Weaknesses a global strategy as a means of gaining competitive advantage
Just like the local markets, global markets are faced with diversity in terms of cultural and business functions. A global or uniform strategy is only viable where a company is dealing in an industry where goods and/ or services are similar throughout the world or in the region it operates in. a global market strategy has the disadvantage of having a limited market access which may hinder a companies competitive advantage. To survive and be competitive in the global market, a company has to have a wider market base and a variety of products and services.
Concentrating on only one line of production may hinder effective growth and thus competitiveness (Quelch & Deshpande, 2004). Diversification is one of the major competitive strategy options available to a company. Globalization has led to evolution of different cultures that have different needs, tastes and preference. Dealing in similar products may drive a company out of the market especially where the product fails to meet the customers’ needs. Dealing in similar products in a global market puts a business venture at risk of the being pushed out of market.
While dealing with diversified goods, when one line of production fails the business can still continue operating using other lines of production. This is not the case with a global or unified strategy. Diversification also hedges a business from the losses which may arise due to under functioning of a particular product or service. Dealing with similar products exposes a business to the risks of operation uncertainty. Global changes may affect the production and distribution of particular goods and with a global and unified strategy; this may lead to devastating effects to a business or company.
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Also, bad reputation of a brand in one area may lead to diminishing of sales of the products and this may have negative effects to the whole company employing a unified strategy (Quester & Conduit, 1999). Another weakness of a uniform strategy is that it lacks adaptability and flexibility. While dealing in the global market, a firm is faced with different external threats emanating from government operations or policies to changes in consumers needs and preferences.
Other external threats include production of substitute and complimentary goods thus high competition. For a business to be competitive and to survive in the global market, it should be highly adaptable and flexible. These two elements lacks in the uniform global strategy thus making its competitive strategy to be at stake. A government may change its policies concerning trading particular products within its borders. A company using a global strategy may be adversely affected by such changes of policies.
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Weaknesses a global strategy as a means of gaining competitive advantage. (2018, Oct 06). Retrieved from https://phdessay.com/weaknesses-a-global-strategy-as-a-means-of-gaining-competitive-advantage/
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