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The forgotten strategy.

Pankaj Ghemawat1

  • 1Harvard Business School, Boston, USA.

Harvard Business Review
|November 19, 2003
PubMed
Summary
This summary is machine-generated.

Multinational corporations should leverage arbitrage, exploiting global differences, not just replication. Strategic advantage lies in recognizing and combining both global similarities and differences for competitive edge.

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Area of Science:

  • Business Strategy
  • International Business
  • Globalization Studies

Background:

  • Multinational corporations often focus on replicating a single business model globally to achieve economies of scale.
  • This replication strategy overlooks significant opportunities arising from exploiting international differences.

Purpose of the Study:

  • To highlight the strategic importance of arbitrage in international business.
  • To identify and categorize the key differences among countries that create arbitrage opportunities.
  • To advocate for a balanced approach combining replication and arbitrage for competitive advantage.

Main Methods:

  • Conceptual analysis of globalization strategies.
  • Identification and categorization of international differences (cultural, administrative, economic, geographic).

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  • Examination of existing and emerging arbitrage opportunities across these categories.

    • Main Results:

    • Globalization offers substantial opportunities through arbitrage, exploiting country-specific differences.
    • Differences exist across cultural, administrative, economic, and geographic dimensions.
    • New arbitrage opportunities are continuously emerging due to technological and market evolution.

    Conclusions:

    • Companies focusing solely on replication miss out on significant competitive advantages.
    • A strategic approach that integrates both replication and arbitrage is crucial for success in the global marketplace.
    • Imagination and the ability to perceive a full range of strategic possibilities are key to achieving competitive advantage.