Global strategy as defined in international marketing as a type of strategy guide to globalization. As opposed to a multidomestic strategy a global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction, but with weak pressures for local responsiveness. Therefore, it allows these firms to sell a standardized product worldwide. However, fixed costs (capital equipment) are substantial. Nevertheless, these firms are able to take advantage of scale economies (cost advantages that an enterprise obtains due to expansion) and learning curve effects, because they are able to mass produce a standard product that can be exported (providing that demand is greater than the costs involved). A global strategy should address the following questions:
- What must be (versus what is) the extent of market presence in the world’s major markets?
- How to build the necessary global presence?
- What must be (versus what are) the optimal locations around the world for the various value chain activities?
- How to turn a global presence into globalcompetitive advantage?
Global strategies require firms to tightly coordinate their product and pricing strategies across international markets and locations; therefore, firms that pursue a global strategy are typically highly centralized. See multidomestic strategy.