Evaluation Of The Strategic Management In The Global Competitive Environment.

EXECUTIVE SUMMARY

The purpose of this report is to evaluate the process of the strategic management in the global competitive environment.

The globalization of the business in our environment has been a source for global organizations to incorporate the process of a global strategic management.

In this report, we are going to propose three different frameworks from three different group of authors: Yip, Johnson and Scholes, and Cavusgil and Zou.

However, theses proposed framework would be analysed and compared and we would give a critical evaluation of theses frameworks.

Through this evaluation we would give some examples about relevant companies in order to explain the theories, and how does the competitive environment affect managers in their strategies.

INTRODUCTION

In our actual world economy, characterised with a high level of changes over the past few years, we can say that the world does not appear anymore like it was in the past.

Indeed so many transformations have been done in terms of government regulations, business, telecommunications, technology, research and development, customers needs and tastes, reduction in barriers to free trade and the world with all theses factors have seen a great convergence.

All theses transformations are leading our national economies into a global system or a global economy, i.e. an independent, integrated global economic system, ( Hill, 2006), therefore a process that we can refer to as globalization.

Hence, in the era of the globalization, it has been inevitable for national enterprises to globalize in order to gain for instance some competitive advantage, economies of scales, more market shares, better skills…

Indeed, nowadays, wherever a company operates, theses products or services would find some foreign competitors.

Therefore, in order to compete with foreign companies, theses companies need to develop a global strategy in order to manage their business the most efficiently.

But what exactly do we mean by global strategy? Or strategic management? And how companies should develop their strategy?

That is why the aim of this report is to give an overall response to the “process” of the strategy.

So, after providing a brief overview of strategy context, we are going to analyze and compare some relevant frameworks.

Thus, in the one hand, we are going to analyze the Johnson and Scholes’s framework.

On the second hand we are going to analyze the Yip’s framework in association wwith the Porter’s framework.

And as a final point, after comparing theses frameworks the last part depicts some critical analysis and recommendations.

I. AN INTRODUCTION TO STRATEGY

The aim of this part is to define the different characteristics of strategic decisions and what do we mean by strategic management and strategy and to analyse why strategies are diverse and vary.

1. Definition of strategy

As we can suppose the term of strategy is very complex and presents different aspects in the literature.

According to Johnson and Scholes “strategy is the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations”, (2008).

Thus, according to this first definition, the term strategy there focus on the “long term direction of an organisation”

Consequently, when we think about global strategy, it deals with:

1 To produce the same country everywhere in the world

2 Cost reduction in the production

3 Product development

4 on the local level, the decision making progress could be limited

2. Definition of global strategy

Hence, as we noticed previously in the era of the globalization we can refer to the global strategy context.

Hence, according to Yip, “a strategy is global to the extent that it is integrated across countries. Global strategy should not be equated with any one element- standardized products or worldwide market coverage or a global manufacturing network. Global strategy should instead, be a flexible combination of many elements.”

Furthermore a distinction between global strategy and multilocal strategy need to be done.

Indeed, as we can suppose a multilocal strategy differs from a global strategy.

The same author, Yip, defines a multilocal strategy treating “competition in each country or region on a stand-alone basis, while global strategy takes an integrated approach across countries and regions”.

To resume, a global strategy could be “defined as the way a business competes in a global market, plays a vital role in determining the performance of a business in the global market”, ( Zou and Cavusgil, 1995).

Define global strategy is seen as a difficult task because our environment is in permanent change and companies need to these changes the most efficiently possible.

3. Definition of Strategic Management

Initially, Strategic management would involve the degree of implication of people, and especially managers in order to define, decide and execute a strategy.

so as, Johnson and Scholes, can underlines the term strategic management engross the importance of managers with regard to strategy,