A time ago, I had the great pleasure of discussing global strategy with colleagues in a Global Management course at the MBA program. I refer to the following as ‘Three ways to gain competitive advantage by competing globally’
1 – Looking for the best location in the world to lower costs or achieve other production or resource advantage that allows for greater rewards. The real managerial decision is where to locate activities, or which country is best suited for which activity? According to the activities and spread of resources, an organization could concentrate activities in a few countries or disperse activities to many countries. The key is to look for the places that will give each activity more efficiencies and that when laced together with the other organizational activities will help create competitive advantage.
2 – To transfer the source of current advantage/competitive knowledge efficiently from local to global markets. The efficient transfer of competitive advantage across nations helps to achieve larger competencies and capabilities, and to further dominate a particular area across the global market. Think of how Coca-Cola’s awesome distribution system in America was copied in foreign markets; the company went from dominating the distribution locally to dominating the distribution of soft drinks globally.
3 – To organize and coordinate organizational activities between different markets in a way that domestic competitors cannot has a great potential to be a source of competitive advantage because the organization a) can choose in which markets to fight rivals, b) can change production location based on which market offers the current best mix of trade cost, exchange rate, or other favorable market condition, c) can transport and incorporate its differentiable advantage into all markets where it competes.
When competing globally an organization has to