What is global strategy and its limitation?

A global strategy refers to plans that an association has created to target development beyond its limits. Specifically, it intends to build sales of services or product worldwide. 'Global strategy' is a small term that joins three procedures: multinational, international and global. Four essential techniques for competing and entering in the universal environment: 1. localization strategy, 2. global standardization strategy, 3. international strategy and 4. Transit strategy. Every one of these procedures has some advantages and disadvantages, but here, our experts from My Assignment Help will discuss the limitation only.

Limitation of Global Strategy

· Lack of concentration on local demand: In order to derive the benefits of economies of scale, companies use to design and apply global strategy to expand their business in the global market. In doing so, they forgot about concentrating on meeting the demand of their local and domestic market.

· Cultural influences make entering into new markets difficult: While setting global strategy, companies are required to focus on the cultural differences such as differences in religious thoughts and beliefs, social practices and more, which is quite tough as well as cost consuming. If a company fails to understand the cultural orientation and differences of the foreign market where it tends to enter, then the global strategy might fail to perform optimally.

· Presence of operational risks: A global strategy stands as a strategy to engage in an international business partnership. Due to this, a global strategy often gets influenced by the political and other external business environment-related factors, economics and laws of the foreign nations over time. If the external business factors turn unfavorable, then a successful global strategy might fail and the company that has applied such strategy also fails to meet its expectations from foreign trade.

· Dependence on foreign nations: Implementation of global strategy makes a company dependent on a foreign market that might not expect. While applying global strategy, companies start to focus on foreign markets about which they might not have in-depth knowledge that lead them to make a global strategy less effective to enter into the markets.

· Presence of trade barriers in some places: The presence of numerous value-added taxes, subsidies, and tariffs affect the selling prices of goods and services sold in the international market. All these trade barriers lead a global strategy to perform less or sometimes make incapable to perform for a company that has formulated and implemented such a strategy to achieve a strong global presence.

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Last updated:10/25/2019 12:57:02 AM


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