Why do companies engage in global strategies?
Companies using a global strategy may achieve economies of scale to improve margins or low price points. Other primary strategic reasons for globalization are to build supplier relationships, to improve access to raw materials (unique to a given region), and to cut costs by relying on other regions’ specializations.
There is also a clear distinction between International Business strategy and the concept of International Management as explained in Mark Casson’s 2022 article.
The History of Global Strategy
Trade is synonymous with the rise of human society and one should start with a brief look at the evolution of trade across the ages. Moving from the historical narrative, we need to look at Global Strategy as an eclectic mix of thoughts. As an interdisciplinary subject, a student of global strategy (GS) studies should start with looking at (a) the firm either in its domestic historical setting or its global interactions, (b) The history of global empires and their global interventions. (c) The historical cultural mosaic behind global strategy created by movement of people, goods and services, and (d) Global strategy thinking from the world of ancient philosophical literature.
(a) The rise of the (Global ) business firm
It looks like the first firm structure was created in India in either circa 500BC or circa 800 BC. The Shreni was an informal association of artisans, merchants and Traders. It could have also been a workers guild Some claim that this structure also included a form of governance code and social institution that may have been a vehicle for charitable acts. By 960 AD, China had started developing business mechanisms to control the flow of capital. However the oldest surviving global firm is a French Mint .
Moving to the subject of Ancient city states who built their wealth on trade, one can find some support for the export and import of commodities in the city state of Troy. There is evidence of extensive fishing activity 1000 – 500 BC, by civilizations centered on the Mediterranean Sea: the Phoenicians, Minoans, Egyptians, Assyrians, and Greeks. Here, fish is caught, traded, and marketed as part of a fishing enterprise.
(b) The history of global empires and their global interventions.
There are those who argue that our modern economy has been shaped by the rise and fall of Global empires and the effect of imperialism. In addition to imperial power from ancient empires, there is also a growing body of work on American imperialism a term that refers to the economic, military, and cultural influence of the United States on other countries. A counter body of work lies on the topic of Soviet imperialism as distinct from the Russian Empire.Please see a chart on Backbones of International Trade that illustrates how countries/states traded over from 1870 to 2013.For many heterodox economists, in the real world, specialization and trade are path dependent. Path dependence means that history matters.
(c) The historical and cultural mosaic behind today’s global strategy studies.
A introductory resource can be found here which looks at the movement of people from Africa as the basis of the history of globalisation. An alternative view of ‘When did Globalization Begin’ can be viewed through the notion, there is no evidence supporting a view that the world economy was globally integrated prior to 1492 ( When Christopher Colombus discovered the Americas in his search for indian spices).
(d) International Trade Thoughts and Philosophy
Many authors look at the codification of literature around mercantilism as the first port of call to understand International trade thoughts. Another work is that of Chi-Yuen Wu who addressed the evolution of economic thought.
Globalisation
The Globalisation debate |Globalisation and nationalism |Three principal positions on political globalisation |
The Debate on Globalization, Poverty, and Inequality : Why Measurement Matters |
How Global Are We?
Importing and Exporting Export licensing decisions Doing Business Profiles of markets
Why Do Nations Trade?
Absolute Advantage
Comparative Advantage
Gaining and sustaining competitive advantage
The Multinational corporation |
When to Go Global? Deciding to Go International
The globalization of business
Target Market Selection
Market Attractiveness
A map of the curated resources around global strategy can be viewed here. If you are looking to read more, a list of Free Textbooks is useful to start exploring the subject.
Additional Readings on Global strategy
The History of Strategy and Its Future Prospects | The Evolution Of Strategy |The Chronicle of Coca-Cola: A Global Business |Taking Wal-Mart Global: Lessons From Retailing’s Giant | G.M.’s Global Strategy: A Brand for Every Place| A Global and Unified System of Power| What happened to the American Empire ? | Economic Imperialism in East Asia | Global Political Economy in Context of Evolution of Political-Economic Thought |Global Trade and Asian Empires
3 historical empires that had a strong impact on global trade |The Mongolian Empire |The Return of the Pirate: Post-colonial Trajectories in the History of International Law|
The Roman Empire Rome the City and the state |Colonialism and Neocolonialism| The dynamics of China-Ethiopia trade relations |Distinctions between International Strategy and International Management |
Proponents also introduce a concept of international strategy and give reasons as to why do companies go international like the Five keys to going global. A major concern for managers deciding on a global business strategy is the tradeoff between global integration and local responsiveness. Global strategies are usually multi-dimensional and can include a variety of levers depending on the company and its situation first described by George Yip and Tomas Hult in 2002.