Types of International Strategies
Research and find an example of three multinational corporations (MNC) that each use one of the three international strategies: Multidomestic, Transnational, and Global. Do not use an example provided in the background readings for the module.
Explain techniques used in multidomestic strategy (¾–1 page)
- Analyze the MNC’s use of this strategy
- Discuss the pros and cons of the strategy
Explain techniques used in transnational strategy (¾–1 page)
- Analyze the second MNC’s use of this strategy
- Discuss the pros and cons of the strategy
Explain techniques used in global strategy (¾–1 page)
- Analyze the final MNC’s use of this strategy
- Discuss the pros and cons of the strategy
From a marketing perspective, management needs to decide on whether to maintain a standardization approach and offer the same product all over the world or to use an adaptation approach and modify the product for each country. A closely related issue is to decide on the overall strategy of the company beyond just marketing. In international business, there are four main overall strategies to consider:
The international strategy, in spite of its name, actually involves the least amount of international commitment of any of the four strategies discussed in this module. In this strategy, a company sells its product overseas without adapting the product for different overseas markets or taking advantage of cost reductions from globally integrated operations. If a company’s international sales increase over time, typically they find a need to use one of the three other strategies discussed in this module.
The global approach responds to a low-cost strategy, with a standardized product and marketing worldwide. The costs of customization are thus avoided. But it differs from the international strategy in that a global approach typically involves active overseas operations such as locating factories overseas and sourcing materials from all over the world in order to minimize costs.
The multidomestic approach locates the firm autonomously in separate countries; responds to national operational, product, and market requirements; and affords flexibility. In this case there is a high degree of product adaptation. It customizes products and marketing strategies to the local needs. The advantage to this strategy is that the product can be adjusted to local tastes and cultures. The disadvantage is that when you offer a customized product in each country, you cannot take advantage of cost savings from producing one standardized product.
The transnational approach is ideal; it customizes products and marketing strategies to local needs and demands; it transfers competencies; it takes advantage of cost savings. Caterpillar Inc. pursues the transnational approach. The disadvantage is that it can be tough to implement and manage a transnational approach—it is the most difficult and complex to effectively accomplish.
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