage can arise from many different factors including efficiency, strategy, risk, learning, and reputation. Market efficiency can give rise to competitive advantage through having economies of scale due to more access to customers and markets. The exploitation of the resources of another country, such as labor and raw materials, can also give a certain country competitive advantage. Market efficiency is also characterized by extended product life cycles and operational flexibility which often leads to the achievement of a competitive advantage rooted in a well-founded global strategy.
Strategic competitive advantage, risk management, the broadening of learning opportunities, and reputation and brand identification also play important parts in the development and implementation of global strategy. Taking all these into account, strategic management can be understood as the development of strategic objectives in terms of efficiency, flexibility, innovation, and learning, and the efficient and effective use of national differences, economies of scale, and economies of scope.
Industries, business, and companies who plan on entering the global market must first conduct an analysis of their potential for globalization. The potential for globalization can be arrived at through studying cost drivers, customer drivers, competitive drivers, and government drivers. These drivers help determine the aptitude of an industry, business or company for globalization. These should be reviewed and evaluated so that the necessary strategies can be developed, whether an industry, company or business is ready for globalization or if it still needs to improve in its local performance.
Global strategic management not only calls for an analysis of competitive advantages, it also requires a review of comparative advantages. Competitive advantage refers to the ability of a firm or an industry to transform raw materials or inputs into services and goods to realize sustained maximum profits. Comparative advantage, on the other hand, refers to the factor endowments and created endowments of specific regions.
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