Global Corporate Strategy

This report discusses the concept of global corporate strategy, focusing on open innovation and internationalization. It explores the differences between open and closed innovation and analyzes the factors that impact innovation and competitive strategy. The report also examines the demand for internationalization and localization, and provides recommendations for Tesco's internationalization strategy.

RUNNING HEAD: GLOBAL CORPORATE STRTATEGY 0
Global Corporate Strategy
Student’s Details-
9/5/2019

GLOBAL CORPORATE STRTATEGY 1
Executive Summary
Global corporate strategy has been adopted by MNC to enhance their brand value and reach at a
reputed place. This has given due importance to open innovation and internalization where
companies are highly globalizing their operations for the purpose of attaining competitive
advantage and highly globalizing their products to reach the global trends and be ahead of the
competitors. The purpose of the report is to have an understanding of internationalization and
giving due to importance to open innovation where the companies attempt to use external
knowledge and resources for the purpose of carrying out operations abroad. For the research,
journal articles, academic books and website sources are used in order to acquire knowledge
about the concepts. The results of the report gives a clear understanding of why MNC must focus
on internationalization and also gives an opportunity to learn about the importance of open
innovation into the company.

GLOBAL CORPORATE STRTATEGY 2
Contents
Introduction......................................................................................................................................3
Open Innovation and Internationalization.......................................................................................3
Open and Closed Innovation........................................................................................................3
Factor Endowment.......................................................................................................................4
Related and Supporting Industries...............................................................................................4
Demand Conditions......................................................................................................................5
Strategy Structure and Rivalry.....................................................................................................5
Government..................................................................................................................................5
Chance..........................................................................................................................................6
Internationalization, Localization and Competitiveness..................................................................6
Demand for Internationalization..................................................................................................6
Demand for Localization.............................................................................................................7
Recommendation.........................................................................................................................8
Organizational Purpose, Profitability and Social Responsibility....................................................9
Role of Leadership in Profitability and Corporate Social Responsibility....................................9
Personal Reflection........................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

GLOBAL CORPORATE STRTATEGY 3
Introduction
Global corporate strategy is the strategy adopted to expand the operations internationally which
is usually undertaken to achieve long term and short-term goals of the company (Rugman &
Verbeke, 2017). In other words, global corporate strategies are engaged in carrying out the
operations globally and serving large number of customers throughout the world. A global
strategy is made by undertaking a detailed plan consisting of the activities or operations that are
needed to be undertaken in various parts of the world. Also, the strategy is made to ensure that
the required plan has the capacity to be successful in the desired country in future (Yamazaki,
2019). It ensures scanning of the environment of the global markets and formulation of desired
strategy for getting the desired benefit from international operations. Here, the report discusses
the concept of open innovation and internationalization wherein differences between open and
closed innovation is evaluated along with the factors that could impact chosen MNC’s
innovation and competitive strategy. The chosen MNC is Tesco which is a grocery and
merchandise retailing company of United Kingdom. The company has global operations by
serving 11 countries all around the globe. The company has diversified their products by selling
products such as books, furniture, toys, software and other financial services. Further, the report
identifies merits and demerits of demand for internationalization and demand for localization and
one demand is chosen that could be profitable for Tesco along with two reasons. Further,
organizational purpose, profitability and social responsibility are discussed along with the
application of leadership principles and personal reflection of learnings is also made.
Open Innovation and Internationalization
Internationalization is the process of undertaking global operations by expanding the selling
capacity and reaching new market segments into the foreign market. This not only helps in the
financial sustainability but also helps in serving large number customers within the entire globe
(Battisti, et al., 2015).
Open and Closed Innovation
Open Innovation is concerned with utilization of internal and external knowledge or ideas.
Within the open innovation, there is significant importance of external knowledge that the

GLOBAL CORPORATE STRTATEGY 4
organization attains and coordinates with external partners by purchasing external technologies
by utilizing them into the operations (Yun, et al., 2016). However, closed innovation is does not
takes into the external ideas and considers only the internal resources for applying the innovation
techniques. In this, the best innovative option is evaluated within the organization and the
promising option is selected in order to establish development and commercialization.
The differences between the open and closed innovation are as below:
 The main difference is that open innovation uses external resources such as technology
from outside the company whereas closed innovation system takes ideas and required
investigations are operated within the company.
 Little investment is required for closed innovation whereas open innovation needs high
investment.
 Lower risk is involved in the closed innovation. On the other hand, when the company
uses open innovation, it tends to have risky technological aspects.
Factor Endowment
Factor endowment is the analysis of land, labor, capital and entrepreneur that a country and that
can be exploited in the process of manufacturing. It is suggested that countries with high factor
endowment are considered prosperous and have the ability to gain higher profit margins than the
countries with lower factor endowment (Bennett & Nikolaev, 2016). However, Tesco is a
renowned multinational company that has sufficient factor endowment. The factors of production
like land, labor, capital and entrepreneur can be impacted by the innovation being forced by the
external environment. For example, if Tesco brings new technology then it should have
sufficient capital, efficient labor to carry out operations and also entrepreneurship skills to
manage the change.
Related and Supporting Industries
Supporting industries provide raw material or expertise to the company to manage the
operations. These are regarded as the group of industries that provide inputs for manufacturing
and also provide significant tools for carrying out the operations of the business. Similarly, Tesco
has close collaboration with Tesco Sustainability group that ensure the sustainability, quality and
productivity. The company has also made partnerships with the packaging industries that have

GLOBAL CORPORATE STRTATEGY 5
ensured the reuse of the packaging materials which is considered as an innovation technique to
be used by the company.
Demand Conditions
The companies having good growth or have sufficient sustainability for future have lower
demand of innovation as these companies do not want to invest in the innovative techniques. On
the other hand, those companies who have lower future state of growth seek for innovation in
order to increase in the sales of the company (Frey, 2009). However, Tesco has sustainable
growth, but the company seeks to increase the customer experience by creating innovative and
exclusive products and the company always demands for innovation in order to be ahead of
competitors.
Strategy Structure and Rivalry
This relates to creation of an innovative strategy for the purpose of reaching the goal and playing
a safe game against the competitors. The strategy structure helps in forecasting of the risk and
making plans for avoid the future risk. Similarly, Tesco reviews the markets through operation
management and the company is also engages their activities in competitor analysis and market
scanning in order to identify the requirement of innovation and making strategy structure to
execute the plans as per the needs or demand. The company strategizes their activities in order to
successfully implement the innovation strategy.
Government
The government has a major role on innovation as there are various restrictions for the use and
also government facilitates the industry with various benefits as well. There are situations where
public organizations act as investors in order to promote the innovation into the business
(Mazzucato, 2015). Similarly, Tesco has made collaborations with the government in order to
ensure that their innovative practices are suitable to the customers and meeting the requirements
of the government. The company also believes that making collaborations with the government
in order to promote the reuse of packaging materials which was an innovative drive to be used as
an environmental protection.

GLOBAL CORPORATE STRTATEGY 6
Chance
Innovation is created when a business needs growth and it has the ability to create powerful
results (Phillips, 2018). A company gets a chance to innovate the products when there is new
trend into the market and the company can double down their innovations and get competitive
advantage. However, Tesco focus on the customer satisfaction and has adopted innovative
techniques for using an opportunity against competitors. The company has often become the first
retailer in UK to provide same-day grocery delivery to the customers. This was a good chance
for the company to attract maximum customers.
Internationalization, Localization and Competitiveness
Internationalization is the process of dispersing the market internationally and reaching the larger
segments (Shearmur, et al., 2015). On the other hand localization is the ongoing technique where
the companies produce the products for the domestic market and keep on selling the products
into the national boundaries.
Demand for Internationalization
There is high demand of internationalization in the companies that want to succeed in the long-
run. Here, the main goal of internationalization is to produce, organize and maintain the products
at the international level. Companies demand for internationalization as it gives a good
opportunity to the company to develop their portfolio and reach large of number of customers
through global operations (Landau, et al., 2016).
Merits:
 Reaching large number of customers through dispersing business into various regions.
 It can help a company to get new employees and business partners who can take the
company on top.
 Doing internationalization can enhance the brand awareness of the company (Yaprak, et
al., 2018).
 This helps in gaining trust of the customers as the customers perceive the company as a
trusted and loyal company.
Demerits:

GLOBAL CORPORATE STRTATEGY 7
 Restriction from rules and regulations and having confused paperwork.
 The company often faces difficulties due to currency fluctuations and can impact the
profitability of the company due to falling of the prices.
 The companies often face difficulties doing market research through the realization of
pons and cons of expansion strategy which consumes time.
Demand for Localization
The companies demand for localization as it provides an opportunity to the company to focus on
one target audience. This can subsequently facilitate the company to get higher revenue also
requires less investment. The main reason behind choosing localization is to enhance the
relationship with the stakeholders of the local area for the purpose of selling more goods and
achieving a competitive advantage. Apart from this, when more and more companies are
involved in globalization, it creates a better chance for the company to get competitive advantage
by focusing on one local area through focusing on one culture.
Merits:
 Making connections with the stakeholders in order to maintain profitability.
 Less investment along with the enormous opportunity to increase the market share.
 It helps in building loyal customer base with the customers by creating an impression
through the variety of products for a particular community.
Demerits:
 Difficulty in understanding needs and wants of customers due to diverse culture.
 Localization is restricted to a particular group and therefore, it has fewer customers as
compared to the companies doing internationalization.
 Further, it leads to lower knowledge and expertise which is a major factor when it comes
to holding a competitive position against the competitors.
Recommendation
After making the analysis of both the demands, it can be recommended that Tesco should adopt
internationalization. This process will help Tesco in reaching larger market segments and also
molding the operations as per the needs of the customers. Internationalization helps in building

GLOBAL CORPORATE STRTATEGY 8
universal image and also allows the company to be ahead of competitors (Morschett, et al.,
2015). Thus, Tesco adopting this strategy, can make themselves stronger in terms of technology
and expertise for performing various operations.
Low-cost leadership strategy works on the rule of being the lowest producer into the market.
Thus, when doing internationalization through low cost leadership is good strategy to be adopted
by Tesco (D. Banker, et al., 2014). The following are the two reasons for the selection of
internationalization:
 When adopting internationalization, Tesco can enjoy economies of scale through low
cost leadership strategy and the company can sell more of their products and can attract
large number of customers as well
 Tesco can achieve sufficient profits through cost leadership strategy and can make faster
penetration in the global markets.
Product differentiation strategy is a good option chosen for doing international operations.
Nowadays, people have different needs from the products and also their needs are changing as
per the changes in the trends, life style and economic conditions (McFarlin & Sweeney, 2014).
Thus, Tesco can be recommended to go for global operations through product differentiation
strategy as it can help in creating different place in the market. The two reasons are mentioned as
below:
 Internationalizing the products of Tesco through product differentiation will facilitate in
the enhancement of portfolio of the company that reach to the expectations of the
customers (Walter & Peterson, 2017).
 When Tesco is seeking to perform their operations globally by making differentiate
products, then it can be a competitive advantage that can be used against the competitors.
Organizational Purpose, Profitability and Social Responsibility
Organizational purpose is the end goal that an organization attempts to achieve. It is considered
as the fundamental reason that describes the reason for the existence of the company. The
purpose is not limited to the management but is also gives motivation and inspiration to the
employees (Basu, 2017). When understanding the meaning of purpose, it should be determined

GLOBAL CORPORATE STRTATEGY 9
that the organizational purpose contribute to the society, should be inspirational and has the
ability to grab the opportunity for growth in future (Joyce & Slocum, 2012). Further, corporate
profitability is regarded as another aspect that an organization has to achieve while doing
business. Corporate profitability is the ultimate objective of the company and without which the
company cannot attain success. For achieving the profitability, it is crucial for the company to
fulfill their social responsibility which can have a huge impact into their operations. Social
responsibility is regarded as the protection of interest of the stakeholders of the company such as
customers, suppliers, investors and government (Grayson & Hodges, 2017). Also, every
company has different way for dealing with them.
Role of Leadership in Profitability and Corporate Social Responsibility
An effective leader defines the purpose of the company and provides strategic direction for the
company for the achievement of the purpose. By the application of leadership principles, it can
be assessed that maintaining the corporate profitability is the main goal of a leader. Moreover,
doing sufficient contributions towards the corporate social responsibility proves to be a crucial
role of a leader that needs to be fulfilled (Lins, et al., 2017). However, the CEO of Tesco proves
to be a successful leader of the company. David Lewin, who is the CEO of Tesco clarifies the
purpose of the company and also plays a major role in fulfilling that objective. Further, the
corporate purpose of Tesco is ‘serving shoppers a little better every day’ that describes that the
company makes innovations in their products in order to create a better experience for their
customers every time the customer comes to buy the product. CEO of the company makes
strategic plans for analyzing the global economic conditions, analyzes competitors and
understands the changing behavior of customers. These strategic actions are undertaken by CEO
to examine the risk and lead the organization towards the attainment of corporate is being
decided.
Further, senior leadership team of Tesco ensures the profitability of the company through
focusing on the core market segments. The company is engaged satisfying the customers with
their diverse range products and focus on cash generation to bring effectiveness in their financial
condition. Tesco has been doing continuous innovation and diversifying their products through
choosing different platforms to reach their target customers and focus on the improvements in
cash generation in order to get sufficient profits. For the company’s continuous growth and

GLOBAL CORPORATE STRTATEGY 10
survival, it is important to adhere to the principles of corporate social responsibility for
maintaining sustainability and thereby increasing profits of the company in the future.
Moreover, David Lewis, as the CEO of Tesco has to ensure the social responsibility of the
company against different stakeholders. Corporate social responsibility strives to maintain ethics
and integrity into the organization in order to use fair means to deal with employees, customers,
suppliers and investors (Gatti & Seele, 2015). Similarly, Tesco has corporate social
responsibility committee that is monitored by CEO. This committee has been engaged in
overseeing the societal obligations through structured policies and rules that are being designed
by the company to ensuring the interest of the stakeholders. The company strives to maintain
good relationship with the stakeholders and takes into consideration their needs and concerns and
also involve them in the decision-making process. The company has undertaken employee
engagement survey and the result of these surveys are monitored by CEO and also interacts with
the employees on daily basis (Tesco, 2016). The CEO of Tesco holds good relationship with the
suppliers and investors in order to ensure the availability of goods and ensures sufficient
collaborations with the investors respectively. The company has the major responsibility towards
the customers by ensuring the quality of the product and getting regular feedback from the
customers for creating engagement. Apart from the stakeholders, the company has responsibility
towards the environmental, economic and social issues (Stanford, 2013). The company has
policies for environmental protection, regulations for coping with the social issues and facilitate
the economic benefit in their global operations.
Personal Reflection
From the above analysis of the internationalization of MNC and adoption of open innovation, I
have learnt many things. Primarily, I have learnt that international and open innovation are the
profitable techniques to be brought up by the company. As we can analyze, Tesco is a
multinational retailing company that continuously strives for excellence and has contributed their
efforts in the light of the external innovation. Further, I have gained that external innovations
brings enormous opportunity into the company through bringing new technology and new
processes that helps the company to expand and stay ahead in terms of competition. Apart from
this, it has limitations as well. I have learnt that it has the possibility for risk and also the

GLOBAL CORPORATE STRTATEGY 11
company has to invest into the innovations and have to bear the expenses after the innovation is
implemented. Further, I have learned the localizing of the MNCs can also be a good practice to
be adopted as it facilitates the company to focus on a particular group after evaluating their
needs. Further, I have learnt the aspects of senior management in the achievement of
organizational purpose, profitability and maintaining social responsibility in order to gain
sustainability into the market. I have also learnt that there is importance of leadership in the
designing of purpose of the organization, taking steps for innovation and handling all the
decision-making processes in the organization in order to meet the social responsibility and
maintaining sustainability for the continuous growth and survival of the business.
Conclusion
In concluding the report, it can be said that global corporate strategies are made by MNCs in
order to successful execution of their plans of doing business internationally. This concept has
given due importance to open innovation which generally uses external resources for the
successful implementation of innovation into the company. The report is made to discuss the
open innovation and internationalization. For the analysis, Tesco as a multinational company is
selected to determine how the company undertakes open innovation and also the impact of
various factors on the company are determined. Further, the report is discussed to have an
understanding of organizational, corporate profitability and social responsibility that a company
has to fulfill. This concept is being analyzed through the leadership principles being
implemented in determining the responsibilities of CEO or senior leadership team of the
company. Lastly, a personal reflection on the learning is elaborated along with the suitable
analysis.

GLOBAL CORPORATE STRTATEGY 12
References
Basu, S., 2017. Corporate purpose: Why it matters more than strategy.. s.l.:Routledge.
Battisti, G., Gallego, J., Rubalcaba, L. & Windrum, P., 2015. Open innovation in services:
knowledge sources, intellectual property rights and internationalization. Economics of Innovation
and New Technology, 24(3), pp. 223-247.
Bennett, D. & Nikolaev, B., 2016. Factor endowmnts, the rule of law and structural inequality.
Journal of Institutional Economics, 12(4), pp. 773-795.
D. Banker, R., Mashruwala, R. & Tripathy, A., 2014. Does a differentiation strategy lead to more
sustainable financial performance than a cost leadership strategy?. Management Decision, 52(5),
pp. 872-896.
Frey, C., 2009. Using demand innovation to find sustainable growth. [Online]
Available at: https://innovationmanagement.se/imtool-articles/using-demand-innovation-to-find-
sustainable-growth/
[Accessed 6 September 2019].
Gatti, L. & Seele, P., 2015. CSR through the CEO’s pen. uwf UmweltWirtschaftsForum, 23(4),
pp. 265-277.
Grayson, D. & Hodges, A., 2017. Corporate social opportunity!: Seven steps to make corporate
social responsibility work for your business. s.l.:Routledge.
Joyce, W. & Slocum, J. W., 2012. Top management talent, strategic capabilities, and firm
performance. Organizational Dynamics, 41(3), pp. 183-193.
Landau, C., Karna, A., Richter, A. & Uhlenbruck, K., 2016. Institutional leverage capability:
Creating and using institutional advantages for internationalization. Global Strategy Journal,
6(1), pp. 50-68.
Lins, K., Servaes, H. & Tamayo, A., 2017. Social capital, trust, and firm performance: The value
of corporate social responsibility during the financial crisis.. The Journal of Finance, 72(4), pp.

GLOBAL CORPORATE STRTATEGY 13
1785-1824.
Mazzucato, M., 2015. What is government’s role in sparking innovation?. [Online]
Available at: https://www.weforum.org/agenda/2015/04/what-is-governments-role-in-sparking-
innovation/
[Accessed 6 September 2019].
McFarlin, D. & Sweeney, P., 2014. International management: strategic opportunities &
cultural challenges. s.l.:Routledge.
Morschett, D., Schramm-Klein, H. & Zentes, J., 2015. Motives for Internationalisation. In:
Strategic International Management. Wiesbaden: Springer Gabler, pp. 75-98.
Phillips, J., 2018. A Simple, Powerful Method to Find Opportunities For Innovation. [Online]
Available at: https://www.inc.com/jeffrey-phillips/how-to-find-opportunities-for-innovation.html
[Accessed 6 September 2019].
Rugman, A. & Verbeke, A., 2017. Global corporate strategy and trade policy. s.l.:Routledge.
Shearmur, R., Doloreux, D. & Laperrière, A., 2015. s the degree of internationalization
associated with the use of knowledge intensive services or with innovation?. International
business review, 24(3), pp. 457-465.
Stanford, J., 2013. Tesco Corporate Social Responsibility. [Online]
Available at: https://prezi.com/zeayl0egzgmn/tesco-corporate-social-responsibility/
[Accessed 6 September 2019].
T., 2016. An update on our Corporate Responsibility Committments. [Online]
Available at: https://www.tescoplc.com/media/475739/corporate-responsibility-update_nov-
2016-final.pdf
[Accessed 6 September 2019].
Walter, J. & Peterson, J., 2017. Strategic R&D and thinnovation of products: understanding the
role of time preferences and product differentiation.. Economics of Innovation and New
Technology, 26(7), pp. 575-595.

GLOBAL CORPORATE STRTATEGY 14
Yamazaki, K., 2019. Golden Rules in Global Corporate Strategy. In: Japanese Global Strategy.
London: Palgrave Macmillan, pp. 157-169.
Yaprak, A., Yosun, T. & Cetindamar, D., 2018. The influence of firm-specific and country-
specific advantages in the internationalization of emerging market firms: Evidence from Turkey..
nternational Business Review, 27(1), pp. 198-207.
Yun, J., Won, D. & Park, K., 2016. Dynamics from open innovation to evolutionary change.
ournal of open innovation: Technology, market, and complexity, 2(2), p. 7.