Global strategy – definition and meaning

A global strategy is one that a company takes when it wants to compete and expand in the global market. In other words, a strategy businesses pursue when they wish to expand internationally. A global strategy refers to the plans an organization has developed to target growth beyond its borders. Specifically, it aims to increase the sales of goods or services abroad.

‘Global strategy’ is, in fact, a shortened term that covers three strategies: international, multinational, and global. Companies must pursue strategies in those three areas if they wish to expand internationally.

According to the Cambridge Dictionary, a global strategy is:

“1. A detailed plan for how a business or product can be successful in all parts of the world.”

” 2. The process of planning how a business or product can be successful around the world.”

Global strategy – some confusing terms

When reading about the international marketplace, there are many terms that people initially find confusing. For example, what is the difference between international, multinational, transnational, and global?

International

An international company is one that imports and exports. In other words, it sells to customers abroad and has foreign suppliers.

However, this type of company does not have any investments, i.e., branches, offices, factories outside its home country.

Global Strategy - image with definition and some features
When a company pursues a global strategy, it needs to define it properly. Is it international, transnational, or global?

Multinational

A multinational company, unlike an international one, has investments in other countries. It has business, staff, and premises in more than one country.

However, it does not have coordinated product offerings. A multinational company focuses more on adapting its products and services to individual local markets.

Global

A global company has investments and is present in several countries. It markets its goods or services through the use of an identical coordinated image/brand in every market.

In most cases, there is one corporate office that is responsible for worldwide strategy. There is also a strong emphasis on cost management, efficiency, and volume.

Transnational

A transnational company operates in different countries. It has investments in operations both at home and abroad. However, the directors/managers at each individual market are also the decision-makers for their regions.

Additionally, local management decides on R&D and marketing policies and strategies for their territories. R&D stands for Research and Development.

Transnational companies are significantly more complex organizations than the other three types.

Global strategy – a term we commonly misuse

Regarding how people often use the term ‘global strategy,’ Prof. Richard Lynch says the following in global-strategy.net:

“Companies talk about ‘going global’ when what they really mean is that they are moving internationally, outside their home countries.”

“It is important to clarify precisely what is meant by such wording because the strategic implications are completely different.”

The World Health Organization has a Global Strategy for Women’s, Children’s and Adolescent’s Health. It envisions a world in which every adolescent, child, and woman realizes their rights to mental and physical health and well-being. It also aims for better social and economic opportunities.

Video McDonald’s local and global strategy

In this video, Prof. Richard Lynch talks about McDonald’s global and local strategies.

Richard Lynch is Emeritus Professor of Strategic Management at Middlesex University in London, England.