Technology allows businesses to be global operations, and even the smallest business can have clients in every time zone. Different countries and different cultures may have different preferences, however; what sells well in one place may never sell in another place. While some global companies tailor different product offerings for different geographic locations, others pursue a global strategy, selling the same product worldwide. Coca-Cola and Apple use a global strategy; a Coke and an iPod are the same everywhere in the world. A global strategy has advantages and disadvantages.
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Efficiency
The biggest advantage of a global strategy is that it enables a company to leverage economies of scale. When it sells the same product worldwide, it can buy its raw materials in bulk, potentially saving the company hundreds of thousands of dollars per year. Economies of scale can save a company money in labor, packaging and marketing material costs, too.
Life Cycle
Global strategy also is useful with regard to product life cycle. A company can phase its release of products, introducing older products into newer markets and saving the launch of a product's most recent version for well-developed markets. For example, a laptop company could sell its older-model laptops, particularly unsold, leftover stock, to a less-developed market after it launches a new laptop model. The older model may be outdated by American or European consumer standards of operating speed and random access memory, but the strategy is a way to get rid of old stock as long as it is on par with competition in the less-developed market.
Related Reading: Advantages & Disadvantages of Using Computer Technology in Decision Making
Macroeconomic Risk
The major downside to pursuing a global strategy is that a one-size-fits-all approach does not work in all markets. Some markets have particular tastes or are more sensitive to pricing. Moreover, a company's products invariably are more popular in one country than another country; deciding in which country a product will be popular is a problem. If a company estimates incorrectly, the mistake could cost it a fortune.
Operational Risk
A global strategy includes an operational risk. If employment laws or corporation laws change in the country where a company manufactures its global product, then that could ruin everything. Likewise, if a war breaks out, employees go on strike or a natural disaster occurs where a company manufactures its global product, then it may not be able to fulfill its obligations.
Technology allows businesses to be global operations, and even the smallest business can have clients in every time zone. Different countries and different cultures may have different preferences, however; what sells well in one place may never sell in another place. While some global companies tailor different product offerings for different geographic locations, others pursue a global strategy, selling the same product worldwide. Coca-Cola and Apple use a global strategy; a Coke and an iPod are the same everywhere in the world. A global strategy has advantages and disadvantages.
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Get APMP certified
Go through CSK's online tutorials: eLearning modules and webinars!www.cskmanagement.com
Efficiency
The biggest advantage of a global strategy is that it enables a company to leverage economies of scale. When it sells the same product worldwide, it can buy its raw materials in bulk, potentially saving the company hundreds of thousands of dollars per year. Economies of scale can save a company money in labor, packaging and marketing material costs, too.
Life Cycle
Global strategy also is useful with regard to product life cycle. A company can phase its release of products, introducing older products into newer markets and saving the launch of a product's most recent version for well-developed markets. For example, a laptop company could sell its older-model laptops, particularly unsold, leftover stock, to a less-developed market after it launches a new laptop model. The older model may be outdated by American or European consumer standards of operating speed and random access memory, but the strategy is a way to get rid of old stock as long as it is on par with competition in the less-developed market.
Related Reading: Advantages & Disadvantages of Using Computer Technology in Decision Making
Macroeconomic Risk
The major downside to pursuing a global strategy is that a one-size-fits-all approach does not work in all markets. Some markets have particular tastes or are more sensitive to pricing. Moreover, a company's products invariably are more popular in one country than another country; deciding in which country a product will be popular is a problem. If a company estimates incorrectly, the mistake could cost it a fortune.
Operational Risk
A global strategy includes an operational risk. If employment laws or corporation laws change in the country where a company manufactures its global product, then that could ruin everything. Likewise, if a war breaks out, employees go on strike or a natural disaster occurs where a company manufactures its global product, then it may not be able to fulfill its obligations.
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