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Executive Interviews: Interview with Pankaj Ghemawat on Global Strategy
January 2008
Pankaj Ghemawat Anselmo Rubiralta Professor of Global Strategy at IESE Business School the Jaime and Josefina Chua Tiampo Professor of Business Administration at the Harvard Business School. 
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So if we accept that borders do
matter, briefly, how can companies
plan strategies that recognize
differences?
This is what my whole book,
Redefining Global Strategy, is about.
But let me focus on three important
subquestions about global strategywhy,
where and how that those who
recognize borders will answer very
differently from those that do not. Why: Look beyond growth and scale
economies at all the components of
economic value in assessing crossborder
alternatives. In contrast, a
borderless frame superimposed on the
reality that most firms foreign
penetration is much lower than their
domestic penetration is likely to
induce an
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obsession with what I call
dinosaur economics.
Where: Determine which of a range of
international differences cultural,
administrative, geographic, and
economic are key in your industry, and
look for differences in differences:
categorize foreign countries into those
that are close to your home base along
the key dimensions versus those that
are very distant. A borderless frame, in
contrast, implies, that all countries are
equally close and offers no obvious
conclusions about where to competebeyond
going for the biggest markets.
(Dinosaur economics redux.) How: Stretch the responses to
differences beyond tweaking the
domestic business model and also
consider ways to profit from
differences, instead of treating them
all as constraints on value creation. In
contrast, a company that is convinced
that borders donot matter is likely to
compete abroad the same way that it
does domestically, for reasons ranging
from economies of scale to the sheer
difficulty of grasping how different
the conditions in foreign countries
truly are. In summary, a failure to recognize that
borders matter is likely to lead to a
misplaced faith in bigger and blander
strategies. -
So does your redefinition of global
strategy represent a compromise
between the extremes of the "one size
fits all" and "think local, act local"
approaches to global strategy that most
companies seem to waver between? Or
is it something more?
My redefinition of global strategy
represents an attempt to get around
the rhetorical and conceptual
limitations of the kind of
compromise or balancing act you are
suggesting. From a rhetorical
perspective, such compromises are
often encapsulated in the slogan
"think global, act local." But while
this slogan is meant to steer
companies towards a sensible
middle ground, its vagueness has
allowed it to be hijacked to promote
extreme agendas. For example,
Roberto Goizueta, the late Chairman
of Coca-Cola, used it to justify
extreme standardization while, at
the opposite end of the spectrum,
Orit Gadiesh, the Chairman of Bain
and Company, uses a variant to
encourage extreme localization.
Since people now apply the slogan
to the full spectrum of possibilities,
from the most standardized to the
most localized, it no longer means
anything in particular. A second, even more fundamental
problem with framing the challenge
of global strategy as striking a
balance between the extremes of
local customization and global
standardization is that these
extremes do not so much span a
strategy continuum as correspond to
two singularities in which crossborder
complexities can be finessed
and simple single-country
approaches applied. To see this, note
that if markets were totally
segmented from each other, singlecountry
approaches to strategy
could be applied country by country
and would imply complete
localization; at the other extreme, if
markets were totally integrated,
there would be the equivalent of one
very big country, and single-country
approaches would work once again,
although complete standardization
rather than localization would be
the implied strategy. These
extremes-and linear combinations of
them-are not, therefore the best
reference points for a strategy that
seeks to take cross-border
complexities seriously.
1.
Global Expansion Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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