Effects of Globalisation on Strategic Management

This report evaluates the way globalization has influenced market-based strategies at the global level. It discusses the effects of globalisation on strategic management, the role of learning organizations, the use of Wheelen and Hunger model, and theories associated with strategic management in the global environment.

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BUSINESS ENVIRONMENT AND STRATEGIC MANAGEMENT
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Executive Summary
Globalisation has been effectively creating several opportunities for knowledge sharing,
technology, social morals-ethics along with behavioural norms in addition to promoting growth
at diverse levels that involves persons, organisations, areas along with societies across different
nations and ethnicities. Rapid globalisation however has been considered as one of the most
prominent aspects of the new millennium, principally as the fast progress of information
technology. Thus, companies operating at global level have been expected to abide by global and
local authoritarian framework, whereas concurrently remaining to a modernized means of
overseeing its production regardless of the state of operation. The purpose of the report was to
evaluate the way globalization has influenced market-based strategies at the global level.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Effects of Globalisation on Strategic Management.....................................................................3
Role of learning organizations in Strategic Management............................................................5
Use of Wheelen and Hunger model to a global company...........................................................6
Theories associated with strategic management in the global environment................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

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Introduction
`Globalisation has been regarded as the integration of financial system throughout the world
by resources of trade, financial as well as technological flows with the exchange of technology
and information along with the movement of people, goods and services. Globalisation moreover
corresponds to the plan of approaching international markets through consistent products.
According to Lasserre (2017), Globalisation, is not sufficient as companies require
internationally consistent tactics, universal systems and comprehensive processes in addition to
the capability of capitalizing on profit on a global basis. These factors have thus has considered a
shift towards incorporation and regularity of inclusive business operations in order to generate a
universal integrated strategy. Furthermore, in the view of Intriligator (2017), Globalisation of the
world financial system is the incorporation of economies right through the world by means of
trade, financial flow along with the exchange of technology and information as well as the
movement of people. Although as per Croucher (2018), globalisation appears to be inescapable
to several countries and various initiatives and thus efforts have been made in order to
acclimatize to it with the purpose of taking benefit of the opportunities created from it to develop
their societies and people. The aim of the following report is to evaluate the way globalization
has influenced market-based strategies at the global level.
Discussion
Effects of Globalisation on Strategic Management
Globalisation has been formulating numerous scopes for information distribution,
technology, communal ethics, and behavioural standards as well as supporting development at
diverse levels which involves individuals, organisations, community as well as societies across
different countries and civilization. According to Buckley (2014), globalisation has been

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considered to be inevitable to several countries along with many efforts have been taken in order
to become accustomed to it with aim of of taking the opportunities shaped from it in order to
expand their societies and individuals. However, in current times, Intriligator (2017) has noticed
a rising global concern regarding risky globalisation influence on local and nationalized
development. A range of social actions have thus been instigated in opposition to the pressure of
globalisation, chiefly on budding countries. Survival as well as accomplishment of an
organisation tends to have its occurrence when the organisation generates and preserves
equivalence amid its plans and the environment and further linking its inner potential with its
approach. As per the analysis of Buckley (2014), responsiveness towards globalisation requires
enterprises to modify their strategy in order to align with the environment and further to redesign
their internal capability to match this strategy. If an organisation’s strategy shows incompetence
to align with its environment, then a strategy gap tends to occur. Furthermore, if its internal
competences fail to correspond to its strategy, then a capability gap tend to take place.
Christopher (2016) at this juncture has asserted that it is essential that organisations attain
competence in changing its strategy with environmental transformations and strategically relate
to the means to the particular strategy to endure, thrive and remain relevant. Business enterprises
functioning in dynamic sectors typically show responsiveness towards environmental changes as
well as competitive forces in diverse ways. However, certain advanced current products, expand
and divest, while others utilize methods which guarantee utmost operational efficiency.
Furthermore, according to Real, Roldán and Leal (2014) to reach a competitive benefit, strategy
requires to accentuate on exceptional performance. Operational efficacy though constitutes
utmost significance however shows inadequacy in attaining a sustainable competitive gain. As
transformations in environmental state of affairs characterize the opportunities and challenges of

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an organization, newly developed environment needs the formulation of recently developed
scheme most efficiently suited to successfully contest with modifications. According to Wheelen
et al. (2017), unstable environments have been typically considered as unknown, hurried and
impulsive measures. Globalisation has carried with it certain effects that have eventually made
corporations to develop means of sustaining competitiveness not only in the international market
but in the local market as well. In recent times, firms have been compelled to expand their
merchandise range in order to strategically deal with rivalry and preserve market distribution
also confine any new market segments whereby foreign competitors have the propensity to
exploit (Buckley, 2014).
Role of learning organizations in Strategic Management
Globalisation in recent times has been reflecting the need of firms not only to be
transnational and multilingual and further to operate as multicultural firms. Hence, wide range of
multinationals must recognize, implement and incorporate multicultural facets in their business
developments. Furthermore, comprehensive studies of Buckley (2014) have observed a rising
global ethnicity signifying varying human potentials as well as acceptance. Such a cultural
pattern offers a universal certainty in which co-creation along with modernism in the process of
knowledge-sharing and associations are thriving. The accomplishment of an organisation
depends on the degree of quality as a learning organisation where ethnicity has been optimized in
order to obtain knowledge. Meanwhile, in the view of Real, Roldán and Leal (2014), learning
organisation settings tend to avert international operations managers from encountering risks of
cultural disagreements and further support them to successfully explain and transfer information
from their sites to other vital parts of the company. As comprehensive process of knowledge
sharing and corporate learning have been highly decisive in the general agreement of expatriate

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managers, these managers essentially give to the global knowledge of the firm, which eventually
forms awareness along with inclusive experience for potential managers in organizations.
Christopher (2016) has stated that strategic knowledge in the knowledge organisation be able to
be positioned in altered settings which openly influence the global stratagem and guidelines of
the company. However, according to Wheelen et al. (2017), the determinant aspect in the current
dynamic global competition focuses on the processes to deal with knowledge benefits in the
enterprise. Nevertheless, constructing new facts for distinct principle within the learning
organisation tends to be consequential in developing as well as protecting core ability for the
business. As a result, in the view of Donate and de Pablo (2015), the achievement of companies
in their competitiveness has been chiefly credited to the growth of core competencies during
learning organisation settings.
Use of Wheelen and Hunger model to a global company
Wheelen et al. (2017) have noted that companies functioning in the dynamic market tend
to avoid making any distinction between their local and international strategies. However,
growing number of companies have started to expand sales, promotion, sourcing, production,
human resource and financial strategies of the company outside national borders. Furthermore,
studies of Slavik and Bednár (2014) have revealed that in the international strategy,
entrepreneurs demand the need to form global organization by strategically expanding the
company’s purpose in order to incorporate overseas operations. However, for successful
execution of such an operation the organizations must incorporate definite standards and beliefs
which can be found globally to make the organizational visions and missions. Consequentially,
detailed missions to observe global stakeholder groups, financial developments and markets must
be strategically integrated into the ongoing Strategic Management process. Authors have stated

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that entrepreneurs or leaders must persistently examine global consumers, fiscal trends and
markets and further integrate such information into developing Strategic Management processes
in the organization and in the course of business intelligence.
Entrepreneurs engaged in modern competitive companies necessitate to lead by
corresponding to the principles of employees from the home nation to the personnel in the host
countries with a sincere purpose of incorporating with the values of parent companies and further
to ascertain that every employee is given justifiable opportunities in the recruitment and
dismissal and other human resources process. On the other hand, Dälken (2014) has stated that
organization must consequently act in response to opportunities internationally which may
regularly evolve through the four stages of global development while each comprising its own
implementation challenges. In the first stage of Wheelen and Hunger model, the organization
will be positioned at its domestic stage, whereby it primarily accentuates its performance on
domestic functions but starts to export its products or services as part of a growth strategy
(Wheelen et al., 2017). This stage further focuses on the process through which it exports their
products and services as vital part of a developmental approach or through an export agency or
department. However, in the view of Dälken (2014), during organizational success through the
global growth strategy, companies tend to shift to the international stage that focuses on creating
a worldwide division to deal with sales, promotion and marketing. Marketing strategies programs
at this stage will typically be modified to align with the needs of each local nation.

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Wheelen and Hunger model
Source: (Wheelen et al., 2017)
Furthermore, with the achievement of the second stage, organizations tend to advance
towards the multinational stage with advertising and production facilities throughout the world.
In such scenarios, Slavik and Bednár (2014) have stated that organization has been labelled as
multinationals when over one third of sales start off overseas and the firm has an international
access to capital markets. However, in the concluding stage, companies no longer are linked
principally with any one nation. Global firms according to Donate and de Pablo (2015) such as
Unilever, Exxon, Philips primarily operates wide ranging countries. However, various companies
recently have developed into multinational reluctantly. Slavik and Bednár (2014) have
mentioned that these companies tend to develop as export houses but as international business

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cultivates and becomes major part of corporate revenues, they become drawn in foreign
operations. However many of these firms have been sustaining familiarity in culture and the
international division thus been treated as a specialized division (Takata, 2016). Consequently,
foreign subsidiaries may in that case be established which serve three principal roles in
organizations namely local implementers that aid in accomplishing local requirements, focused
contributors that play an exceptional role as part of co-dependent system as well as a subsidiary
with an international authorization due that are accountable for the whole global business. Thus,
Donate and de Pablo (2015) have emphasized on the importance of organizations in seeking
approved measures to evaluate performance of employees across the global companies.
Furthermore, proper examination of global subsidiaries with intermittently and corrective
measures must be taken into consideration if performance fail to reach the expectation level.
Theories associated with strategic management in the global environment
Besides formulating and employing strategies, adding values to consumers and
stakeholders has been a fundamental theme in Strategic Management. According to authors, in
order to generate values for these stakeholders, global entrepreneurs require to successfully attain
competitive advantage over its opponents by strategically adjusting itself to the varying global
business environment. In the view of Dälken (2014) realizing competitive gain has been accepted
to be the most imperative goal of an organization. Takata (2016) has claimed that CEOs or
entrepreneurs must strategically classify the sources of competitive gains of the firm and
challenge to analytically categorize these sources.
Porter’s Five Forces
Porter’s Five Forces in such cases tactically adopts an outside-in approach which focuses
on the industry forces and the way it influences performance of companies in understanding

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competitive advantage and further analyses competitive advantage as emerging from these five
industry forces. However, authors have claimed that the hypothesis of such an approach is
primarily based on homogeneity of income in the same industry (Slavik & Bednár, 2014).
Accordingly, organizational achievement tend to be reliant on the way entrepreneurs acts
responsive and precisely envisage the threats , opportunities as well as changes of the industry it
is involved in. In the turbulence economy, authors have mentioned that entrepreneurs must show
readiness to encounter the challenges of the threats in their sector and to regress to contingencies
strategies of their strategies (Bond & O'Byrne, 2014).
The Relational Approach (RA)
The Relational Approach (RA) approach has been highly resourceful to the organizations
that have globalized subsidiaries or division as it integrates the diverse inter-relationships of the
company. Such inter-relations as per the opinion of Minculete and Chisega-Negrilă (2014) have
existence between the company in globalised circumstances such as united ventures, strategic
agreements and mergers. The fundamental supposition of the RA approach lies on the
heterogeneity of organizations regarding having different resources and structures. Hence,
resources of globalized companies are neither easily obtained nor operated in a market place
across the organizations. According to Brown and Mason (2014), during an unstable financial
system, companies operating at global level may have to collaborate with their alliances in order
to create strength and funds to decrease threats and challenges of competitors based on the inter-
firm relationships which they have strategically build up.
Conclusion
Therefore from the above discussion, it can be concluded that globalisation has been
influencing strategic management as it determined the developmental approach to be adopted by

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companies in intensifying its performance to other provinces. However, strategic management
team in order to rise above the challenges of globalisation must take into consideration the trends
in the effective setting as well as increase developmental strategies which might aid in
counteracting the impact of globalisation. Furthermore, subsequent to globalisation, customer
outlooks have been intensified with the rise of the levels of competition resulting globalisation to
affect the level of competition as customer expectations also augmented. Meanwhile, in order to
advance customer service, company require to strategically maintaining its value service delivery
along with corporate principles which lead its actions in safeguarding its reliability and authority
of its work.

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References
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