Global Strategy: Definition & Example

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  • 0:00 From International to Global
  • 2:12 Why Would a Company Go Global?
  • 3:14 Lesson Summary
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Lesson Transcript
Instructor: Monica Gragg

Monica has taught college-level courses in Tourism, HR and Adult Education. She has a Master's in Education and is three years into a PhD.

This lesson provides an overview of how companies transition from an international company to a global company using global strategy. We will use McDonald's, the largest food service retailer in the world, to demonstrate how and why global strategy is used.

From International to Global

Do you ever wonder how McDonald's became the largest food service retailer in the world? After all, it has 36,000 restaurants in 119 countries serving about 70 million people a day! Only about 14,000 restaurants are in the U.S., which means that the majority of McDonald's restaurants are global. Seventy-five years ago, it was just one restaurant in San Bernardino, CA. If McDonald's were a country, it would have a bigger economy than Latvia. Their success didn't happen overnight, but it did start with a global strategy.

Global strategy helps companies grow from being an international company to a global company. Once upon a time, McDonald's was classified as an international company. An international company focuses on the domestic market with some sales overseas. Their product or services are entirely made in their home country. On the other hand, an international company may also be defined as a company that sells imported products in the domestic market.

When McDonald's expanded to Canada and Puerto Rico, it became a multinational company. A multinational company has products or services in just a few countries or may use services or raw materials from a select number of countries. The domestic market is still primary, but the product may be modified to satisfy their customers in other countries. For example, as Puerto Rico is primarily Spanish speaking, the McDonald's menu is offered in Spanish and English. They may also add a few items that emulate local customs and cuisine. I remember visiting a McDonald's in Spain that offered beer, and in bigger cities in China, McDonald's delivers!

The last phase is global. Just 28 years into the business, McDonald's was in less than 30 countries and opened its 5,000th restaurant (in Kanagawa, Japan). With that amount of restaurants, it would be extremely difficult to modify a product or service for every country, like in the multinational phase. So in the global phase, the product, service, and brand are nearly the same worldwide.

Why Would a Company Go Global?

As you can see, global strategy is a process of expanding and competing in globalized markets. A company will strategize to adjust their products and pricing, and assess domestic and international marketplaces to determine how they can satisfy a global audience with few variations in their product, service, and brand.

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