Interactive Assignment Chapter 7
Strategic Choices in International Markets
Assume you are in charge of developing the strategy for a
multinational company selling products in some 50 countries around the world.
One issue you face is whether to employ a multidomestic strategy, a
transnational, or a global strategy.
Read the overview below and answer the questions that
follow.
When competing internationally, strategy making is more
complex for five reasons: (1) different countries have home-country advantages
in different industries; (2) there exist location-based advantages to
performing different value chain activities in different parts of the world;
(3) varying political and economic risks make the business climate of some
countries more favorable than others; (4) companies face the risk of adverse
shifts in exchange rates when operating in foreign countries; and (5) differences
in buyer tastes and preferences present a conundrum concerning the trade-off
between customizing and standardizing products and services.
A company must choose among three alternative approaches for
competing internationally: (1) a multidomestic strategy or think local, act
local approach to crafting international strategy; (2) a global strategy—a
think-global, act-global approach; and (3) a combination of think-global,
act-local approach, known as a transnational strategy. A “think-local, act-local”
or multidomestic strategy is appropriate for industries or companies that must
vary their product offerings and competitive approaches from country to country
in order to accommodate different buyer preferences and market conditions. The
“think-global, act-global” approach (or global strategy) works best when there
are substantial cost benefits to be gained from taking a standardized and
globally integrated approach and little need for local responsiveness. A
transnational approach (think global, act local) is called for when there is a
high need for local responsiveness as well as substantial benefits from taking
a globally integrated approach. In this approach, a company strives to employ
the same basic competitive strategy in all markets but still customize its
product offering and some aspect of its operations to fit local market
circumstances.
1.
If your company produces a basic mobile phone with limited
features and wants to compete internationally, which strategy would the company
most likely employ—a multidomestic strategy, a transnational strategy, or a
global strategy?
A transnational strategy would be appropriate since the same
strategic theme could be employed, but country-to-country customization is
necessary to accommodate consumer preferences in mobile phone features.
A transnational strategy would make better strategic sense
since it provides for tailoring the competitive strategy for each country’s
market.
A global strategy would work best as it allows the company
to use a different competitive approach in each country.
A global strategy would work best since the same phone will
be offered and most likely will require only very minor deviations from one
country to another.
A multidomestic strategy would make the most sense since the
mobile phone’s features must be tailored to the specific market conditions and
buyer preferences in each country market.
2.
If your company’s product is dry soup mixes and canned
soups, which strategy for competing internationally would your company most
likely employ—a multidomestic strategy, a transnational strategy, or a global
strategy?
A global strategy is advisable in order to delegate strategy
to local managers who have firsthand knowledge of local conditions.
A multidomestic strategy is advisable because local market
conditions preclude a uniform, coordinated worldwide strategic approach.
A multidomestic strategy is advisable since customer needs
and preferences vary greatly in the soup industry.
A global strategy is advisable since a different competitive
approach will need to be used in each country.
A transnational approach is appropriate. Country-to-country
customization to accommodate differences in taste preferences would most likely
be necessary.
3.
If your company’s product is large home appliances such as
washing machines, ranges, ovens, and refrigerators, which strategy for
competing internationally would your company most likely employ—a multidomestic
strategy, a transnational strategy, or a global strategy?
A global strategy would be advised since buyer needs vary
greatly across the world.
A multidomestic strategy is recommended because of
significant country-to-country differences in customer preferences, buying
habits, and government regulations in the large appliance industry.
A transnational strategy would fit the industry environment
best since the competitive approach should be different for each country.
A multidomestic strategy is advised because of the need for
manufacturers to utilize the same marketing approaches worldwide.
A transnational strategy would make the most strategic sense
because people would use the exact same size and style of appliances worldwide.
4.
If your company’s product is apparel and footwear, would a
multidomestic strategy, a transnational strategy, or a global strategy seem to
have more appeal?
A multidomestic strategy would make more strategic sense
because of the opportunities for economies of scale in apparel and footwear
manufacturing and the operation of centralized distribution centers.
A transnational strategy is preferred since apparel and
footwear items can reflect global fashion trends while being customized as
needed because of country-to-country differences in customer preferences and
tastes.
A multidomestic strategy is advised because of the need for
manufacturers to utilize the same marketing approaches worldwide.
A global strategy would be advised since buyer needs are
universal across the world.
A transnational strategy would fit the industry environment
best since customer preferences and style preferences do not vary from country
to country.
