O good for when pressures for global integration and

o good for when pressures for global integration and local responsiveness
are low
o usually companies with distinctive capabilities together with strong
reputation and brand names
o [Google centralizes R&D in California]
o Downside is that the home country view limits the view of the business
with risks of skilled local competitors getting ahead.

- Multi-Domestic strategy maximizes local responsiveness. It is based on different
product or service offerings and operations in each country depending on local
market conditions and customer preferences.
o Each country manager has considerable autonomy
o Loosely coordinated internationally
o Collection of independent units with value chain specific to the country
o Good when strong benefits to adapting to local needs and when there
are limited efficiency gains from integration.
o Common in food and consumer products and marketing driven
companies
o Downside is manufacturing inefficiencies, costly product and service
variations and risks towards brand and reputation if become too diverse
- Global strategy maximizes global integration. The world is seen as one
marketplace with standard products and services that fully exploit integration
and efficiency in operations.
o focus is capturing scale economics and exploiting location economies
worldwide
o exact opposite of multi-domestic strategy
o most beneficial when there are substantial cost or quality efficiency
benefits from standardization or when customer needs are homogenous
across countries.
o Common for commodity or commodity like products
- Transnational Strategy is the most complex strategy that tries to maximize both
responsiveness and integration. Aim is to unite key advantages of the multi-
domestic and global strategies while minimizing their disadvantages. It also
maximizes learning and knowledge exchange between units. Products and
services and operational activities are, subject to minimum efficiency standards,
adapted to local conditions in each country.
o the value chain includes centralized manufacturing to increase efficiency
combined with distributed assembly and local adaptations.
o Coordination encourages knowledge flows from wherever ideas and
innovation come from
o [General electric]
Key methods for expansion are mergers, acquisitions and alliances.
A merger is the combination of two previously separate organizations in order to form a new
company.
An acquisition is when an acquirer takes control by purchasing a majority of shares in a target
company.
M&As aim to improve the competitive advantage of the companies involved by:
- Extension: extending a firm’s reach in terms of geography, products or markets.
o [FB buys WhatsApp to capture new products and markets]
- Consolidation: bringing together two competitors can have 3 benefits

o Increases market power by reducing competition
 Might allow to raise prices
o Combination can improve efficiency by reducing surplus capacity or
sharing resources
o The greater scale may increase production efficiency or increase
bargaining power with suppliers forcing them to reduce prices.