It is vital for any company to draw up such strategies and plans for the future that will bring profit and allow them to deepen their development. Successful global development determines further financial success, which is why developing a strategy that works is so important. Recently, however, more and more brands have been failing in planning despite their considerable resources. This turn of events usually results in these organizations suffering heavy losses and eventually going bankrupting. All these are why it is important to examine why global strategies fail.
Many factors together contribute to the destruction of the expected strategic results. Pankaj Ghemawat (2007), in his book on exploring global brand strategies, discusses the main reasons why brands fail. All aspects influencing failure in one way or another relate to the fact that managers poorly or do not fully understand the specifics of the market. For example, this manifests itself in the fact that many strategies fail because they rely too heavily on globalization without considering all its factors (Pankaj, 2007). Many managers create company development plans without considering that globalization in the world is not legal and complete. When a strategy is designed to work well in a theoretical space without obstacles, it cannot cope with the difficulties that arise. Such difficulties arise because globalization, despite its development, is incomplete (Pankaj, 2007). As a result, strategies designed to spread brand influence unhindered fail. Such barriers, despite their minimal significance, lead global companies to collapse because they are not considered.
Another reason for the failure of global strategies can be called the fact that managers rarely take into account the characteristics of the different countries for which the plan is being developed. Actions that have made a company successful in one region may have the opposite effect in another (Pankaj, 2007). This primarily concerns countries whose culture is significantly entrenched and is not suppressed by the influence of others. Under such conditions, global strategies cannot reveal their influence and develop to their full extent since a strong local culture is a deterrent factor for this.
Based on the previous argument, a similar statement can be made about the fact that subsidiaries of international companies do not do well due to the distance factor. Many managers use the same development paths for their firms in all countries, thinking they will work equally well everywhere (Pankaj, 2007). This opinion is erroneous because managers fail to successfully control the activities of their subsidiaries due to different perceptions of the same actions by people living in another country.
The key problem with the failure of global strategies is that they are not adapted to other countries’ cultural and purchasing characteristics. Developing expansion plans for companies means that management must be fully aware of the realities they face. A slight change in a company’s focus can enable it to succeed more in other market conditions than in its home country. In addition, purchasing power also plays an important role, which differs almost all over the world (Pankaj, 2007). Most companies do not consider adjusting the pricing policy to local conditions when choosing a strategy, which leads to defeat.
In conclusion, it is important to note that the defeat of global strategies despite companies’ considerable resources is due to several factors at once. The first reason identified is that globalization is not advanced enough to base an entire strategy on it. Such a decision often leads to failure since the boundaries between different cultures are still there. Another reason considered is the inability of management to adapt their companies to the realities of other countries. These motives are interconnected and are close in meaning, therefore, changes should be carried out by managers not only at the planning stage but also during the implementation of the plan.
Reference
Ghemawat, P. (2007). Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business Review Press