This paper examines the ways in which global markets influence business strategy at both the organizational and individual levels. It discusses how globalization expands opportunities for product development and revenue while simultaneously introducing competitive threats. The paper explores different market entry strategies — including subsidiaries, joint ventures, and exports — and contrasts international, multinational, and global organizational structures using real-world banking examples. It also addresses the concept of reverse innovation and argues that a truly global mindset must be embedded in strategy from the outset, affecting everything from organizational design to individual career development.
This study guide is drawn from PaperDue's library of 130,000+ paper examples across 47 subjects.
Global markets can have a significant impact on strategy. With globalization, there are more opportunities than ever before for firms to sell products and services around the world. Whereas in the past strategy might have been developed for local or, at best, regional markets, firms today must take the entire world into account. De Brentani (2010) notes that this can have a significant effect on product development. Global firms must now think carefully about how well a new product idea will translate to foreign markets. This results in changes to the way companies approach innovation, as they must be thoughtful about their products and branding in order to ensure the broadest appeal possible.
Global markets also represent the opportunity to tap into global resources. International markets are not just a source of revenue — they are a source of ideas as well. For example, innovation derived from international operations can be applied around the world (Govindarajan & Ramamurti, 2011). One well-known illustration of this is McCafé, the popular McDonald's store-within-a-store concept that originated in Australia but has since been rolled out globally. At technology companies, innovations can emerge from suppliers and then be implemented worldwide by major brands. Managers must therefore recognize that global markets provide an opportunity to improve internal capabilities; international markets are not solely about revenue generation.
The concept of reverse innovation — developing products first for emerging markets and then adapting them for developed ones — reinforces this point. Companies that treat their international operations as learning laboratories gain a strategic advantage that purely domestic-focused rivals cannot easily replicate.
When developing strategy, companies must consider the market entry strategies best suited to different markets. A company can take a subsidiary approach to international expansion, but it can also establish joint ventures or rely on exporting. A firm must also decide whether it wants to adopt an international structure, a multinational structure, or a fully global structure. In the banking industry, for instance, companies have taken a number of different strategic approaches. TD Bank and Citigroup have pursued internationalization strategies by acquiring regional banks to expand their footprint while leveraging their home-market strength. BNP Paribas partners with local banks to broaden its global reach, while HSBC has moved toward a more integrated global model featuring dual global headquarters and numerous strong regional subsidiaries.
"Reduced trade barriers intensify global competitive pressure"
"Global thinking must be embedded in strategy from the start"
"Workers must adapt career strategies for global job markets"
Always verify citation format against your institution’s current style guide requirements.