Pankaj Ghemawat in his book on the subject, Redefining Global Strategy, presents two strategic frameworks to help companies operate across borders. Two specific frameworks are – ADDING Value Scorecard and AAA.
The ADDING Value Scorecard is a framework to help companies assess whether a particular strategic move makes sense to add value to the business both locally and globally.
The acronym stands for –
- A – Adding volume, or growth;
- D – Decreasing costs;
- D – Differentiating or increasing willingness—to—pay;
- I – Improving industry attractiveness or bargaining power;
- N – Normalizing (or optimizing) risk;
- G – Generating and deploying knowledge (and other resources and capabilities).
One more framework to help companies deal with cross-border differences; it’s called the AAA triangle which stands for adaptation, aggregation and arbitrage.
- Adaptation strategies are designed to help companies adjust to differences across borders;
- Aggregation strategies are designed to help companies overcome some country differences by grouping them based on similarities;
- Arbitrage strategies seek to profit from some of these national differences rather than treating them as constraints.
Pankaj Ghemawat also has a blog, What in the World, on globalization. For my blog “Get off the drawing board”, the context of “learn-to-burn ratio” that he talks about in his blog entry is topical.
- Recognize the value of options (alternatives) in an uncertain world. Strategy options often vary greatly in their "learn-to-burn" ratios – the rate at which they generate information about which scenario will come to pass versus the rate at which they commit resources to particular scenarios. Once you take this kind of option value into account, it opens the door to additional strategic possibilities: e.g., mixed supply chains (rather than complete offshoring or onshoring), toeholds as ways of exploring new markets and, more generally, sequenced strategies.