Identifying a Sustainable Strategy in a Globalized World: An argument for keeping the political/economic environment in the analysis

Dr. Mary Anne R. Brady
Sustainable Management

As organizations have become more focused on identifying new markets, outsourcing production, and discovering fresh resources corporate strategist must become more knowledgeable about the global environment. Some metrics to consider include country specific information such as GDP/GNP, legal congruence, cultural distinctiveness and product appropriateness. The focus of this paper is on the ability of corporate strategist to plan or implement a sustainable strategy given the political conditions of a country and its economy policy.

We don't have to go very far to recall what the recent presidential election had on Mexico-a stalemate that lasted most of 2006. In Asia, another political stalemate caused Thailand's economy to slide throughout 2006 contrary to projections in 2005 that the economy would recover from the devastation of the tsunami. This impasse caused a work stoppage on a significant number of megainfrastructure projects and contracts. In a more positive light, Japan over the last five years, under Prime Minister Koizumi, has been transformed into an economic powerhouse. The relationships between what is happening in the seats of government and the ability of corporate strategist to prepare for the future are closely linked. Michael Porter (1998), an authority on competitive strategy and international competitiveness, says governments should aim to create an environment in which firms can upgrade their competitive advantages.

From the examples above, it appears that the standoff in the governments of Mexico and Thailand are creating a limiting environment for organizations contrary to Japan's government policies which have improved competitive advantage. The questions is what do corporate strategist need to analyze when building a sustainable strategy?

Review of Strategic Development Methodologies:

Do popular methodologies for analyzing the internal and external environment of an organization augment development of a sustainable strategy in a global environment?

• Balance Scorecard: Measures are chosen to direct the attention of managers and employees on today's performance drivers expected to lead to competitive breakthroughs and to create value.
• Porter's 5 Forces: The rules of competition are embodied in the entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers, and the rivalry among the existing competitors. The external environment includes political, social, economic, technological, legal, and environmental factors.
• Scenario Planning: Several diverse real-life stories of equally plausible futures are carefully researched and designed to bring forward surprises and unexpected leaps of understanding. Driving forces to be considered: society, technology, economic, political, and environmental.
• SWOT Analysis: Scanning the external environment for hard data, which may be threats to one organization while offering opportunities to another, include technological change, legislation, sociocultural changes, and changes in the marketplace or competitive position.
• Systems Analysis: Effective corporate planning requires answers: What laws and government regulations affect the corporation and how? What new laws and regulations are under consideration and what are the chances of their being enacted?

The success of a strategy depends not on the state of the world today but on the state of the world in the future.

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