★ Cater to local customer needs. Businesses in multidomestic industries should adapt products, services, and marketing to suit local customer needs. ★ Accommodate differences in distribution channels. For example, Japan’s distribution system for consumer goods is characterized mainly by small retailers. ★ Respond to local competition. To out-compete local rivals, successful firms devise offerings and practices that best meet local demand. ★ Adjust to cultural differences. For those products where cultural differences are important, the firm should adapt the product and marketing, especially when local competitors are numerous. ★ Meet host government requirements and regulations. The firm must always comply with local legal and regulatory requirements, which can vary substantially from country to country.
LISA YANG IBUS20002 Business in the Global Economy Global firms also need to ★ Encourage local managers to identify with the broad objectives of the firm ★ Visit subsidiaries periodically to instill corporate values and priorities ★ Rotate employees within the corporate network to promote development of a global perspective ★ Encourage country managers to interact and share experiences with each other through regional and global meetings ★ Provide incentives and penalties to promote compliance with headquarters’ goals Transnational firms also need to: ★ Exploit scale economies by sourcing from a reduced set of global suppliers and concentrating production in relatively few locations where competitive advantages can be maximized ★ Organize production, marketing, and other value-chain activities on a global scale ★ Optimize local responsiveness and flexibility ★ Facilitate global learning and knowledge transfer ★ Coordinate global competitive moves—that is, deal with competitors on a global, integrated basis How IKEA strives for transnational strategy ● Some 90% of the product line is identical across more than two dozen countries ○ modifies some furniture offerings to suit tastes in individual countries. ● An overall, standardized marketing plan is centrally developed at HQ in Sweden, but is implemented with local adjustments. ● Management decentralizes some decision-making to local stores, such as product displays and language to use in advertising. GLOBAL STRATEGY HQ seeks substantial control over all country operations in order to minimize redundancy and to achieve maximum efficiency, learning, and integration worldwide. Products, marketing, and company practices are relatively standardized. R&D, manufacturing, marketing, and other activities tend to be concentrated at headquarters, where they can be centrally coordinated and controlled. Views the world as one large marketplace.