Project

Strategic Management Planning for Domestic and Global Competition

The companies would adopt globalization strategies when seeking to strengthen their position in the global market by increasing their market share and brand awareness. The process of a firm going global begins with export-import activity, then minimal change in operation or management, then direct overseas investment to be followed by the most involved phase of substantially increasing foreign investment. Therefore, companies globalize so as to benefit from technologies and industries from abroad. These reasons have been categorized as proactive or reactive or both by Pearce and Robinson (2012). Proactive reasons for globalization are the reasons that a company initiates and later on followed by other players in the industry. These reasons include the search for additional resources, economies of scale, power and prestige, synergy, attraction by incentives, need for new and expanded markets, protection of the home market and to exploit firm-specific advantages. On the other hand, companies could be driven by reactive reasons to globalize where a trend set by a competitor would be adopted. The reactive reasons for firms going global include trade barriers, international customer demand, international competition, chance, and regulation. In spite of both reasons being practiced in the modern business environment, proactive reasons have been noted to yield more beneficial long-term returns.The four main strategic orientations in global firms as identified by Pearce and Robinson (2012) include ethnocentric, polycentric, regiocentric and geocentric orientations. In ethnocentric orientation, it would be postulated that the priorities and values upheld by the parent organization should inform the strategic decisions adopted for all of its operations.As such, plans to be adopted by the overseas markets would be developed at the home office using procedures and policies similar to those employed in the domestic market. Such firms would, therefore, have an international division or export department. When the culture of the country where the strategy would be implemented dominates the decision-making process, a polycentric orientation would be said to have applied. The domineering philosophy would be that the local techniques and personnel would be best suited to deal with the local market. Therefore, each subsidiary established in the overseas markets would operate independently with its own strategies. Thirdly, a regiocentric orientation perceives each region as a different market. It applies where the parent company attempts to blend its predispositions together with those of the region where the strategy would be implemented so as to reach a region-sensitive compromise. Objectives would be negotiated between the headquarters and the regional headquarters and also between this regional headquarters and its subsidiaries. Finally, a geocentric orientation would adopt an approach of global systems in the process of decision making with the aim of achieving global integration. This perception of the entire world as one market enhances the development of standardized strategies that would project a uniform image for the products of the company and the company itself.

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