What Is a Global Strategy? (With Types and Examples)

Updated February 3, 2023

As companies expand, many of them might consider moving into global markets. In order to operate globally, however, a company should consider creating a global strategy. Understanding how to create an effective global strategy can help make a business successful across the world.

In this article, we discuss the definition of a global strategy, why it's important, the three key types of global strategies and examples of global strategies.

What is a global strategy?

A global strategy is a strategy that a company develops to expand into the global market. The purpose of developing a global strategy is to increase sales across the world. The term "global strategy" includes standardization, and international and multinational strategies. Developing a global strategy can benefit your company in many ways, including making sales in new markets, increasing your global brand awareness and more.

To develop a global strategy, it's important to consider how your business's products can perform in global markets. Global strategy creation also involves analyzing your competitors, global customers, production sites and other components of your business to help you ensure that your business succeeds in the global market.

Importance of developing a global strategy

Developing a global strategy is important because it can help you ensure that your business succeeds in multiple locations around the world. The benefits of a global strategy can include:

Generating new sales

One key benefit of creating a global strategy is increasing sales by operating in new markets. When you move into a global market, you can make more sales off of the products that you already have. Creating a global strategy can also allow you to take advantage of emerging markets, which are locations around the world that have developing markets and increasing economic growth. Operating in emerging markets can help your company make sales and increase its profits.

Accessing new resources

A global strategy can also help your company take advantage of new resources. Some companies choose to create global strategies for the purpose of resource seeking—finding new resources in other parts of the world. Often, this can help companies use less expensive resources, which can reduce their costs and increase their profits.

Fostering global brand awareness

Creating a global strategy can also help you increase your global brand awareness. As you move into a global market, you can increase your recognition in all parts of the world. There are also many benefits of using a global branding strategy, including increasing the consistency of your messaging, reducing your marketing costs and increasing your company's customer awareness across the globe.

Lowering labor costs

Another benefit of creating a global strategy is taking advantage of lower labor costs in other parts of the world. Some companies include efficiency-seeking activities in their global strategies to allow them to decrease their labor costs. Efficiency seeking is attempting to take advantage of differences in costs in locations outside of a company's home country, and it can allow companies to significantly reduce their costs and increase their profits.

Creating economies of scale

Expanding into the global market can also allow your company to experience the benefits of economies of scale. Economies of scale occur when a company experiences reduced costs as a result of increasing their production and efficiency. This can allow your company to reduce production costs, which can increase your profit.

Diversifying risks

Creating a global strategy can also allow you to diversify business risks, including economic risks and operational risks like natural disasters. This is because business risks can vary across the world. Diversifying risks can help your company protect itself from risks that could become major threats.

Increasing operational flexibility

Another benefit of developing a global strategy is the opportunity to increase operational flexibility. Operating in a global market can allow you to shift your production easily. When you have a global strategy, you can move your manufacturing overseas, partner with foreign entities, market your products to different locations and change your production in other ways.

Types of global strategies

There are three key types of global strategies:

Standardization

A standardization strategy is a strategy that a company develops to expand its operations into the global market. In a standardization strategy, you sell the same products in every location. A standardization strategy is characterized by keeping control centralized rather than delegating decisions to local markets. Some of the benefits of a standardization strategy include the ability to develop products more quickly and easily coordinate activities across locations.

International

An international strategy involves importing and exporting products. Using an international strategy can allow you to work with foreign suppliers and sell to customers around the world while keeping your physical premises within your home country. Typically, international strategies still focus mainly on the company's home market while doing some business overseas.

Multinational

When you use a multinational strategy, you can cater your products to each individual local market. You can also have physical business locations and staff based in various locations. The key benefit of using a multinational strategy is the ability to cater your business to individual locations.

Global strategy examples

Here are some real-world examples of the three key types of global strategies:

Standardization strategy example

Imagine that you want to create a standardization strategy for your luxury purse company. In this case, you would create a strategy to sell essentially the same purses in every location. This would allow you to keep your products consistent across locations.

International strategy example

Using the same scenario, imagine that you decided to create an international strategy for your luxury purse company instead. Your international strategy would still focus on your home country, but you would do some business overseas. For example, your physical production would still occur in your home country, but you could export some purses overseas.

Multinational strategy example

Consider that your luxury purse company wanted to create a multinational strategy. In a multinational strategy, you could create different luxury purses for each location that you sell in. This would allow you to cater your business to its different markets.