Bartlelt and Ghostal (1989) mention four basic models of globalisation strategy:
1. Multinational strategy
2. International strategy
3. Transnational strategy
Multinational Strategy :
Under this, a firm’s subsidiaries in the foreign countries enjoy strong local autonomy of business decision-making.
Global Strategy :
Under this, the business is centrally governed in a strong manner so as to reap economies of scale through global manufacturing, standardised procedure and so on.
The parent company deploys innovations and allocation of resources rapidly through foreign direct investment in different nations. The firm can maintain a differentiation strategy under this.
Under this multinational, global and international strategies are rationally combined. It enables the firm to simultaneously achieve local flexibility while rapidly absorbing and differing parent company’s innovations. Transnational strategy implies seeking global integration, operational efficiency and excellency of performance on a continuous basis.
1. By choosing appropriate global strategies a business firm can locate its different operations in view of the consumer market, low-cost labour supply and availability of raw materials and other productive resources. For example, a country like India mav choose on this count for software and R &D work because of easy availability of highly skilled technocrats of relatively lower salaries.
2. There are certain high-investment industries (e.g., commercial aircraft, pharmaceutical, etc.) in which minimum efficiency scale is desirable and the production costs recovery depends on worldwide operations.
3. Globalisation process creates interlinked and interdependent economies in the international business environment.
4. Globalisation is propelled by lowering or removal of trade and tariff barriers, thus, opening up of the national economies.
5. International global competition demands an outlook of new perspectives. A global firm needs to examine and audit its own competence as well as the position of its key suppliers, and present and prospective competitions.
6. Globalisation compels formation of regional gloche in forminy strategic alliances to protect the countries from economical and technological threats and levering their respective competitive advantage.
7. NAFTA (North American Free Trade Area) or European Union (EU) lead to huge market- blue posing a threat to disrupt world power strategies of nations outside it.
8. The signposts or globalisation have effectuated:
- Global consumers
- Global markets
- Shorter life cycles for new technologies and products
- Homogenisation of markets
- Decreasing trade barriers and increasing openness
- Decreasing costs of transportation and communication.
9. Such dynamism of global economy has made it imperative for the business firms to adopt a global outlook and approach in its operations.
10. Globalisation implies increasing global dependency of the nations when many of the items consumers need and want are produced in different countries rather than locally.
11. Increasing foreign trade in a global economy leads to improved political relations. Old wisdom says: “Countries that trade with one another seldom have wars with one another.”