Essay About Strategic Analysis And Global Strategy

Frameworks For Global Strategic Analysis
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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