Publication: Harvard Business Review (MAR 2010)
Article: Finding your strategy in the new landscape
Authors: P. Ghemawat
Reviewed By: Liz Brashier
In light of the continuing recession – an aftermath of the still recent 2008 crash – it seems appropriate to discuss corporate strategy. Companies have a lot to prepare for, rather than look forward to, in the coming decade. Some will react to weak growth and rising capital by retreating to the home market, using the word “global” to reference “economic slowdown” rather than true globalization. This reaction, however, could be a poor decision for firms that are based outside of the developed world. With low per capita incomes in developing countries, there is room for significant growth. Regardless of company location, it is imperative for managers to reevaluate strategy if they are to pursue a global strategy.
The first element of the global strategy described in Pankaj Ghemawat’s article is competition. While views on global strategies have centered around an idea of integrating markets, a shift to managing differences and adapting to local conditions is key. Resource allocation processes must change; companies cannot afford to invest in long-term payoffs on investments, and need to be more selective in making investments.
The second element is markets and products. A shift in customer targeting would allow companies to reach a broader market, and move to an economy that was previously unreached (i.e., moving a company that typically markets to the suburbs into urban areas could prove successful in expanding customer base).