Global Strategy: An Organising Framework
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Journal article review
This review critiques and analyses the article ‘Global Strategy: An Organizing Framework’, written by Sumantra Ghoshal, which appeared in the journal ‘Strategic Management Journal’ (vol 8, 425-440), published in 1987. This review will begin by summarising the article. It will then briefly analyse the effectiveness of the article based on how it was structured – investigating how the information is set out and whether the readers can access it effectively and with ease. And finally the article will be critiqued based upon its authority and accuracy, and how current and relevant the information presented is. The review will also analyse any graphs and tables before finally judging the article’s accessibility and credibility.
The central theme of the paper is to present a ‘conceptual framework encompassing a range of different issues relevant to global strategies’. The framework provides a foundation for organising the existing and the growing literature on international competition and ‘creating a map of the field’. This article can be used for both teaching and future research, but more importantly this article is most beneficial for manager of multinational corporation. Which is aimed at providing then with ‘relating and synthesizing the different perspectives and prescriptions that are currently available for global strategic management’. The writer has reviewed Global Strategy in an unbiased way by presenting both the positive and negative consequences and views of each concept within the framework. Overall the article is presented clearly, well written and fluent, as is it relevant to the topic.
The purpose of this paper is to provide an organising framework which could possibly help managers of multinational corporations (MNCs) and/or academics in ‘formulating the various issues that arise in global strategic management’. This article serves as a basis for organising existing literature on the topic of global strategy. This is a result of corporate objectives being multidimensional and quite often seen to be mutually contradictory, thus causing difficulty for both researchers and practitioners to deal with the rich literature on global strategies. ‘Actions to achieve a particular objective often impede another equally important objective’ (Ghoshal, 1987).
The article begins by presenting the multiple arrays of perspectives and prescription that are created by various other writers in the field. He explains that the difference between authors and their views on global strategy and how to manage them are not limited. He gives a brief insight into the views of 4 different authors and how on various occasions these views may contradict each other yet none of these can be truly criticised. Therefore this framework provides the key strategic objectives of MNCs and the tools that one is required to posses in order to achieve them from an range of different writers. He continues most of this article referencing back to these other authors to support his views. The article further goes onto explaining how this integrated analysis of different means and ends are more helpful than a simple categorizing scheme which only distinguishes between global and multi-domestic strategies.
Before elaborating on the different means and ends, the author presented a simple argument on the goals of multinationals and their strategic objectives. He states that there are 3 broad categories which must be considered when generating an inclusive checklist of factors and issues that are to be considered when reviewing different strategic alternatives. These factors include:
- Achieving efficiency in its current activities
- Managing risks associated with carrying out these activities
- Developing internal learning capabilities so as to be able to innovate and adapt to future changes.
The writer provides this simply and straightforwardly in a table that displays the factors that may be considered when carrying out comprehensive statistic audits for MNCs to achieve a competitive advantage. The 3 factors that Ghoshal (1987) aluminates are; the exploitation of national differences in input and output markets, the benefits from scale economies in different activities and the exploiting of synergies or scope economies that are available due to diversity. He mostly elaborated on scope economies in product and market diversification as he believes that this aspect is both new and not very well understood. He defines scope economy based on ‘the notion that certain economies arise from the fact that the cost of joint production of two or more products can be less than the cost of producing them separately. He supports this by comparing product diversification and market diversification in three categories of; shared physical assets (diversified firm, flexible manufacturing system, cross-subsidization of markets and exploitations), shared external relational (with customers, suppliers, distributors) and shared learning. However he does also explain the negative aspect of scope economy as being costly due to its different environmental demands. He advises the reader by saying that to succeed the firm must differentiate its management system so that its activities can fall under external consistency within its own environment and internal consistencies within the firm and across its many different activities. The writer goes on to saying that to create these synergies it may result in compromises of external consistency in each activity.
Ghoshal states that this checklist ‘simply serves as a basis for mapping the overall strategies of the company’. He also goes on to saying that the essence of an organizing framework and the key to a successful global strategy is to ‘manage the interaction between the different goals and means’ (Ghoshal, 1987). The article also acknowledges the possible benefit for MNCs by explaining how another ‘practical utility of the framework’ is to highlight the ‘contradictions between different goals and different means’ thus emphasising the strategic dilemmas that would otherwise be resolved through omission.
The following sections of the framework further explain the dimensions of its construct – ‘the strategic objectives of the firm and the source of competitive advantage available to MNC’ – he strengthens his arguments by using other article sources that ultimately contributes to the literature and generally the overall framework.
The author concludes the paper by briefly discussing trade-offs that are steadfast in some of the more recent prescriptions on global strategic management. According to Ghoshal (1987) these trade-offs imply ‘that to formulate and implement a global strategy, MNC managers must consider all the issues suggested in Table 1, and must evaluate the implications of different strategic alternatives of each of these issues’.
The article under review was accessed in a clear and well set out form. The article was introduced with an abstract, which provided the stance or thesis developed by the article, background to the issue as well as briefly outlining the purpose of the article, its main points, findings, conclusions, implications and future research directions. The rationales for the article and for the research it describes were also included. The paragraphs in the body were mostly short and therefore the information in each paragraph was easy to access, however there were a few longer paragraphs that seemed to be overly complicated for those who might not have any prior knowledge on the topic. The article is broken into headings and subheadings and most of the paragraphs were structured in a clear cut way thus allowing important information to be categorised and spread out for easy access. The Introduction provided background information and the rationale behind the article. This allowed clear understanding of the context and importance of the study. The body was logically organised. This allowed the reader to read the entire article or just the part of interest. As the article described a global strategy for organising framework, the provided tables and diagrams to clearly display and outline its framework. For example when the author was describing the relationship between strategic objective and their competitive advantages thus allowing the reader to clearly see the contradictions. The writer also used a table to explain scope economies in product and market diversification. The conclusion adequately explained and summed up the article and provided adequate research directions. The article had both qualitative and quantitative aspects with excerpts from other articles and sources related to the topic. There were extensive references cited in-text and set out clearly in the References section. The article was a PDF document which meant it could easily be printed and read or accessible online. However as it is a scanned document no information was provided to help to make the information accessible. This in turn disallowed readers to evaluate the article’s worth more effectively, however linked headings and subheadings allowed the reader to move through the paper more quickly. The article’s structure was logically developed overall; with the use of short paragraphs helping the reader access the main points more easily thus allowing an average person to read most of the article however in some sections the level of literature was advanced.
The journal, the ‘Strategic Management Journal’, is a publication of the highest quality research most relevant to strategic management. It is one of the highest ranked business and management journals. The author’s credibility was established in a number of ways. These included the fact that the article was a peer reviewed article. Also the fact that most of the in-text citings involved papers which he has jointly written on similar topics thus indicating his broad knowledge of the topic. The article also contained references from a broad array of different writers who are also seen to be very knowledgeable in the topic. This information highlights that the article is highly credible. The source of the information in the article was a current and based on recently emerged popular concepts among MNGs and also researchers in the field of international management. The information is verified and supported by a comprehensive, recent reference list with these sources cited in-text to support both the literature review and the research itself. The information in the article is therefore accurate and reliable. The article’s accuracy is also confirmed by the careful scrutiny that it was subjected to by two anonymous referees from the strategic management journal. The fact that the article is peer reviewed also verifies its precision. The journal, although published in October 1987, is still very prominent in the field of strategic management. The research it describes was current (for its time) and the article cites up-to-date references in the body of the text (ranging from information 1980s). The article is although not current it is supported by a range of studies over an extensive time frame. This was an academic journal on an academic database, which has high credibility in an academic context. It was written to inform researchers and students rather than to entertain or advertise. The subject is covered well and as the topic is based on an international scale it can be generalised. It would be relevant to both these groups but particularly a manager of a multinational corporation. It is a simple article to read and understand and therefore can be relevant to first year students. The article is very detailed with the topics being explored in great depth. The material is presented in a logical and organised way. The article is accordingly relevant to the academic community. The information was objectively developed, well supported with a current research base and with all evidence acknowledged and referenced. There was no evidence of bias. The article acknowledged the complexity of the issues discussed in a number of ways. For example, the literature review provided explanations of how some managers of MNCs can be contradicting when it comes to finding a strategic advantage and that globalisation of a company can result in negative effects if managers aren’t aware of the conceptual ambiguity about what a ‘global strategy’ really means. The article, with its source an academic journal on an academic data base and available as both print and electronic forms, is stable as a resource.
This review has both summarised and critically reviewed Ghoshal’s article ‘Global Strategy: An Organizing Framework’’. The structure, accessibility, content, strengths and limitations of the article were analysed and critiqued along with the tables which was included. The authors and journal are credible, accurate and current. The article’s information is accessible, well structured, relevant and presented in an objective way. The article is also stable as a resource. The article has contributed to the literature in terms of its valuable critique of current research study on existing and the growing literature on international competition and the implications provide possibilities for future research in this field. The article has contributed to a better understanding amongst the business community of the advantages and disadvantages, for the globalisation of MNCs.
S. Ghoshal. Strategic management journal, volume 8, No.4 (Sep. – Oct., 1987), pg.425-440
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