Central Challenge of Global Strategy Harvard Business

Bartlett & Beamish state, “Today, every firm must meet the challenges of managing strategies, organizations, and operations that are increasingly more complex, diverse, and uncertain than during earlier times — and do so within the confines of their administrative heritage. Discuss this statement in light of relevant ideas presented in “Distance still Matters” (in what ways do ideas in the readings complement or conflict with the claims of Bartlett & Beamish?)

The statement of Barlett & Beamish clearly complements with the ideas presented in “Distance still Matters.” Distance still Matters are an article that goes into extensive depth in order to explain the hard reality of global expansions for organizations. PankajGhemawathas put forward ideas and arguments that are completely in line with the statement of Barlett and Beamish.

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Pankaj in his article “Distance Still Matters” explains that the impact of distance should not be neglected by organizations because it is rapidly becoming a challenge for many successful organizations. He states that the impact of distance should be measured in order to completely evaluate the complexity involved with expansion into foreign markets.

Firstly, in order to measure the impact of distance, Pankaj has discussed the relationship put forward by economists that trade and distance has a negative correlation.

Secondly, this article also discusses the “Cage distance framework” which has four dimensions of distance, which are namely, cultural, economic, administrative and geographic. The Cage framework is discussed in great depth in order to explain the potential challenges that organizations have to face in the long run due to expanding in far off foreign markets. Each dimension of this framework explains different situations that arise to due distance and diversity impacts.

Thirdly, Pankaj has put forward the idea of “Industry Sensitivity to Distance” in order to measure how sensitive different industries are to distance. Along with a research associate at Harvard Business School, Pankaj carried out this research to analyze different dimensions of distance that affect foreign market opportunities. The research showed for example, that electricity is highly sensitive to geographic and administrative dimensions of distance as compared to cultural dimension.

The impacts of geographic distance are explained in further detail as we go ahead with the article. Pankaj states that the farther you are from a country, the more difficult it becomes to conduct business there. He then proceeds with the argument that distance is not the only issue, other factors such as the size of the target country and its market, political situation of that country, access to waterways, oceans, labor wage policy of the country’s government and environmental and legal rules and regulations of the country also play a major role in foreign expansion.

Then the article proceeds to economic distance and the factors associated with it. The article clearly states that the most important economic factor that forces organizations to create distances by expanding their operations into other countries is the wealth and purchasing power of their potential customers. In short, we can say that the demand of customers forces organizations to expand into new territories in order to satisfy the needs and wants of their loyal customers around the globe. Organizations take expansion and distance decisions only when they see a highly positive response from their customers, therefore, the economic distance factor mainly depends upon the financial well being of customers, that is, whether customers have a sound element of purchasing power or not.

Q2. Bartlett & Beamish state, ” For most multinational enterprises, the challenge of the 2000s is both strategic and organizational, as firms are required to simultaneously capture the advantages of both localization and globalization while responding to conflicting external demands <(ex)customers’ demands, host government’s demands.>.”

Discuss this statement in light of relevant ideas presented in “Culture and organization” (in what ways do ideas in the readings complement of conflict with the claims of Bartlett & Beamish?)

The explanation given in this chapter of culture and organization are in line with the statement of Barlett and Beamish.

The chapter on culture and organization discusses in great detail how culture influences organization structures, processes/operations etc. The paper starts with the Hofstede’s research of 1960s in which he used a sample of 116000 employees in 40 countries to measure the impact of culture on organizational structure. Hofstede’s research was successful in finding five dimensions, which are as follows, power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity and long-term orientation.

The cultural factors influence an organization’s capabilities because different societies and people have different cultural values and promoting the brand and products according to the cultural values leads to successful results. If the customer demand and loyal factors for an organization are high around the globe then that organization takes the decision of expanding into foreign markets. But immediately after taking the expansion decision, the organization has to evaluate the cultural and globalization challenges.

Adopting the right organizational culture is no doubt extremely essential for multinationals which operate around the globe. In today’s highly competitive globalized world, each and every organization needs to focus on its strategic and organizational demands in order to cater to the demands of its customers successfully.

Multinational organizations have to go a step ahead in their management functions because they have to deal with various issues at the same time. Multinationals have to cut their costs, adapt to different cultures, deal with the rules and regulations the governments of different countries and make changes to their products and services according to the taste of customers of different countries.

For example, the business strategy of Nike is highly smart and efficient. Nike is selling products all around the world at high prices whereas many critics argue that Nike shoes almost cost nothing to make because they are made in countries like Vietnam where the cost of labor is extremely low. But Nike argues that there are various elements that add to its cost structure and results in high prices of its shoes.

One of the main elements that allow Nike to dominate the market and to charge high prices is because Nike has been successful in achieving a competitive advantage over its competitors. Competitive advantage means a unique advantage that an organization has in term of its efficient resources, strategy or methods which cannot be imitated by any other competitor. Nike has developed a highly unique strategy which is to maintain its standardized quality over the world. It has become brand equity of the organization and helps in sustaining competitive advantage over its rivals (Hall & Jones, 2000)

The high quality of Nike makes its customers loyal and high prices do not matter to them. Also, the marketing strategy of Nike is highly costly but at the same time effective because Nike targets unique segments of the market as well as mass marketing. It uses unique niche segments to develop strong brand equity and brand name in the target markets so it can sustain its competitive advantage over its potential competitors. The high level income group and different age groups are targeted by Nike to cater to the upper/rich class in order to maximize their profits in the long run (Malik & Merunka, 2006).

Q3. Bartlett & Beamish state, “The competitive intensity in most industries is such that a firm must gain competitive parity in terms of efficiency, flexibility, and learning, and it must also achieve differentiation on at least one.” Discuss this statement in light of relevant ideas presented in “regional strategies for global leadership” (in what ways do ideas in the readings complement of conflict with the claims of Bartlett & Beamish?)

The ideas which are presented by PankajGhemawat in his Harvard Business Review article “Regional strategies for global leadership” are to complimenting with Barlett&Beamish’s statement only to a certain extent. Barlett & Beamish state that in order to survive the intense global competition, firms must gain competitive advantage over their competitors with respect to flexibility, efficiency, learning and differentiation.

On the other hand, PankajGhemawat has explained the importance regional strategies for global leadership. Pankaj argues that multinational organizations need to fully understand and implement strategies at the regional level. When organizations expand into new territories, they immediately try to adopt and implement a global strategy which consumes most of their energy, time and attention and in the end does not show good results. Due to this reason, Pankaj states that organizations that want to operate efficiently around the globe should adopt a regional oriented strategy.

The article proceeds forward with examples of successful organizations such as Wall Mart International, General Electrics and Toyota who have understood the importance of regional strategies to operate successful in today’s era of globalization.

Jeffrey Immelt, the CEO of GE states that he has hired regional teams to deal with the company’s globalization initiatives effectively. On the other hand, Toyota’s Vice President states that the company aims to move forward with globalization through their strategy of localization and through dealing with each region independently. The CEO of Wall Mart has also talked on similar lines by stating that globalization is all about playing 3-D chess at regional, global and local levels.

The author further explains the reality of regions by stating that the process of regionalization is rapidly evolving mainly because of the emergence of regional blocs. These regional blocs have further triggered the process of globalization. Cross border integration and business is rising due to the impacts of regionalization. Pankaj points out that there is clear evidence that multinational companies are boosting their sales by rapidly adapting to the process of regionalization. A study of the Journal of International Business Studies shows that almost 88% of the world’s most successful multinationals achieve 50% of their annual sales from their home country/regions.

Through the regional strategy menu, PankajGhemawat classifies regional business strategies into five dimensions, namely, the home base strategy, the platform strategy, the portfolio strategy, the mandate strategy and the hub strategy. He states that without implementing these strategies multinational organizations cannot gain a competitive advantage in today’s highly globalized world.

In the end, Pankaj concludes the article by explaining that multinationals have to critically define their regions in order to measure the strengths and weaknesses associated with their regional strategies. The author states that firms should not restrict their regional strategies to a particular region, instead they should interpret their strategies to a number of geographical levels.

However, it is important to understand that implementation regional strategies is no easy task, it is in fact a huge challenge for organizations because they have to re-design their entire organizational structure according to the requirements of regionalization.

Q4. Bartlett & Beamish state, “To be effective, change in a transnational organization’s anatomy (the formal structure of its assets, resources, and responsibilities) must be complemented by adaptations to its psychology (the organization’s culture and management mentality). Discuss this statement in light of relevant ideas presented in “Managing Executive Attention in the global Company” (in what ways do ideas in the readings complement of conflict with the claims of Bartlett & Beamish?)

Julian Birkinshaw, Cyril Bouquet and Tina C. Ambos have presented their ideas in “Managing Executive Attention in the Global Company,” which are fully complementing with the opinion of Barlett & Beamish.

The paper starts with the discussion that all successful organizations like Coca Cola, Nestle and Shell Oil have factories all around the globe which they have to manage effectively. When organizations expand their operations into different countries they have to balance their organizational structure, assets/resources, responsibilities and culture in order to be successful in the long run. It is of utmost importance that multinational organizations understand the culture of different countries before starting their operations there. Without properly understanding and adapting to the culture of different countries and environments, multinational organizations cannot successfully operate around the globe.

Expansion is no doubt a mind boggling and tiring job but senior executives have to work extensively on it in order to avoid future organizational problems. The writers of this article conducted a research for this matter by interviewing 50 executives of about 30 organizations to find out the reasons due to which executives are unable to give proper time and attention to unstable countries and subsidiaries. The research had three main hypotheses, namely, the subsidiary weight & attention, the subsidiary voice & attention and the subsidiary isolation & attention.

The research stated that lack of information is not a valid reason because executives of transnational organizations are loaded with unlimited information that is monthly reports, annual reports, etc. Of all their operations around the world. The problem is mainly that they are unable to prioritize which countries and markets need their time and attention to the most.

One of the reasons for this lack of efficiency of the executives is ethnocentric thinking. Ethnocentric thinking basically means that executives of multinational organizations think that the home market/country is the most important.

Another factor stated in the article is hard mentality which basically explains that executives of transnational organizations tend to focus their attention mainly on markets that their rival competitors are focusing upon.

These two factors are summarized by the authors of the article as “focus on either the home market or the hot market.” In order to reduce this biased and wrong behavior of the executives, the article highlights strategies//solutions to allocate executive attention to corporate portfolio in an effective manner. Research and findings give two approaches for handling this issue. The first approach is “Attracting Attention with Weight” and the second is “Attracting Attention with Voice.”

The first approach basically asks multinationals to short list the subsidiaries which play a major role in the success of the overall profitability. After shortlisting, the executives will know which subsidiaries need their attention to the most and this way they can manage not only their profitability but also their time and energy.

The second approach of attracting attention with “voice” is basically designed for subsidiaries that lack weight. This approach allows executives to adopt two proactive efforts, namely, initiative taking and profile building.

The first effort of “Initiative Taking” focuses on growing the subsidiary by selecting new projects such as developing new products or services or by entering new markets. Executive managers start working and thinking energetically to develop new ideas to lead the weightless subsidiary to new levels of growth and success. An example of this initiative taking effort is also mentioned in the article, that is, the CEO of ABB visited their Czech subsidiary and found that the managers there had taken an innovative initiative of networking the computers of the company at night to increase their built in processing capacity. This initiative allowed the Czech subsidiary of ABB to gain significant weight in terms of recognition and growth.

The second effort of “Profile Building” is also of critical importance because it allows the subsidiary managers to attract the attention of their executives by building a highly impressive and sound profile. The research showed that the subsidiaries made impressive profiles of their operations mainly focused on three aspects, that is, they built a stellar track record, they supported corporate objectives and they worked as internal brokers.

These two efforts of initiative taking and profile building proved to be highly effective for subsidiaries because they were not only able to gain the attention of their executives but were also able to prevent themselves from the threat of strategic isolation.


Julian Birkinshaw, Cyril Bouquet and Tina C. Ambos (2007) Managing Executive Attention in the Global Company

PankajGhemawat (2001). “Distance Still Matters” — The hard reality of global expansion. Harvard Business Review.

PankajGhemawat. (May 2009) “Regional Strategies for Global Leadership” Harvard Business Review

PankajGhemawat (March 2007)Managing Differences — The Central Challenge of Global Strategy Harvard Business Review

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