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Choosing the right strategy to cope with globalization

Choosing the right strategy to cope with globalization

Thinking about delocalizing or tackling emerging markets? Depending on their specific characteristics and context, companies have a more or less broad palette of strategies to meet the challenges of globalization.

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The economy is becoming increasingly global day by day. For companies, this trend opens up attractive opportunities – expanded markets, opportunities to realize scale economies, an available pool of low-cost labor, etc. However, there are also significant constraints, as competition becomes more fierce with the arrival of increasing numbers of less predictable players, the associated risks become more diverse and more impactful, new competencies must be developed, etc.

The publications that we have analyzed emphasize the diversity of possible responses to these fundamental market trends. In particular, they distinguish four potential strategies, each of which can be very profitable for companies able to master the corresponding key success factors:

– Take advantage of larger markets and cost reduction opportunities, within the traditional framework of an integrated company.

– Specialize in one step of the value chain and set up the company to operate as a “virtual organization.”

– Position the company as a strategic subcontractor to capitalize on the demand generated by the fragmentation of value chains.

– Take advantage of opportunities neglected by competitors focused on global markets by satisfying local market needs better than they do.

Synopsis n.152a


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