Frameworks For Global Strategic Analysis

Frameworks for Global Strategic Analysis

Donald R. Lessard 1

Massachusetts Institute of Technology

Keywords: global strategy, competitiveness, geographic scope, internationalization,

globalization/localization.

1. Introduction

Strategic analysis in a global setting involves competition in industries that

extend across national boundaries and among firms with different national

home bases that may tap into strategic resources in more than one location.

This note provides frameworks for global strategic analysis at four levels: the

geographic scope of the industry, the competitiveness of various locations, the

geographic reach of the firm, and the global integration vs. local focus of

specific activities. This multilevel approach makes it possible to "zoom in" on

a particular strategic setting, taking into account the most important factors at

each level.

2. Levels of Analysis: Issues, Frameworks and Actions

This note introduces the principal frames of reference required for strategic

thinking and action in an international context. These include those required

for defining the geographic scope of industries, the competitive advantage of

countries (regions) and its implications for the location of activities, and the

appropriate tradeoffs between local responsiveness and global integration of

different activities in the value chain. Strategic thinking in any context

involves the identification of a set of issues, the selection and/or development

of an appropriate conceptual framework for assessing these issues and

identifying potential courses of action, measuring key variables, and selecting

courses of action.

1. Epoch Foundation Professor of International Management, MIT Sloan School of

Management. This note is adapted from an MIT Sloan School teaching note that reflects

the “multi-level” approach to IM developed together with Eleanor Westney over the years.

While I have attempted to cite the prior works I draw on directly, this note does not attempt

to provide a complete bibliography of the extensive IM literature underlying these key

concepts. For an excellent early bibliography see Kogut (1989).

82 Frameworks for Global Strategic Analysis

International strategic management involves competition in industries that

extend across national boundaries, among firms with different national home

bases, and with firms that operate across national boundaries and may tap into

strategic resources in more than one location. As a result, in addition to the

“standard” strategic frameworks for assessing the desirability of an industry or

business and the firm’s capabilities that give it a competitive advantage in

particular businesses, international strategic thinking requires frameworks for

the following levels of analysis:

• the geographic scope of the relevant industry,

• the attractiveness of various locations as markets, sources of factor

inputs or strategic competencies, and the overall competitive

advantage afforded by various locations,

• the sustainability of internationalization as a (dimension of)

competitive strategy for a particular firm,

• the degree of global integration and local focus of activities or

processes.

While each of these levels is complex, we find it useful to caricature each

of these frameworks graphically, much as Porter has done with the “five

forces” model of industry and the “diamond” model of national/regional

competitiveness. These caricatures are drastic oversimplifications and omit

many relevant variables and feedbacks, but they call to mind the various

dimensions that should be considered.

The goal is not to master the framework, but to use it to master the strategic

issue at hand. This will require modifying the frameworks, often adding or

changing dimensions, as the most relevant simplifications will vary from

application to application. The basic frameworks and the definition of the

various forces are presented below, together with the key references for each.

All of the levels of analysis identified above play a role in the overall

strategic process. Often, this process is depicted hierarchically, “zooming in”

from the most macro to the most micro perspectives or temporally from

positioning to implementation. In practice, the process is more simultaneous

and chaotic, since changes in opportunities or threats may appear at any of the

levels, triggering a new round of