Global Strategy: an Organizational Framework by Sumantra Ghoshal - Article Example

Name Tutor Course Date Article Review Article Title: Global Strategy: An Organizational Framework Author: Sumantra Ghoshal Central Theme The author talks about the global strategy and organizational strategy that is usually used by the managers in increasing the efficiency of their organization. According to the author, the operations of the multinational corporations have been influenced by the increasing globalization in the world. According to the author, the article targets the managers of corporations. This is because it will help them improve their global strategies for their multinationals. The article also targets the students who are conducting research on the multinational strategies and organizational approaches (Ghoshal, 2). The author provides the managers with different perspectives and prescriptions that can be utilized for the purpose of ensuring that they are successful in their operations. The article is important as it provides the knowledge regarding the global strategies in terms of managing the corporations. The article has clearly outlined the strategies and concepts of global strategy and organizational frame work. The paper thus provides a review of the article. Review Summary The concepts of global strategy have always led to different perspectives which have contributed to a lot of ambiguity with regards to its concepts. The global strategies are however applicable to the global organizations and industries. It is also important to note that the global strategies are usually used for the purposes of gaining competitive advantage. The concepts of economies of scale are also important when developing the global strategies. Different authors have come up with different explanations regarding the concepts of global strategy. The differences among the authors are mainly based on the perspectives and prescriptions. According to the article, standardization and exploitations of the economies of scale are some of the concepts of global strategy. Competitive advantage is also an important concept in the global strategy. The lack of organizational framework is responsible for the conflicting concepts among the different authors. The corporate objectives also differ which contributes to the lack of framework. The lack of framework also has negative impacts on the managers and the students carrying out research in the field of global strategy (Duane, 12). The article therefore intends to establish an organizational framework that will be used for the purposes of benefiting the managers and students carrying out academic research on then topic. According to the organizational framework that has been developed by the author in the article, the goals of a multinational can be categorized into three categories. The three main goals involve developing a competitive advantage, managing risks and developing internal learning. Developing a competitive advantage is important for a multinationals due to the high rate of competition that exists in the international market. A multinational can also benefit from the economies of scale of different activities incase it has a competitive advantage. The success of a global strategy is mainly dependant on how the goals of the multinationals interact. Expanding and exploiting the scale economies can also be used for the purpose of increasing efficiency within a multinational. In the scope economies, sharing of investments and costs can be useful in terms of increasing the efficiency. Managing the risks in the market and the policy induced risks are also important in terms of ensuring that the multinationals are successful. Operational efficiencies and balancing the scale of economies is also important in terms of man aging risks. Diversifying the risks in the scope economies can also be used by the multinational. Learning from the societal differences enhances the innovativeness of the multinational and hence contributing to a successful global strategy. Shared learning in the multinational also impact positively on innovation. It is also important to note that innovativeness plays an important role in reducing the cost of operations in a multinational (Wheelen, 8). The strategic goals play an important role in terms of ensuring that a multinational organization is able to achieve efficiency. The multinational that operate in an imperfect market usually measures their efficiency in terms of the use of resources. The ratio of the output to the cost is also important in an organization in terms of measuring the efficiency. According to the author, the field of strategic management is mainly dominated by the efficiency perspectives. In terms of the global strategy, efficiency is also closely related to the framework of integration responsiveness. The framework plays an important role in terms of determining the cost advantage of a firm. Integration and differentiation is also an important concept of global strategy (Thompson, 13). The concepts of differentiation and integration is however different depending on the type of the industry. Managing the risks is also an important strategic goal for a multinational. This is considering that a multinational is usually faced with a lot of risks. Managing a macroeconomic risk may be complicated for a multinational corporation since it is not within its control. The political actions of a government may also expose a multinational corporation to a policy risk. The policy risk can however be controlled by the organization. The uncertainty of the response of the competitors towards the strategies of a multinational may also expose the multinational to a competitive risk. The lack of appropriate resources and technology can expose a multinational to a resource risk. The global strategy emphasis the need for a multinational to consider each of the risks jointly during the decision making process. The multinationals should also consider sharing, shifting or diversifying the identified risks. The contractual and semi contractual currency risks can easily be managed by the multinational through diversification and shifting. According to the author, it is also important to note that the global strategy requires some flexibility and overall strategies in order to ensure that the decisions made are able to manage the risks. Innovations and learning play an important role and it is part of the organizational goal. Innovativeness and leaning also enables a multinational corporation to encourage knowledge sharing and hence impacting positively on its performance. The success of a multinational is also dependant on how knowledge is shared and also its rate of innovativeness. Diversifying the internal capabilities of an organization is one of the important concepts that are used by the multinationals for the purpose of promoting its innovativeness. However, it is also important to note that some concepts of centralization and decentralization may impact negatively on the learning process (Boyd, et al, 280). The sources of competitive advantage play an important role in formulating the global strategy of an organization (Stead, 23). The national differences exist in the market and it plays an important role in terms of determining the strategies that should be used by a multinational. The taste and preferences of the customers plays an important role in determining the national differences. The national differences can also be brought about by the government policies. The government policies can affect the cost of production within the country and it may this lead to competitive advantage. Some of the government regulations in some countries give the local companies competitive advantage over the multinationals. The scale economies also play an important role in determining the competitive advantage of a multinational. The scale economies can be used for the purposes of reducing the cost of production and hence increasing the volume of the goods produced. This plays an important role in increasing the competitiveness of the multinational. The value added chain is also important for an organization in terms of the scale economies as it ensures that the multinational has a competitive advantage. Prescriptions in perspectives play an important role in defining the global strategy within a multinational corporation. The concept is important for the managers of the multinationals in terms of decision making. The concept of prescription and perspectives is also useful in explaining how some of the firms gain competitive advantage. The global success of the multinational corporations is due to the competitive advantage. Prescriptions and perspectives are also important in explaining the competitive advantage that the firms may enjoy. The strategic trade-offs also plays an important role in terms of explaining the competitive advantage of a multinational organization. This is because different trade-offs exists among the sources of competitive advantage. It is also important to note that the concepts of the trade-offs may not be fully used by the managers. According to the concepts of perspectives and perceptions, the managers should ensure that the strategic alternatives should be clearly analyzed before making any decisions. Evaluating the strategic trade-offs in relation to situational contingencies is also important for the managers. The prescriptions also play an important role in terms of providing information to the managers of a multinational corporation regarding the strategic trade-offs. The sources of competitive advantage can also be established by a multinational corporation through the concepts of prescriptions and perspectives (Gordana, 40). It is also important to note that the perspectives and prescriptions also provide important information to the students carrying out academic research on the topic. Critique The main argument in the article is that the use of a framework that has been proposed can play a significant role in ensuring that the multinational corporations are able to develop a global strategy. The perspective of the writer towards the theoretical position is positive as the writer agrees that the lack of a framework makes it difficult to put in place a global strategy among the multinational corporations. The ideas of the writer are partially similar to the idea of the other writers. The author has highlighted the ideas of different authors which are similar to the ideas that have been presented in the article. The writer has also presented news ideas about the topic in the article. The ideas of the writer are quite important in terms of enhancing the quality of the arguments developed. However, it is also important to note that some of the ideas that have been presented by the author have not been backed by any evidence. This means that the ideas may not work in the practical sense. It is also important to note that the writer has clearly highlighted the factors that influence the global strategies among the multinational corporations. This is has been achieved through the use of examples of the operations of the multinational corporations. However, it is important to note that the practical examples that have been used by the author are quite few and hence impacting negatively on some of the arguments that have been presented. The quality of the work is also high as the writer is not biased. The examples used and arguments presented by the writer also indicates that the writer is qualified to write in the area of strategic management. The ideas that have been presented by the writer are credible. This also indicates that the author has a deeper understanding of the issues regarding the topic. The essay is easy to understand since the writer has not used any complex and technical terms that may hinder understanding. This is an advantage to the readers who are not conversant with the technical terms regarding the topic. However, the lack of statistical analysis in the article impacts negatively on the on the findings of the author regarding the topic. Other sources have also been used by the writer for the purposes of providing definitions and clarifications regarding the topic. However, it is important to note that the author did not use other sources in some sections of the article although some clarifications were required. More sources should have been used by the author as compared to the number of sources that were used. The complex ideas have been simplified by the writer. The simplification of the complex ideas is however based on the definitions and clarifications. Some of the complex ideas are still found in the last section of the article which has a negative impact on the understanding of the section. Despites some cons, the article is recommended for anyone interested in the subject. Conclusion In conclusion, it is evident that the article provides important information regarding a framework that can be used for developing a global strategy among the multinational corporations. It is also evident that competitive advantage strategies are important for a multinational corporation for the purpose of ensuring that it is successful. The proposed framework in the article is also important in terms of ensuring that the strategies of a firm can be reviewed. The article also provides important information regarding the risk management concepts within a multinational corporation. It is also evident that the information that has been provided by the article can be useful in terms of providing important information to the managers of multinational corporations and students undertaking academic research on the topic. The author has also ensured that the article can be well understood through the use of simple terms. The article is also useful to anyone who requires information regarding the topic. References Ghoshal, Sumantra. Global strategy: An organizational framework. Strategic management Journal. Vol 8, No5. 425-440. 1987. Duane, Ireland. Strategic management cases: competitiveness and globalization. London: Cengage Learning, 2012. Wheelen, Thomas. Concepts in strategic management and business policy. Pearson Education India, 2011. Thompson, John L. Strategic management: awareness & change. Cengage Learning EMEA, 2010. Boyd, Brian K., et al. "Contingency hypotheses in strategic management research use, disuse, or misuse?" Journal of Management 38.1 (2012): 278-313. Stead, Jean Garner, Sustainable strategic management. ME Sharpe, 2013. Gordana, Ilić. "Strategic management of information systems in the function of efficient business of companies." Strategic Management 17.3 (2012): 36-46. Read More