The Post Crisis World Demands A Much More Flexible Approach To Global Strategy and Organization
The Post Crisis World Demands A Much More Flexible Approach To Global Strategy and Organization
The Post Crisis World Demands A Much More Flexible Approach To Global Strategy and Organization
The post crisis world demands a much more flexible approach to global strategy and
organization
INTRODUCTION
Post 2008, International trade- Decline 9% & FDI-Decline of 15% in 2008 and >40% in 2009
Expectations in the next decade:
Weak Global Growth
Pressures from over capacity
Persistently high unemployment
Volatility in the financial markets
Costlier Capital
Expanded role of the government
Much larger burden of regulation and taxation for all, and
Maybe even increased protectionism.
“Global firms must factor these developments into their strategies in the new decade”
Managers cannot afford to ignore the risks of pursuing a global strategy in the uncertain years
ahead.
In the case the author looks at:
How the crisis affects a company's basic strategic environment
How that translates into changes in product and market focus,
Organizational and supply chain structures,
Talent management choices
The management of corporate reputation and identity.
Explore the hub and spokes of a typical strategy wheel
STRATEGY AND COMPETITION
Adapt to local differences
Strategies that currently emphasize smoothing differences and achieving economies of
scale across national boundaries may need to shift toward adapting to local conditions
Invest more selectively
Resource allocation processes will have to change, too.
Some of this selectivity in investing can be imposed by:
Raising hurdle rates and tightening assumptions around terminal values
Allocating resources according to their articulated strategic priorities
Turning on the investment spigots in China and, to a lesser extent, India, while
tightening the financial taps elsewhere
Responded to resource constraints by off shoring, outsourcing, and forging
strategic alliances
Watch out for emerging-market competition
Many companies from the developed world also need to widen their competitive focus
Pay at least as much attention to local Chinese competitors as they did to other
competitors, they will produce formidable homegrown rivals, of ever larger size and
reach
MARKETS AND PRODUCTS
Focus on underserved segments everywhere
Multinationals have to rethink their customer targeting
companies will need to penetrate more geographies, channels, and income levels
Wal-Mart, for example, has begun a major push into U.S. urban markets. Strategy
involves smaller store formats and more attention to mobilizing local political support.
Recognize price pressures
Reasons for reduced prices:
Economic weakness and extra capacity
Possibly a shift in the zeitgeist from excess to frugality
Expansion into poorer markets at home and abroad will intensify this trend.
Companies should start repositioning. Eg. Louis Vuitton and Gucci have prospered with
larger stores that offer many items at price points of several hundred dollars
Cultivate requisite variety
Multinationals will have to develop products and services that are fundamentally
different from what they're used to selling
There should be regional varieties of offerings, for instance, in taste, price sensitivity, and
infrastructures for service and delivery become more important.
Eg. Nokia's focused on rural and other lower-income markets and developed a basic
mobile phone that doubles as a flashlight during power cut.