One of the learning outcomes of the Integrated Management syllabus is to be able to "explain the process of strategy formulation". There are numerous approaches to strategy formulation, but all of them to varying degrees require you to pay attention to the changing commercial environment.
This has altered in unprecedented ways over the past few decades, creating new challenges for businesses. One of the most significant of these has come to be known by the term "globalisation". This is defined in many ways, but the one in the Integrated Management CIMA Learning System will serve our purposes well. It states that the process of globalisation involves "a move away from national economic systems towards a system where national markets are merging into one huge global marketplace, with the tastes and preferences of consumers from around the world beginning to converge".
Globalisation has also meant that national economies have become increasingly interdependent, so a change in the economy of one country can quickly affect those of others. A dramatic example has been the way in which problems in the US sub-prime mortgage market in late 2007 have had a damaging global impact. Whether a company is trying to anticipate changes in the market for its products or the threat of competition, it must increasingly consider not only the national situation but also the global one.
But the claim that firms must operate in a global marketplace where the preferences of consumers around the world are becoming similar has become so familiar that there's a danger it will be taken for granted. The idea of convergence is something that we become aware of whenever we go on holiday abroad. One of the reasons that we travel is to experience the social, cultural, climatic, scenic, architectural and other differences that various countries offer. Globalisation has meant that this experience is becoming harder to find. With the exception of the climate and the scenery, other things are becoming much the same as back home. More and more, the traveller searching for the "foreign" experience is forced to travel further into the hinterland as modernity reaches even the most rural of locations. Multinational companies have played a significant role in the convergence process. Exploiting advances in communications and the removal of trade barriers, they have been able to access new markets and cheaper capital, materials and labour. They are increasingly...