The Effects of Globalization on Strategic Management Planning
Nowadays, globalization is one of the inherent element of the 21st century and a great factor influencing many business strategies all over the world. According to Karl Heil, globalization “refers to growth of trade and investment, accompanied by the growth in international businesses, and the integration of economies around the world”. Richard Lynch claims that globalization within business framework is viewed in consideration with its two major characteristics: an increase of interdependency between different countries and it is multi-faceted quality with diverse business aspects (Lynch, 2014).
As it is claimed that “the key to understanding the emerging world view is to see that unprecedented new imperatives have arisen - especially the revolutionary force of IT - that are unleashing powerful new forces to integrate the globe” (JAI Press Inc., 1993), globalization needs to be closely considered during strategic management planning.
Strategic management as “the highest level of managerial activity” (Ernst) defining a general direction to the whole enterprise needs to be highly comprehensive and sensitive towards the changes driven on the global scale. Globalization, as stated by Lynch, has a wide range of different facets: political, sociological, economic, finance, production, technology, and culture, to name a few (Lynch, 2014). Thereby strategic management planning has to embody globalization so that to boost one's development and expand the market horizons. For instance, the study conducted at the Business School in Nairobi concluded that globalization had a considerable effect on strategic management planning in the way that it determined the expansion strategy which had to be implemented in the fast-growing, developing global and international companies (Nyakoa, 2013).
While designing a global strategic management plan, the company should take into consideration the common customer tastes, the market coverage and network establishment and maintenance – all of which are correlated to the globalization, as well, and thus may ensure further company's achievements on the global scale.
How Strategic Alliances Can Facilitate Global Strategic Growth
Strategic alliances seem to become increasingly important business method and activity which has already reached many industries, especially the ones who access the global market and need enough power and support in competing in the market of a global scale.
According to the definition of Margarita Išoraitė, strategic alliances are “agreements between companies or partners to reach objectives of common interest” (Išoraitė, n.d.). By uniting the efforts, the companies are able to proceed much faster with their development and gain a greater general performance which would be impossible to ensure by working alone. Strategic alliances have great contribution in the global strategic growth; they can facilitate them in a number of following ways: for example, to facilitate access to global markets, or together to face and overcome the complexity of business and customer relations globally. Expanding global markets in different spheres with the common efforts of strategic alliances would thereby lead to a global strategic growth.
The four aspects of strategy, according to Heil, are the following: the scope of operations, resource allocation, competitive advantage, and synergy (Heil, 2011). These are what definitely needs to be agreed on in the alliance within the strategic management planning.
Karl Heil claims that strategic alliances also enable a company to evade certain difficulties associated with internationalization, which may be based on the various bases: political, social, and regulatory ones. Such case may happen when the alliance is set between the multinational company and the home one so that the latter could help the former to overcome them since they are well-acquainted of them.
References
Heil, K. (2011). Strategy in the Global Environment. Reference for Business, Advameg, Inc.
Retrieved from http://www.referenceforbusiness.com/management/Str-Ti/Strategy-in-the-Global-Environment.html
JAI Press, Inc. (1993). Impact of globalization on Strategic Management. Retrieved from
https://sites.google.com/site/tribhuvansite/sm/impact-of-globalization
Išoraitė, M. (n.d) Importance of Strategic Alliances in Company's Activity. Mykolas Romeris
Lynch, R. (2014). How does globalization relate to strategy, especially in large companies?
Retrieved from http://www.global-strategy.net/how-does-globalization-relate-to-strategy/
Nyakoa, O. A. (2013). The Effect of Globalization on Strategic Management of Ernst&Young
(EY), Kenya. School of Business, University of Nairobi.
