Multidomestic Strategy Multidomestic strategy is one where strategic and operating decisions are decentralized to the strategic business unit in each country in order to tailor products and services to the local market. The multidomestic strategy: BUSINESS POLICY° LEARNING NOTES
Chapter 8: International Strategy 8-5 assumes business units in different countries are independent of one another contends that markets differ and can be segmented by national borders focuses on competition within each country suggests products and/or services can be customized to meet individual markets needs or preferences assumes economies of scale are not possible because of demand for market-specific customization The use of multidomestic strategies: usually expands the firm’s local market share because the firm can pay attention to the needs of local buyers results in more uncertainty for the corporation as a whole, because of the differences across markets and thus the different strategies employed by local country units does not allow for the achievement of economies of scale and can be more costly decentralizes a firm’s strategic and operating decisions to the business units operating in each country Global Strategy A global strategy is one where standardized products are offered across country markets and competitive strategy is dictated by the home office. The global strategy: assumes strategic business units operating in each country are interdependent attempts to achieve integration across businesses and national markets, as directed by the home office emphasizes economies of scale offers greater opportunities to use innovations developed at home or in one country in other markets often lacks responsiveness to local market needs and preferences is difficult to manage because of the need to coordinate strategies and operating decisions across borders requires resource-sharing and an emphasis on coordination across national borders Transnational Strategy A transnational strategy is a corporate strategy that seeks to achieve both global efficiency and local (national market) responsiveness. It is difficult to achieve because of requirements for both strong central control and coordination to achieve efficiency and local flexibility and decentralization to achieve local responsiveness. A transnational strategy mandates building of a shared vision and individual commitment through an integrated network to produce a core competence that would result in strategic competitiveness (that competitors would find difficult to imitate). Effective implementation of a transnational strategy often produces higher performance than does implementation of either the multidomestic or global international corporate-level strategies.
You've reached the end of your free preview.
Want to read all 10 pages?
- Summer '12
- Business, International Trade