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Global Strategic Management During the last half of the twentieth century many barriers to international trade fell and a wave of firms began pursuing global strategies to gain a competitive advantage However some industries benefit more from globalisation than does others and some nations have a comparative advantage over other nations in certain industries To create a successful global strategy managers first must understand the nature of global industries and the dynamics of global competition Sources of Competitive Advantage from a Global Strategy A well-designed global strategy can help a firm to gain a competitive advantage This advantage can arise from the following sources Efficiency Economies of scale from access to more customers and markets Exploit another countrys resources - labour raw materials Extend the product life cycle - older products can be sold in lesser developed countries Operational flexibility - shift production as costs exchange rates etc change over time Strategic First mover advantage and only provider of a product to a market Cross subsidisation between countries Transfer price Risk Diversify macroeconomic risks business cycles not perfectly correlated among countries Diversify operational risks labour problems earthquakes wars Learning Broaden learning opportunities due to diversity of operating environments Reputation Crossover customers between markets - reputation and brand identification Sumantra Ghoshal of INSEAD proposed a framework comprising three categories of strategic objectives and three sources of advantage that can be used to achieve them Assembling these into a matrix results in the following framework The Nature of Competitive Advantage in Global Industries A global industry can be defined as An industry in which firms must compete in all world markets of that product in order to survive An industry in which a firms competitive advantage depends on economies of scale and economies of scope gained across markets Some industries are more suited for globalisation than are others The following drivers determine an industrys globalisation potential 1Cost Drivers Location of strategic resources Differences in
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