Global strategy as defined in business terms is an organization's strategic guide to globalization. A sound global strategy should address these questions: what must be (versus what is) the extent of market presence in the world's major markets? How to build the necessary global presence? What must be AND (versus what is) the optimal locations around the world for the various value chain activities? How to run global presence into global competitive advantage?

Academic research on global strategy came of age during the 1980s, including work by Michael Porter

Michael Porter

Michael Eugene Porter is the Bishop William Lawrence University Professor at Harvard Business School. He is a leading authority on company strategy and the competitiveness of nations and regions. Michael Porter’s work is recognized in many governments, corporations and academic circles globally...

 and Christopher Bartlett & Sumantra Ghoshal

Sumantra Ghoshal

Sumantra Ghoshal was an academic and management guru. He was the founding Dean of the Indian School of Business in Hyderabad, which is jointly sponsored by the Kellogg School at Northwestern University and the London Business School....

. Among the forces perceived to bring about the globalization of competition were convergences in economic systems and technological change, especially in information technology, that facilitated and required the coordination of a multinational firm's strategy on a worldwide scale.

A global strategy may be appropriate in industries where firms are faced with strong pressures for cost reduction but with weak pressures for local responsiveness. Therefore, it allows these firms to sell a standardized product worldwide. However, fixed cost

Fixed cost

In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be time-related, such as salaries or rents being paid per month, and are often referred to as overhead costs...

s (capital

Capital (economics)

In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...

 equipment) are substantial. Nevertheless, these firms are able to take advantage of scale economies and experience curve effects

Experience curve effects

Models of the learning curve effect and the closely related experience curve effect express the relationship between equations for experience and efficiency or between efficiency gains and investment in the effort....

, because it is able to mass-produce a standard product which can be exported (providing that demand is greater than the costs involved).

Global strategies require firms to tightly coordinate their product and pricing strategies across international markets and locations, and therefore firms that pursue a global strategy are typically highly centralized.