Glocalization" of business activities: a "glocal strategy" approach
Goran Svensson. Management Decision. London: 2001.Vol.39, Iss. 1;


Abstract (Article Summary)
The topic of this article provides a discussion on the importance of well-defined concepts and approaches used by scholars and by practitioners in various contexts. It is troublesome when the use of a concept or an approach is ambiguous and confusing. The discussion focuses on, and is exemplified through, the globalization of business activities and the term "global strategy". The widespread use of popular jargon cannot cover the fact that a genuine or true global strategy approach appears to be a managerial utopia. The terms "glocal strategy" and the "glocalization" of business activities are introduced to enhance the accuracy of the present usage by scholars and by practitioners of the term global strategy and the phenomenon often described as the globalization of business activities.


Introduction

In literature, different concepts and approaches are continuously being developed. They are developed and used in order to put forward and describe various real world phenomena as the result of research efforts. Different concepts and approaches are also used to position the research performed. Scholars may use concepts and approaches to position themselves and their research in relation to other scholars' research. Concepts and approaches may also be used to limit the scope of a specific research project. Practitioners may use different concepts and approaches to describe their ongoing and future business activities. In addition, they may use concepts and approaches to illustrate and promote a product, a brand, or other issues of importance for the company. The importance that a concept or an approach provides a correct picture is crucial. Otherwise, the supposed receivers or audience may be misled and discontent.

Accordingly, there may be a mismatch between the receivers' or the audience's expectations and perceptions if a concept or approach is used ambiguously. Therefore, the importance of well-defined and correctly applied concepts and approaches is a necessity. Existing definitions and applications should reflect unifying features and common denominators in commonly used contexts. Otherwise, scholars, as well as practitioners, may not be able to communicate properly with each other. In addition, the supposed receivers or audience may be misled if a concept or an approach is ambiguous. It may cause confusion and misunderstanding and in the end lead to frustration and dissatisfaction among the potential receivers or audience.

Objective

There are widespread concepts and approaches that are used in various contexts and that do not reflect the same meaning in different contexts, or even catch the core significance of their supposed or original meanings. One such concept or approach is the term "global strategy", which is frequently used in different contexts and meanings. There is an evident disagreement of the meaning and the appropriate usage of the concept or approach of global strategy among scholars and practitioners. The term global strategy appears also to be used, both by scholars and by practitioners, in order to attract attention or an audience, and has now become popular jargon.

Nevertheless, the multiple meaning and usage of the term is confusing and misleading. There is a necessity to further explore and describe the concept and approach of global strategy. A re-definition of the term may assist in advancing it beyond present boundaries. However, the objective of this article is less pretentious. It is limited to throwing light upon the meaning and usage of an ambiguous term both in literature and in practice. At best, a renewal and refinement of the term global strategy will be achieved. The topic of this article is therefore exemplified and described through the widespread and popular term "global strategy", which is widely applied in many different contexts. It is also widely used to represent different meanings, depending very much upon the user. The term global strategy is explored and described in the next section.

A global strategy

A company's global strategy is closely related to its corporate strategy. The corporate strategy guides the performance of a company's overall business activities and the allocations of resources to achieve established business goals. Yip (1989) provides a detailed framework for evaluating whether and how to globalize an individual company's corporate strategy. The framework emphasizes the potentials for achieving competitive benefits and provides illustrations of companies that have applied globalization issues in their corporate strategies. The formulation of a global strategy is a major challenge in itself, but its execution requires far-reaching changes to be made in corporate structures and procedures (e.g. Lorenz, 1986).

Levitt (1983) makes a distinction between the multinational corporation and the global corporation. The multinational corporation operates in a number of countries, and adjusts its products and practices in each, while the global corporation operates with resolute constancy, as if the entire world, or major regions of it, was a single entity. The global corporation sells the same things in the same way everywhere. Accordingly, Levitt (1983) states that the uniformity of global business activities should be applied on a worldwide basis without local adaptations. Keegan and Green (2000, p. 26) define a global strategy as:" ... a design to create a winning offering on a global scale ... "

Consequently, they also apply a worldwide approach to the term global strategy. Allio (1989) states that global competitors exploit the similarities between countries to enhance the competitive advantage, while the multidomestic or multinational competitors exploit the differences between countries.

Simon-Miller (1986) argues that the adoption of a global strategy may give a competitive advantage. In contrast to multinational companies, global corporations view the world or its major regions as one entity instead of a collection of national markets. These world marketers compete on a basis of appropriate value, i.e. an optimal combination of the marketing mix that is identical in design and function. Yip (1989, p. 31) distinguishes between a multidomestic strategy and a global strategy:" ... a multidomestic strategy seeks to maximize worldwide performance by maximizing local competitive advantage, revenues, or profits; a global strategy seeks to maximize worldwide performance through sharing and integration ... "

On one hand, the setting for a pure multidomestic strategy is characterized by the following: that there is no particular pattern of market participation; that the product offering is fully customized in each country; that the location of value-added activities are restricted to each country; that the marketing approach is local; and that the competitive moves are stand-alone by country. On the other hand, the setting for a pure global strategy is characterized by the following: that there is a significant share in major markets of market participation; that the product offering is fully standardized worldwide; that the location of value-added activities are concentrated - one activity in each different country; that the marketing approach is uniform on a worldwide basis; and that the competitive moves are integrated across countries.

Grune (1989, p. 10) offers an explanation of how a global approach differs from a multinational one. For example, the multinational companies have three characteristics, namely that they pursue independent strategies in each foreign market, their subsidiaries are essentially autonomous operations, and while they allow headquarters to coordinate financial controls and marketing, each subsidiary is a profit center with decentralized strategy and operations. A global company operates as an integrated system in which all subsidiaries are interdependent in terms of operations and strategies. Jeannet and Hennessey (1992) argue that a global strategy represents an application of a common set of strategic principles across most world markets. When a company pursues a global strategy, it looks at the world market as a whole rather than at markets on a country-by-country basis. Lewis and Housden (1998) use the term global strategy to represent standardized products, standardized promotions, and low need for localized marketing and high advantages of standardized marketing.

Keegan (1989) writes that a global strategy is based upon scanning the world business environment to identify opportunities, threats, trends, and resources. He means that the global effort takes great discipline, great creativity, and constant effort, but the reward is not just success, it is survival. Dahringer and Muhlbacher (1991) use the term global to emphasize customer similarities regardless of the geographic areas in which they are located, but it does not ignore differences among markets. They mean that these differences have to be considered when companies perform and implement their business activities. Yip and Coundouriotis (1991) regard the global strategy as a process of worldwide integration of strategy formulation and implementation. In contrast, a multi-domestic approach allows the independent development of strategy by country or regional units. Kim and Mauborgne (1993) present five characteristics that are assumed to make a global strategy work, namely head office's familiarity with local conditions, two-way communication between head office and subsidiaries, consistent decision-making practices, ability to refute decisions, and provide explanations for final decisions. Hout et al. (1982) write that a global strategy is to think of the world as one market instead of as a collection of national markets. A company with such a global focus formulates long-term strategy for the company as a whole and then orchestrates the strategies of local subsidiaries. Finally, Kanter and Dretler (1998) advance a different view, in which the term global strategy is synonymous with holistic approach, not necessarily an international one, that can tighten local integration in the interest of global goals.

The overall or the holistic approach of the term global strategy is evident. Accordingly, the term global strategy implies the focus on similarities, standardization, homogenization, concentration, and coordination on a worldwide basis. The origin and the emergence of the global strategy approach and the globalization of business activities are explored and described in the next section.

Origin and globalization

The globalization of business activities and the term global strategy emerged in the early 1980s. Levitt (1983, p. 92) is often considered as the first to recognize the trend towards globalization and states that:"Companies must learn to operate as if the world were one large market - ignoring superficial regional and national differences ... "

In addition, he argues that the companies that do not adapt to the new global realities will become victims of those that do. However, McCloughry and James (1957) used the term global strategy in the 1950s in their book titled Global Strategy.

Johansson (2000) states that there are four groups of variables that propel companies towards globalization, namely the categories of market, competition, cost, and government. They are sometimes referred to as the four major globalization drivers (Yip, 1989 and 1992). Originally, Yip (1989) discusses and classifies the globalization drivers. For example, the market drivers consist of homogeneous needs, global customers, global channels, and transferable marketing. The cost drivers are categorized as economies of scale and scope, learning and experience, sourcing efficiencies, favorable logistics, differences in country costs and skills, and product development costs. The government drivers are classified as favorable trade policies, compatible technical standards, and common marketing regulations. Finally, the competitive drivers consist of the interdependence between countries and the competitors that globalize or might globalize.

Sheth (1986) argues that companies doing business in foreign markets probably do so owing to factors other than an emerging universality of consumer needs and wants. He points out three possible reasons for the emerging globalization of business activities in the early 1980s, namely the access to foreign markets, the increasing degree of international standardization of products and standards, and the increasing number of worldwide mergers, acquisitions, and joint ventures. Jeannet and Hennessey (1992) mention a number of reasons for the globalization of business activities such as globalizing for internal efficiency, globalizing to compete in homogeneous markets, and globalizing for added synergies. The indicators for the globalization of business activities are proposed to be at the customer level, at the market level, at the industry level, and at the competitor level. Furthermore, these indicators are independent of each other, which means that different levels of globalization may be observed in each area. Dahringer and Muhlbacher (1991) state that a global approach allows companies to achieve concentration and coordination of activities, which stimulate the companies' efforts for the globalization of business activities.

The origin of the term global strategy may be traced principally to the early 1980s due to a number of globalization trends that emerged such as focus on similarities, standardization, concentration, and coordination of business activities on a worldwide basis. The benefits and the advantages of the global strategy approach and the globalization of business activities are explored and described in the next section.

Benefits and advantages

The global strategy approach and the globalization of business activities are encouraged by a number of perceived potential benefits and advantages. Yip (1992) mentions four drivers of globalization. The global strategy approach may improve the access to market drivers such as common customer needs, global customers, global channels, transferable marketing, and leading markets. In addition companies are stimulated by cost drivers such as economies of scale, economies of scope (i.e. the gains from spreading activities across multiple product lines or businesses), sourcing advantages, and duplication across countries. An example of government drivers is the introduction of ISO9000, which is a global standard of quality certification (Johansson, 2000). Finally, companies who go global provide a strong incentive for other firms to follow. Levitt (1983, p. 92) states that companies:" ... benefit from enormous economies of scale in production, distribution, marketing, and management ... "

Keegan and Green (2000) and Simon-Miller (1986) also argue that the global strategy approach and the globalization of business activities may lead to substantial competitive advantages in the marketplace.

Segal-Horn (1996) mentions other potential benefits of a global strategy approach and the globalization of business activities such as the cost savings/reductions and the restructuring of international logistic operations. Furthermore, the advantages may influence the design, purchasing, manufacturing operations, packaging, distribution, marketing, advertising, customer service, software development, making of standardized facilities, methodologies, and procedures across locations. Yip (1989), too, mentions a list of benefits that may be achieved through the globalization drivers such as cost reductions, improved quality of products and programs, enhanced customer preference, and increased competitive leverage. He also mentions some major drawbacks such as reduction of responsiveness to local needs, distance activities from the customer, increased currency risk, reduction of adaptation to local customer behavior and the marketing environment, and local competitiveness, all of which may be sacrificed.

Jeannet and Hennessey (1992) argue that there are various factors limiting the global strategy approach and the globalization of business activities. For example, they refer to market characteristics, industrial conditions, marketing institutions, and legal restrictions. Keegan (1989) mentions two motives for the globalization of business activities. One is to take the advantage of opportunities for growth and expansion and the other is survival. Companies that fail to pursue global opportunities will eventually lose their domestic markets, since they may be pushed aside by stronger and more competitive global competitors. Dahringer and Muhlbacher (1991) argue that two major advantages may be obtained in the implementation of the global strategy approach and the globalization of business activities, namely the concentration and the coordination of business activities. Concentration means centralized decision making which is normally combined with a high degree of standardization of business activities. The experience curve may also be improved through the coordination of business activities. Lamont (1996) writes that the global strategy approach encourages initiatives to find new markets, new segments, new niches, the developing of new buying and selling opportunities, and marketing across international boundaries. The global strategy approach includes specific tasks such as the organizing of worldwide efforts, the research of domestic and foreign markets, the finding of new partners, the purchasing of comprehensive support services, and the managing of the costs of international transactions. Allio (1989) argues that a global strategy becomes critical when the need for local adaptation is low and the benefits from global systems are high, either as a result of economies of scale or economies of scope.

Yip and Coundouriotis (1991) conclude that the use of a global strategy approach can potentially achieve one or more of four major categories of benefits, namely reduced costs, improved quality, enhanced customer preference, and combined global resources. For example, reduced costs may be achieved through gaining economies of scale from pooling production and other business activities, moving to lower cost countries, exploiting the flexibility of a global network, and enhancing bargaining power with governments, unions, and suppliers. Improved quality may be achieved through focusing resources on a smaller number of products and programs. Enhanced customer preferences may be obtained through increasing global availability, serviceability, and recognition. Finally, the combining of global resources and using more locations for attack and counter-attack may lead to an increased competitive leverage. Kogut (1985) identifies a set of global opportunities, such as arbitrage opportunities (i.e. production shifting, tax minimization, financial markets, and information arbitrage), leverage opportunities (i.e. global coordination and political risk), and creating compatible incentives, all of which emphasize adaptations of the global strategy approach and its related business activities.

Accordingly, the global strategy approach and the globalization of business activities assume the achievement of benefits and advantages. The ultimate outcome of these potential benefits and advantages is dependent upon the extent to which they are theoretical potentials and influenced by obstacles in the global business environment.

Usage and application

This section is dedicated to presenting a selection of references that use and apply the term global strategy in various contexts. As the presentation proceeds, a diversity of the usage and the application of the global strategy approach are revealed. Most of them emphasize the importance of adaptations to local conditions, characteristics, and circumstances in the marketplace. For example, Malnight (1996) develops an evolutionary perspective on how multinational corporations define their global strategy, where they locate their key resources, and how they structure and manage their operations. He argues that, rather than being a planned process, each phase represents a viable strategic response to then-existing challenges and opportunities. This signifies that the global strategy approach is adapted to the specific business environment. Rabstejnek (1989) emphasizes the importance of the basics of a global strategy approach, but at the same time acknowledges the sensitivity to cultural characteristics, customs, and other elements that may be necessary in domestic markets. Domzal and Unger (1987) state that a global strategy approach emphasizes consumer similarities across geographic borders and strives for standardized marketing strategies, while minimizing local differences. Furthermore, they argue that the companies that do not embrace a global strategy approach will be placed at a competitive disadvantage. Their usage of the global strategy concept implies that firms strive to identify global segments that share the same psychographic characteristics. At the same time, they recognize that there are differences between markets.

Lindell and Karagozoglu (1997) go on to apply the global strategy approach in an international context. Their study investigates the challenges and the organizational responses of small- and medium-sized R&D-oriented firms in the internationalization process in Scandinavia and the US. Their focus is mainly on the international level, although they use the global strategy concept. Henley (1989) touches the area of international business, though it is also expressed in terms of global strategies. Koepfler (1989) also uses the global strategy concept, but concludes that the strategy must fit the products and the services to the practices and the languages of different markets. Porter (1986) argues that in some global strategies, marketing should play the part of tailoring rather than standardizing to support an overall strategic position. Simon-Miller (1986) writes that in planning global strategies, economic nationalism in the form of protective policies or tax incentives for domestic producers must be considered. The product itself is standardized, but the branding, positioning, and promotion may have to be modified to reflect local conditions. Kogut (1985) states that the key to understanding a global strategy is to find the ways in which competitive positions in one national market change the economics for entry into other countries and into other product lines. In addition, he argues that global strategies succeed by creating market procedures that shape products to fit national needs.

Ellwood et al. (1999) write that if the business objective is to penetrate a local market in a developing region of the world, then the global strategy would almost certainly require investment at the licensing or joint venture level. McCarthy and Puffer (1997) use the concept of global strategy in terms of a multinational context. Strategic investment flexibility is found to depend on a company's original entry strategy and tolerance of risk, as well as its assessment of the specific legal and political environment, industrial conditions, market readiness for its products or services, competition, and the investment required to establish a sustainable competitive position. Katrak (1983) studies two cases of global strategies in multinational firms. One of the cases is when the subsidiary is allowed to act as an autonomous unit to maximize its own profits. The other is when the subsidiary's output level is completely determined by the parent company to maximize the latter's global profits. Kenyon and Mathur (1987) write that international banking also has led to banks taking a competitive marketing view. Those adopting global strategies aim at dominance by offering a wide variety of products, while those adopting a segmentation strategy target a narrow range of products and customers. Bender (1985) argues that enterprises that continue to adopt a regional, national, or even multinational approach to business are losing out to the competitive advantages of global organizations. In developing a global strategy, other economic factors and business considerations that are important include the combined effects on the business of varying rates of exchange along with different inflation rates in different nations.

Orlando (1997) argues that the relationship between cross-national diversity and firm performance is contingent upon a global strategy approach. Bartlett (1982) concluded that some arrangements actually hindered the implementation of global strategies. The arrangements he referred to were that each company had already developed networks of strong independent country subsidiaries, and that an organizational structure thus had developed in which the country managers' knowledge of the national operating environment gave them a dominant role in key decisions, making them more independent of a formulated global strategy. Ralston et al. (1997) used the global strategy approach in a corporate culture context using the concept of multi-domestic strategy. In addition, Anand and Delios (1996) used the concept of multi-domestic strategy to describe Japanese subsidiaries in India that operated independently in terms of the multinational corporation's global strategies. It is concluded that foreign entrants to the region should be aware of, and be able to respond to, the unique advantages of each host country, and to the different strategies and capabilities of their subsidiaries. Finally, there are authors who reinforce the global strategy concept further by using other words such as "total". For example, Yip (1992) provided a guide on how to implement a "total global strategy" successfully, and is of three components. One involves internationalizing the core strategy by adapting it to the various international markets.

Evidently, the usage of the term global strategy is often applied in the context of international or multinational contexts. This means that the necessity for local adaptations is acknowledged. One might say that the concept appears to be misleading, misused, and sometimes abused.

Misleading, misused and abused

The previous paragraphs have indicated that the usage of the global strategy approach is misleading, misused and abused. Segal-Horn (1996) argues that few companies lend themselves to "naive" global strategies, since all strategies require some degree of adaptation to regional and national conditions. In addition, she argues that the popularity of the global strategy approach has caused the term to be overused and misused. Scholars and practitioners refer to a global strategy approach when they actually mean international or multinational. In addition, they refer to it in a general sense of anything connected with doing business outside the domestic market:"The core of the standardization/adaptation debate in international strategy is the question of how far, if at all, it is appropriate to design, market, and deliver standard products and services across national boundaries (Segal-Horn, 1996, p. 13)."

Kotler (1986) argues that there are circumstances where a multinational company can gain benefits through increased standardization of its marketing mix. There are also circumstances where this strategy would hurt the company. For example, he writes:" ... The issue can be framed in the following way: Under what circumstances can a company in Country X sell its product in Country Y without changing product, promotion, price, or place and earn a good return ... (Kotler, 1986, p. 13)."

Kotler (1986) regards Levitt's approach (1983) as going back to a sales approach, which is a step backwards in terms of a marketing approach that recognizes local conditions, characteristics, and circumstances. In addition, Hammerly (1992) emphasizes the necessity for matching global strategies with national responses.

Wind (1986) introduces an approach to think globally and to act locally. It suggests that the overall design follows a worldwide perspective, but that every detail of the strategy takes into account the country characteristics and cultural differences. He writes:"By following the strategy of think globally, act locally ... changes in the world force us to move away from thinking domestically ... avoid the pitfalls of inappropriate global standardization and ... employ marketing-oriented approach and take advantage of our understanding of the local conditions in each one of the world markets ... (Wind, 1986, p. 26)."

Accordingly, the necessity of tailoring the global strategy is inevitable (e.g. Champy, 1997) or as Porter (1986, p. 17) writes:"In some global strategies marketing should play the role of tailoring and not standardizing to support an overall strategic position. In some cases, standardizing marketing can lead to competitive advantages that support the overall global strategy ... "

Champy (1997) states that companies must value cultural and ethnic diversity, because it is a pragmatic necessity for any company that wants to sell globally. He concludes:"Going global ... It starts with recognizing that the world has no center ... customers will differ from country to country and that they will expect you to respect those differences. Learn this or stay at home (Champy, 1997, p.25)."

Simon-Miller (1986) comments that the so-called open world markets may be characterized by economic nationalism (e.g. protective policies or tax incentives for domestic producers). In planning global strategies, the company should take into account these barriers and discrepancies.

Sheth (1986) concludes that we do not need the concept of global versus domestic markets, but a concept of multiple markets and writes:"In conclusion, we often mistake global competition for global markets. As most markets become more divergent within each country, this approach tends to produce overlapping segments across countries, giving the illusion that markets are becoming global ... (Sheth, 1986, p. 11)."

Accordingly, the apparent globalization of business activities may be questioned. Grune (1989) comments that in its broadest sense the term global describes the worldwide marketplace, but more often the term is used to indicate a strategic approach to compete in that worldwide marketplace. In this context, the term global is usually applied as the traditional multinational term. He also writes:"Coca-Cola is always cited as the classic global product. Yet I understand that when Coca-Cola introduced its Fanta orange drink around the world it was willing to adapt - offering a more tart taste in Germany and a sweeter drink for Italy (Grune, 1989, p. 12)."

Evidently, the adaptation may also affect the core product itself of a so-called global product.

Jeannet and Hennessey (1992) write that, for many, global is just a replacement term for international and to many readers the term global strategy suggests a company represented everywhere and pursuing more or less the same strategy. Lorenz (1986) argues that the term globalization has no single meaning. To some people, it means the globalization of industries, while to others it implies a shift towards global products as well as global brands. To some people the term describes a truly global homogenization. He also states that the usage is not clear and writes that:"The permutations of meaning are confusing, not to say bewildering. To most people the only certainties are that globalization has become fashionable, and that it represents a daunting new challenge of indefinable proportions ... (Lorenz, 1986, p. 51)."

Sugiura (1990) focuses on how a global strategy may be localized. Four localizations are described in terms of the products, the profits, the production, and the management in order to achieve customer satisfaction. His usage of the global term appears to be more in accordance with an international or multinational approach. Palich and Gomez-Mejia (1999) conclude that companies that desire to expand internationally require managerial adaptation, due to differences between national cultures. These dynamics have not been used to represent the cultural diversity that may hinder the work being done to integrate and coordinate efforts as required by global strategies. Hamel and Prahalad (1985) conclude that a global strategy must look beyond lower costs and product standardization, and should think in new ways about world competition. In addition, Kogut (1985, p. 37) concludes:"However, centralization is constrained by the need to maintain a careful balance between local subsidiary responsiveness and the coordination of the global benefits ... balancing is critical ... "

Roth and Morrison (1992) write that the implementation of a global strategy requires coordinating subsidiary activities across country locations. The assumption often made is that such coordination must be managed by headquarters. Roth and Morrison (1992) also introduce an alternate approach in which subsidiaries within multinational organizations are given worldwide mandates to manage specific products or product lines.

Kanter and Dretler (1998) present an examination of the usage of the terms "global" and "globalization" by executives and by media, which indicates the prevalence of six major myths or misunderstandings. For example, that the term global is synonymous with international, meaning simply having a presence in other countries whether or not there is any connection among activities across countries; that a global strategy means doing everything the same way everywhere; that globalizing means becoming a stateless corporation with no national or community ties; that globalization requires abandoning country images and values; that globalizing means tacking on acquisitions or alliances in other countries, without much integration or change; and that to qualify as global, a strategy must involve sales or operations in another country. They conclude that four lessons may be learnt, namely the need for integration across functions and divisions, the need to manage change, the need to respect local cultures, and the need to understand a corporation's culture. Finally, McCloughry and James (1957) use the term global strategy in terms of war strategies, but emphasize the importance of localizing the war and preventing it from becoming a general world struggle." ... thereby not only achieves the maximum concentration of force upon his immediate object, but affords himself the best chance of a peace, if only temporary, which will leave him in possession of what he has gained ... (McCloughry and James, 1957, p. 54)."

It is obvious that the term global strategy causes myths and misunderstandings amongst scholars and practitioners. The term is therefore not suitable, since it contributes to the overall confusion of corporate worldwide strategies. The term global strategy tends to be misleading, misused, and sometimes abused. It appears to be a managerial utopia of a global strategy approach. The potential managerial utopia of the global strategy approach in a managerial context is briefly illustrated through the brief application of the Coca-Cola case in the next section.

The Coca-Cola case

The Coca-Cola Company[1] is often mentioned as a global company that possesses a network of global products and global business activities. In the 1970s and 1980s the company was moving towards consolidation and centralized control. At the time, the direction was to go global in order to expand geographically into many of the countries in which the company does business today. In the 1990s the world began to move in a different direction. Globalization forced changes to appear so fast that many countries could hardly manage the new global environment. As globalization continued, a large number of local and national leaders began to question the suitability of the ongoing worldwide business development. They commenced ensuring their sovereignty over their own political, economic, and cultural destinies. Daft (2000, p. 20) states:"As a result, the very forces that were making the world more connected and homogeneous were simultaneously triggering a powerful desire for local autonomy and preservation of unique cultural identity ... The world was demanding greater flexibility, responsiveness and local sensivity ... "

In addition, he states:" ... nimbleness, speed, and transparency and local sensivity had become essential to success ... (Daft, 2000, p. 20)."

Accordingly, the Coca-Cola Company sees itself not as a global organization, but as a multi-local enterprise (Anonymous, 1994). The historical strength of the company came from operating as a "multi-local" business that for decades relied heavily on the insight of local bottling partners. That is because its global strategy is to allow its businesses in more than 200 countries to act according to local need, local laws, local cultures, and so on. Coca-Cola pursues an assumed global strategy, allowing for differences in packaging, distribution, and media that are important to a particular country or geographical area (Anonymous, 1988). Hence, the global strategy is localized through a specific geographic marketing plan. Instead of applying a global strategy, it is likely to be a strategy of thinking globally, but acting locally. Daft (2000, p. 20) comments that:" ... the global success of Coca-Cola is the direct result of people drinking it one bottle at the time in their own local communities. So we are placing responsibility and accountability in the hands of our colleagues who are closest to those billions of individual sales ... "

This signifies that if their local colleagues develop an idea or a strategy that is the right thing to do locally, and it fits within fundamental values, policies, and standards of integrity and quality of the Coca-Cola Company, then they have the authority and responsibility to do so. At the same time, they will be accountable for the outcomes of the idea or strategy.

It is apparent that a company such as the Coca-Cola Company has realized the weaknesses and the deficiencies of applying a genuine or true global strategy approach in their worldwide business activities. To be in high favor of local ultimate consumer adaptations is emphasized as crucial for their business activities to be prosperous. Therefore, their multi-local strategy approach is still going strong and adequately for the company's worldwide business activities. In addition, according to Daft (2000) this will be the source of achieving successful and prosperous business activities, and maintaining them, during the twenty-first century.

Implications and consequences

In the previous sections, it has been illustrated that there are a large number of scholars and practitioners who use the term global strategy in one way or another. However, its usage and applications are often disparate, unclear and doubtful. A few of these have been briefly presented. The global strategy approach sometimes appears to be an etiquette or expression that is used just to improve the image or the attractiveness of a specific publication or a company's strategic approach. Normally it seldom refers to anything more than a worldwide strategy that is adapted to local conditions, characteristics, and circumstances. Hence, the application of a genuine or true global strategy approach is often poor. Furthermore, the frequent use of the global strategy approach since the mid-1980s seems to be the result of the wearing out of other suitable, alternative or potential strategy concepts. The use of the global strategy concept appears to reflect a tendency by scholars and by practitioners to use generally attractive and popular concepts or jargon. Shearlock (1993) states that British Airways had to pull together the disparate threads of its global strategy, which seems to be quite a common feature in many of the cited references. This signifies that the use of the term global strategy does not usually reflect a genuine or true global strategy approach. However, it is possible that a company's global strategy approach may be to adapt the corporate strategy of each market to local conditions, characteristics, and circumstances. Such global strategy does not accomplish the requisites of a genuine or true global strategy approach. It signifies also a misleading, misuse and abuse of the term global strategy. For example, Salmon and Tordjman (1989) distinguish between a multinational strategy and a global strategy in terms of the internationalization of retailing. They state that the multinational strategy involves the implantation of autonomous affiliates operating comparably to the parent company, but adapted to the local market. Global strategy corresponds to a reproduction, outside the national frontiers of the retailer, of a formula that is known to be successful in the originating country. In addition, in Kanter (1994) executives point out that there is a significant difference between simply having offices in several countries and developing a genuine or true global strategy.

Most cited references handle the term global strategy differently to the way it is defined in well-recognized American-English and British-English dictionaries, such as Random House Webster's Unabridged Dictionary and the Oxford English Dictionary. Just of few of the cited references apply the global strategy approach according to these dictionaries. The global strategy is, in one way or another, locally adapted to national, regional or continental characteristics. In order to clarify the core meaning of the global strategy approach some definitions are provided. They are collected from two widespread and acknowledged American-English and British-English dictionaries. For example, the term "global", according to Random House Webster's Unabridged Dictionary (1997, p.812) signifies:" ... pertaining to the whole word, worldwide and universal ... "

Likewise, in The New Shorter Oxford English Dictionary on Historical Principals (1993, p. 1101) "global" means:" ... pertaining to or embracing the whole of a group of items et cetera; comprehensive and total; and pertaining to the whole world, worldwide ... "

The term "strategy", according to Random House Webster's Unabridged Dictionary (1997, p. 1880) signifies:" ... a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result ... "

In The New Shorter Oxford English Dictionary on Historical Principals (1993, p.3085) "strategy" means:" ... The art or skill of careful planning towards an advantage or a desired end ... In game theory, business theory, etc., a plan for successful action based on the rationality and interdependence of the moves of opposing or competing participants ... "

The term strategy does not implicate any assumed mislead, misuse or abuse in the cited references of the present research, but the focus is on the global strategy approach as a whole, which signifies, according to the author of the present article, a strategy pertaining to the whole world, applied worldwide, and implemented universally.

Consequently, the author argues that a few of the cited references properly apply to the global strategy approach. In addition, there is a tendency to mislead, misuse and abuse the term. Two different words, namely "international" or "multinational", seem to be more appropriate in terms of describing the usage and the application of the global strategy approach in many of the cited references. The term "international" signifies, according to Random House Webster's Unabridged Dictionary (1997, p.996):" ... between or among nations: involving two or more nations; of or pertaining to two or more nations or their citizens; pertaining to the relations between nations; having members or activities in several countries; transcending national boundaries or viewpoints ... ."

In The New Shorter Oxford English Dictionary on Historical Principals (1993, p. 1397) the word "international" means:" ... agreed on by many nations; used by, or able to be used by many nations ... "

In Webster's Unabridged Dictionary (1997, p. 1263) "multinational" refers to:" ... large corporation with operations and subsidiaries in several countries; of, pertaining to, or involving several nations; noting or pertaining to multinationals ... "

The New Shorter Oxford English Dictionary on Historical Principals (1993, p. 1856) defines the term "multinational" as:"Comprising or pertaining to several or many nationalities or ethnic groups, etc.; Of a company or other organization: operating in several or many countries ... "

Accordingly, most of the cited references are proposed to be in accordance with traditionally international, multinational or other adaptable strategy approaches.

A glocal strategy approach and glocalization of business activities

The introduction of the terms "glocal strategy" and "glocalization" may be a compromise to improve the present usage of the term global strategy. The glocal strategy approach reflects the aspirations of a global strategy approach, while the necessity for local adaptations and tailoring of business activities is simultaneously acknowledged. The "glocal strategy" concept comprises local, international, multinational, and global strategy approaches (see Figure 1). It differs from the global strategy approach, since it explicitly recognizes the importance of local adaptations and tailoring in the marketplace of business activities. In addition, it comprises typically international and multinational strategy issues.

Accordingly, a local strategy approach recognizes the necessity to consider locally related issues in the performance of business activities in the marketplace. An international strategy approach refers to the local strategy approach of business activities that is in part applicable beyond the home market's boundaries, while a multinational strategy approach is applied when a wide selection of foreign markets is targeted through the business activities. The international and multinational strategy approaches acknowledge also the necessity for local adaptations of business activities in the different markets targeted. The global strategy approach has an emphasis on the standardization and homogenization of business activities across existing markets all over the world. However, the global strategy approach to manage worldwide business activities appears to be a managerial utopia. Therefore, the concept of glocal strategy is introduced to provide an improved accuracy of the present usage of the global strategy approach among scholars and practitioners. The glocal strategy approach also recognizes that there has to be a balance and harmony between the standardization versus the adaptation, and the homogenization versus the tailoring, of business activities. The harmony is achieved since the concept explicitly comprises the spectrum from local strategy issues to global strategy issues through the "glocalization" of business activities. Glocalization means that the standardization versus the adaptation, and the homogenization versus the tailoring, of companies' business activities are optimized. Accordingly, the focus on balance and harmony are crucial in a company's glocal strategy approach and its glocalization of business activities.

Final remarks

The issues of globalization of business activities and global strategies emerged in the 1980s and have been a popular topic since then. They have been used and applied among executives in international and multinational corporations, as well as among scholars in the field of international business. There is a continuum from the local adaptations of worldwide strategies on one side, and the universal or global strategies without adaptations on the other side. In an empirical context, the global strategy approach is more like a managerial utopia, though any kind of genuine or true global strategy will not be successfully implemented on a worldwide basis. A worldwide strategy has at least to be adapted to local conditions, characteristics, and circumstances to a certain extent. Nevertheless, it is a matter of thinking globally, but acting locally, i.e. acting and thinking "glocally". Apparently, in most areas it is not suitable to apply a genuine or true global strategy, since local adaptations of the business activities usually have to be taken into consideration in the marketplace.

Accordingly, the author argues that the misusage of the global strategy approach amongst scholars and practitioners is widespread. For some practitioners, and some scholars as well, this may be perceived as a matter of semantics. Nevertheless, in the academic field of research and its pertinent publications, the existence of well-defined concepts and the correct usage and application of concepts and approaches are of crucial importance. Scholars need a unifying conceptual framework that bears basically the same underlying core meaning. Without it, they will not be able to communicate effectively with each other. Research may be positioned wrongly and may mislead the audience or the potential readers.

The lack of universality and worldwide application of the global strategy approach is argued to be evident among scholars and practitioners. The usage and the applications focus on the international and multinational contexts. In one way or another, all assume that the global strategy approach has in part to be adapted to local conditions, characteristics, and circumstances. Therefore, the use of the global strategy approach is misleading, misused and sometimes abused. The usage of the concept is also multi-contextual. The usage of the term global strategy is confusing and not appropriate, or as the CEO of the Coca-Cola Company concludes (Daft, 2000, p. 20):" ... we must remember we do not do business in markets; we do business in societies ... In our future, we'll succeed because we will also understand and appeal to local differences. The 21st century demands nothing less ... "

Conclusions

The topic of the present article has provided a discussion on the importance of well-defined concepts and approaches used by scholars and by practitioners. It is troublesome when the usage of a concept or an approach is ambiguous and confusing. The present discussion focused on, and was exemplified through, the globalization of business activities and the use of the global strategy approach. Accordingly, the point of departure was the term "global strategy". In literature, the use of the global strategy approach that does not refer to the universality or the worldwide applicability of business activities is widespread. The use of the global strategy approach indicates that it is misleading, misused and abused multi-contextually in the field of international business. Usually, it is assumed that the global strategy approach has to be adapted to local conditions, characteristics, and circumstances. The global strategy approach is often nothing more than a question of international or multinational strategy approaches. Therefore, the contribution and relevance of the term global strategy is questioned. The use of the global strategy approach is argued to be confusing and not appropriate in most contexts. It is implicitly argued that the terms international strategy or multinational strategy provide a better description of what is often referred to as a global strategy. A compromise is proposed to be the term "glocal strategy", which in part reflects the aspirations of a global strategy approach, while the necessity for local adaptations and tailoring of business activities (i.e. "glocalization") is simultaneously acknowledged. The widespread usage of popular jargon cannot cover the fact that a genuine or true global strategy approach appears to be a managerial utopia. Accordingly, the terms "glocal strategy" and the "glocalization" of business activities are introduced to enhance the accuracy of the present usage by scholars and by practitioners of the term global strategy and the phenomenon often described as the globalization of business activities.

Application questions

1 Explain in what sense the term "glocal strategy" may enhance the accuracy of how the term global strategy is currently used by practitioners, as well as by scholars.

2 How can the model of the "glocal strategy" concept be applied by practitioners and by scholars in strategic management?

3 How can the term "glocal" be applied in fields other than strategic management?

Note

1 This section is to a large extent based upon an interview with the chairman and chief executive of Coca-Cola Company, Douglas Daft, in The Financial Times (27 March, 2000, p. 20).

References

1. Allio, R.J. (1989), "Formulating global strategy", Planning Review, March/April, pp. 22-7.

2. Anand, J. and Delios, A. (1996), "Competing globally: how Japanese MNCs have matched goals and strategies in India and China", Journal of World Business, Vol. 31 No. 3, Fall, pp. 50-62.

3. Anonymous (1988), "How Coke markets to the world", Journal of Business Strategy, Vol. 9 No. 5, September/October, pp. 4-7.

4. Anonymous (1994), "Coca-Cola's staffing philosophy supports its global strategy", Personnel Journal, Vol. 14 No. 2, Fall.

5. Barlett, C.A. (1982), "How multinational organizations evolve", The Journal of Business Strategy, Vol. 3 No. 3, pp. 20-34.

6. Bender, P.S. (1985), "The challenge of international distribution", International Journal of Physical Distribution & Logistics Management, Vol. 15 No. 4, pp. 20-5.

7. Champy, J. (1997), "Think globally, sell locally", Sales & Marketing Management, July, pp. 24-5.

8. Daft, D. (2000), "Back to classic Coke", The Financial Times, 27 March, p. 20.

9. Dahringer, L.D. and Muhlbacher, H. (1991), International Marketing: A Global Perspective, Addison-Wesley Publishing Company, Reading, MA.

10. Domzal, T.J. and Unger, L.S. (1987), "Emerging positioning strategies in global marketing", Journal of Consumer Marketing, Vol. 4 No. 4, Fall, pp. 23-40.

11. Ellwood, F.O., Larkins, E.R. and Winkle, G.M. (1999), "Issues in managing the multinational corporation", CPA Journal, Vol. 69 No. 1, pp.49-52.

12. Grune, G.V. (1989), "Global marketing global opportunities", Executive Speeches, November, pp. 10-3.

13. Hamel, G. and Prahalad, C.K. (1985), "Do you really have a global strategy", Harvard Business Review, Vol. 63 No. 4, July/August, pp. 139-48.

14. Hammerly, H. (1992), "Matching global strategies with national responses", The Journal of Business Strategy, March/April, pp. 8-12.

15. Henley, J.S. (1989), "African employment relationships and the future of trade unions", British Journal of Industrial Relations, Vol.27 No. 3, pp. 295-309.

16. Hout, T., Porter, M.E. and Rudden, E. (1982), "How global companies win out", Harvard Business Review, Vol. 60 No. 5, September/October, pp.98-108.

17. Jeannet, J-P. and Hennessey, H.D. (1992), Global Marketing Strategies, Houghton Mifflin Company, Boston, MA.

18. Johansson, J.K. (2000), Global Marketing: Foreign Entry, Local Marketing & Global Management, Irwin McGraw-Hill Companies, Inc., Boston, MA.

19. Kanter, R.M. (1994), Global Strategies: Insights from the World's Leading Thinkers, Harvard Business School Press, Boston, MA.

20. Kanter, R.M. and Dretler, T.D. (1998), "Global strategy and its impact on local operations: lessons from Gilette Singapore", Academy of Management Executive, Vol. 12 No. 4, pp. 60-8.

21. Katrak, H. (1983), "Multinational firms' global strategies, host country indigenisation of ownership and welfare", Journal of Development Economics, Vol. 13 No. 3, December, pp. 331-48.

22. Keegan, W.J. (1989), Global Marketing Management, Prentice-Hall, Englewood Cliffs, NJ.

23. Keegan, W.J. and Green, M.S. (2000), Global Marketing, Prentice-Hall, Inc., Upper Saddle River, NJ.

24. Kenyon, A. and Mathur, S.S. (1987), "The development of strategies by international commercial banks", Journal of General Management, Vol. 13 No. 2, Winter, pp. 56-73.

25. Kim, W. C. and Mauborgne, R. A. (1993), "Making Global Strategies Work", Sloan Management Review, Spring, pp. 11-27.

26. Koepfler, E.R. (1989), "Strategic options for global market players", Journal of Business Strategy, Vol. 10 No. 4, pp. 46-50.

27. Kogut, B. (1985), "Designing global strategies: profiting from operational flexibility", Sloan Management Review, Vol. 27 No. 1, Fall, pp. 27-38.

28. Kotler, P. (1986), "Global standardization courting danger", The Journal of Consumer Marketing, Vol. 3 No. 2, Spring, pp. 13-6.

29. Lamont, D. (1996), Global Marketing, Blackwell Publishers, Inc., Cambridge, MA.

30. Levitt, T. (1983), "The globalization of markets", Harvard Business Review, Vol. 61 No. 3, May/June, pp. 92-102.

31. Lewis, K. and Housden, M. (1998), An Introduction to International Marketing: A Guide to Going Global, Kogan Page Limited, London.

32. Lindell, M. and Karagozoglu, N. (1997), "Global strategies of US and Scandinavian R&D-intensive small- and medium-sized companies", European Journal of Management, Vol. 15 No. 1, pp. 92-100.

33. Lorenz, C. (1986), The Design Dimension: Product Strategy and the Challenge of Global Marketingg, Basil Blackwell, Oxford.

34. Malnight, T.W. (1996), "The transition from decentralized to network-based MNC structures: an evolutionary perspective", Journal of International Business Studies, First Quarter, pp. 43-65.

35. McCarthy, D.J. and Puffer, S.M (1997), "Strategic investment flexibility for MNE success in Russia: evolving beyond entry modes", Journal of World Business, Vol. 32 No. 4, Winter, pp. 293-319.

36. McCloughry, K. and James, E. (1957), Global Strategy, Cape.

37. Orlando, C.R. (1997), "Cross-national human resource diversity as value added", The Mid-Atlantic Journal of Business, Vol. 33 No. 2, pp. 93-100.

38. Palich, L.E. and Gomez-Mejia, L. R. (1999), "A theory of global strategy and firm efficiencies: considering the effects of cultural diversity", Journal of Management, Vol. 25 No. 4, pp. 587-606.

39. Porter, M.E. (1986), "The strategic role of international marketing", Journal of Consumer Marketing, Vol. 3 No. 2, Spring, pp.17-21.

40. Rabstejnek, G. (1989), "Let's go back to the basics of global strategy", Journal of Business Strategy, Vol. 10 No. 5, pp. 32-5.

41. Ralston, D.A., Holt, D.H., Terpstra, H. and Kai-Cheng, Y. (1997), "The impact of national culture and economic ideology on managerial work values: a study of the United States, Russia, Japan, and China", Journal of International Business Studies, Vol. 28 No. 1, First Quarter, pp. 177-207.

42. Random House Webster's Unabridged Dictionary (1997), Random House, New York, NY.

43. Roth, K. and Morrison, A.J. (1992), "Implementing global strategy: characteristics of global subsidiary mandates", Journal of International Business Studies, Fourth Quarter, pp. 715-35.

44. Salmon, W.J. and Tordjman, A. (1989), "The internationalisation of retailing", International Journal of Retailing, Vol. 4 No.2, pp. 3-16.

45. Segal-Horn, S. (1996), "The limits of a global strategy", Strategy & Leadership, November/December, pp. 12-17.

46. Shearlock, P. (1993), "Cure, but not cure all, for BA", Airfinance Journal, No. 151, June, pp. 35-7.

47. Sheth, J. (1986), "Global markets or global competition", The Journal of Consumer Marketing, Vol. 3 No. 2, Spring, pp. 9-11.

48. Simon-Miller, F. (1986), "World marketing: going global or acting local? Five expert viewpoints", Journal of Consumer Marketing, Vol. 3 No. 2, Spring, pp. 5-7.

49. Sugiura, H. (1990), "How Honda localizes its global strategy", Sloan Management Review, Fall, pp. 77-82.

50. The New Shorter Oxford English Dictionary on Historical Principles (1993), Clarendon Press, Oxford.

51. Wind, Y. (1986), "The myth of globalization", The Journal of Consumer Marketing, Vol. 3 No. 2, Spring, pp. 23-6.

52. Yip, G.S. (1989), "Global strategy ... In a world of nations?", Sloan Management Review, Fall, pp. 29-41.

53. Yip, G.S. (1992), Total Global Strategy: Managing for Worldwide Competitive Advantage, Prentice-Hall, Inc., Englewood Cliffs, NJ.

54. Yip, G.S. and Coundouriotis, G.A. (1991), "Diagnosing global strategy potential: The world chocolate confectionery industry", Planning Review, January/February, pp. 5-14.

Further reading

55. Geren, B. (1989), "In pursuit of global strategies: meeting worldwide competition", SAM Advanced Management Journal, Summer, pp.44-8.

[Illustration]
Caption: Figure 1; The concept of "glocal strategy"



--------------------------------------------------------------------------------


Copyright © 2004 ProQuest Information and Learning Company. All rights reserved. Terms and Conditions
Text-only interface