Strategic Operations in the Global Environment

All organizations interact with their environments in crafting strategies and in generating performance; the complexity of the Global Business Environment makes this interaction particularly critical to the global firm. Understanding the GBE includes concern for the status of the global economy and international capital markets, the effect of political agreements or strife, cultural and institutional differences, levels of technological development, tax minimization, and other global and regional issues as they affect strategy, strategic management, or performance of organizations. Specific characteristics of multiple local environments are equally important firms selecting particular locations for expanding markets or resource bases, setting up offshore operations, and diversifying operating risks.Concerns about cultural, institutional, geographical, economic, technological, and development distance affect decisions about where and how to sell products, source inputs and resources, and establish operations. The rise of very large emerging market countries emphasizes the importance of understanding locational context to pursuing scale economies in both production and market-seeking strategies. Offshore production of goods and now services by highly skilled, but poorly paid, workers has energized intense political discussion as well as new visions for global sourcing strategies and billions of new customers have changed market perceptions at a fundamental level.

How do exogenous conditions interact with strategic decisions and organizational characteristics to drive performance? How do global business organizations respond to changing political, economic, institutional, or cultural conditions and how do such responses affect performance? How do global organizations deal with the demands of multiple stakeholder groups in multiple locations? When and how do the actions of global firms affect the global business environment? How do variations in the GBE over time and across locations drive and respond to dynamic aspects of global strategies? How do locational differences in culture, institutions, and economic development impact entry strategies, transnational integration, and performance? What about liabilities of foreignness? Clusters? Partners?


Global Strategy and Performance

The essence of global strategic management is an expansive world vision that considers the possibilities of every location as a market and as a source of competitive advantage, both alone and when integrated with the rest of the firm. Global organizations must craft strategies and processes for international expansion, diversification, and integration to develop, protect, and exploit their resources and capabilities.Concerns for both strategy processes and strategic goals and objectives are deepened in the global setting. Performance is the ability of organizations to attain their goals, a challenging concept in any setting, but particularly challenging in the global setting. Performance goals, resources and capabilities, market characteristics, and institutional limitations vary from place to place.

How has global strategy co-evolved with globalizing markets? How has the balance of global integration and local adaptation affected exploration and exploitation in a globalizing economy? Have the drivers of global diversification changed? Are growth strategies still dominant in global markets? What are the drivers of performance for global organizations?  How is performance best defined, measured, and delimited for different actions in the international setting? What sorts of new strategies and organizational forms will emerge in the new global economy with its focus on emerging and less developed markets?

Management of the Global Organization

An important aspect of international strategic management involves selecting and developing the structure and functioning of global firms and their component organizations, including organizational architecture, management systems, managing resources and capabilities, global networking of subsidiary organizations, and managing operational strategies and information sharing in organizations engaged in substantial operations across national borders or located in multiple national environments. Non-market strategies such as corporate social responsibilities in host nations or on a global basis are developing concerns and potential sources of competitive advantage for global organizations.

What strategic imperatives will drive new forms of global organization in the 21st Century? Multinational firms are described frequently as network organizations – what does this mean for internal management processes, innovation, and collaboration across borders? What are the sources of stability and growth of global organizations, how are these forces managed, and how do they affect performance? How do non-market strategies best complement market strategies? As organizational structure is so apparent in global organizations, what can we learn from these firms about theories of strategic management of organizations in general? How do global flagship firms best motivate, guide, and reward network partners for supporting their goals? How are networks used effectively to generate access to superior resources and capabilities on the part of global firms? What is different about strategic management for emerging markets with their large numbers and large income disparities?

Global Strategy and Global Society

Global organizations are social actors as well as economic entities. Global strategies ignore this at their peril – an increasingly so in a world engaged in multiple societal and technological transitions. Global strategy should ask how the international business organization can be a responsible player in its many national settings as well as on a global scale. Global capitalism has lifted many societies and individuals out of abject poverty, but has left many others behind. Increasingly free trade and investment has not “raised all boats”. Global corporations arbitraging legal and regulatory regimes in the search for growth at any cost are degrading the environment at an unsustainable pace and simply denying responsibility. Corrupt behavior is destroying local societies, attacking the common interest, and destroying corporations and governments. However, not all global companies follow these cynical and destructive paths. Identifying the societal costs of unchecked self interest, understanding strategies that turn in other directions, and testing the performance outcomes for socially responsible global business organizations are matters of great concern for us all and for Global Strategy Journal.

What are the consequences of responsible vs. irresponsible behavior? Does crime – or at least legally and ethically questionable corporate behavior – pay for global firms? How and why should global business firms pursue non-economic strategies? Businesses and their owners and managers are stakeholders in the global commons – the global environment, our global society, our collective future. What are their responsibilities to society in general and to the societies in which they create and market economic value?

Global Innovation and Knowledge Strategies

Managing innovation and knowledge transfer is clearly an aspect of strategic management in any setting, but the importance of these activities to the modern global multi-business firm suggests that such strategies merit specific emphasis.Current models see the global enterprise primarily as an arbitrageur and combiner of knowledge derived from multiple sites and brought together in some centralized process.Concerns for intellectual property development and protection, multinational and global R&D, moving knowledge across borders and distance, and the global architecture of innovation and application of knowledge are core concerns.

How do global firms access knowledge that is held in multiple locations? How can unique knowledge be moved effectively and efficiently through intra- and extra-organizational networks? What is the function of the headquarters in a knowledge-driven strategy? How are acquisitions and alliances best used to access and exploit knowledge resources? What is organizational learning in global multi-business firms? Innovation is often tied to the “born global” concept – is this justified and economically advantageous? ? How will “reverse learning” from emerging market countries into the established industrial economies engender fundamental change and force development of new strategies in these countries?

Organizing the Global Enterprise

In order to pursue their strategic objectives, global organizations must access a wide range of resources, capabilities, brands, markets, and technologies from world-wide locations. This process may involve cross-border mergers and acquisitions, international alliances and joint ventures, formal and informal networking, internal development, and offshored/outsourced value-adding activities. The global firm may function as the leader or flagship of its network, but it still must focus on communication and collaboration rather than the residual command and control of internalized structures.

How do multinational firms identify and access resources and build capabilities in a diverse global environment? What roles do assembly strategies such as acquisitions, alliances, or licensing play in the formulation and execution of corporate, business, and functional strategies? How do assembly capabilities influence the structure and performance of global firms? How have cooperative networks, as opposed to internal controls, changed the nature of transnational competition? How can international sourcing be used to build an innovative organization?