Strategic Orientations and Global Business Development

Development of a Global Corporation

Minimal effect on the existing management orientation or on existing product lines.
Requires little change in management or operation.
Characterized by direct investment in overseas operations, including manufacturing plants.
The most involved level is characterized by a substantial increase in foreign investment, with foreign assets comprising a significant portion of total assets.

An ethnocentric orientation believes that the values and priorities of the parent organization should guide the strategic decision-making of all its operations.
A polycentric orientation means the culture of the country in which a strategy is to be implemented is allowed to dominate the decision-making process.
A regiocentric orientation exists when the parent attempts to blend its own predispositions with those of the region under consideration, thereby arriving at a region-sensitive compromise.
A corporation with a geocentric orientation adopts a global systems approach to strategic decision-making, thereby emphasizing global integration.

The need for customized products to meet the tastes or preferences of local customers.
- Fragmentation of the industry, with many competitors in each national market.
- A lack of economies of scale in the functional activities of firms in the industry.
- Distribution channels unique to each country.
- A low technological dependence of subsidiaries on R&D provided by the global firm.

Economies of scale in the functional activities of firms in the industry.
- A high level of R&D expenditures on products that require more than one market to recover development costs.
- The presence of homogeneous product needs across markets, which reduces the requirement of customizing the product for each market.
- The presence of a small group of global competitors.
- A low level of trade regulation and of regulation regarding foreign direct investment.

Multiple political, economic, legal, social, and cultural environments, as well as various rates of change. Globals are restricted in their selection of competitive strategies by various regional blocs and economic integrations.
- Interactions between the national and foreign environments are complex.
- Geographic separation, cultural and national differences, and variations in business practices all tend to make communication and control efforts difficult.
- Globals face extreme competition.

An opportunity is a major *favorable* situation in a firm’s environment.
A threat is a major unfavorable situation in a firm’s environment.
A strength is a resource or capability controlled by or available to a firm that gives it an advantage relative to its competitors in meeting the needs of the customers it serves.
A weakness is a limitation or deficiency in one or more of a firm’s resources or capabilities relative to its competitors that creates a disadvantage in effectively meeting customer needs.

A SWOT analysis can overemphasize internal strengths and downplay external threats.
A SWOT analysis can be static and can risk ignoring changing circumstances.
A SWOT analysis can overemphasize a single strength or element of strategy.
A strength is not necessarily a source of competitive advantage.