This briefing on Choosing a Strategy was prepared by Emma M. Carnal while a Accounting major in the College of Business at Southeastern Louisiana University.

Introduction

The idea of choosing a strategy is based off of four basic strategies which include the global standardization strategy, localization strategy, transnational strategy, and international strategy. My presentation will be based around these four concepts and are directly related to the level of pressure for cost reduction and local responsiveness.

The Idea in a Nutshell

Choosing a strategy is an essential part of running a business. For management to be successful in maximizing their profits, they must have a strategy to use as a guideline. There are four basic strategies that should be considered when choosing a strategy, these strategies are based off of the level of cost reductions and local responsiveness a business has. Not only does management have to choose a strategy, they must also be willing to change the strategy in the future.

The Top 10 Things You Need to Know About Choosing a Strategy

1. “Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”. When choosing a strategy managements main concern should be to maximize the firm’s value. The first step to achieving this goal is choosing the correct strategy for your company.

2. When choosing a strategy there are four basic strategies that management should consider. These strategies include the Global Standardization, Localization, Transnational, and International. These four options are directly affected by a company’s level of pressure for cost reductions and local responsiveness.

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3. The pressure for cost reduction is usually greatest when needs for a product are universal, their competitors are able to sell the same product at a lower price, and when it is easy for consumers to switch between products. If a company is highly pressured for cost reduction then they may want to consider standardizing their production or moving to a low cost location

4. The pressure for local responsiveness is usually greatest when consumers have differences in preference or tradition. If a company is highly pressured for local responsiveness then this is an indication to the company that they may not be able to leverage their skills and products with other firms core competencies. The best way to approach this situation would be for management to customize the products that they offer in accordance with the preferences and traditions of the regions.

5. The main focus of the Global standardization strategy is to increase profitability by utilizing cost reductions that can come from economies of scale and location. This strategy helps to keep production of goods low cost by keeping customization of products low and decreasing the time of production. This strategy is best fit to a business that has high pressure for cost reduction and low pressure for local responsiveness

6. The main focus of the Localization Strategy is to customize the goods they produce so that they can meet customer’s needs individually. This strategy best fits to a business that has high pressure for local responsiveness and low pressure for cost reduction. An example of the Localization strategy is when MTV matches programming to the viewing preferences of people in different nations

7. The idea of the Transnaional strategy is to decrease the cost of production on customized goods. This strategy best fits to a business that is highly pressured for both cost reduction and local responsiveness. An example of this would be Wal-Mart.

8. The main focus of International strategy is to sell products that were originally made for domestic markets to international markets. For the International Strategy, the best business would be one with low cost pressure and low local responsiveness. An example of a business using International strategy is Xerox. Xerox first started selling their photocopiers to domestic markets in the 1960’s. They are now selling to international markets due to the protection of their patents which continues to protect them against competitors

9. A firm may have to change its strategy multiple times for it to survive long term. This change in strategy is usually due to the always changing situation of a business.

10. Proctor & Gamble is a great example of the evolution of a strategy. They are one of the largest international companies and this is attributable to their evolving strategy. Some of the factors that made them change their strategies were due to high tariffs, market segmenting, and the fall of cross border trading.