No. 24

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School

The Taft University System, William Howard Taft University *

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603

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Management

Date

Feb 20, 2024

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docx

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Uploaded by SargentTitaniumBadger23

Class Notes Assume you are in charge of developing the strategy for an international company selling products in some 50 different countries around the world. One of the issues you face is whether to employ a multidomestic strategy, a global strategy, or a transnational strategy. a. If your company’s product is mobile phones, which of these strategies do you think it would make better strategic sense to employ? Why? A global strategy would be appropriate since most mobile phones are constructed to work globally and buyer needs across the world are relatively universal. There are typically two ways in which a business can handle the idea of breaking down core missions amongst various locations—the global strategy or the multidomestic strategy. A global strategy involves a high degree of concentration of resources and capabilities in the central office and centralization of authority in order to exploit potential scale and learning economies. Customization at the local level is thus necessarily low. b. If your company’s product is dry soup mixes and canned soups, would a multidomestic strategy seem to be more advisable than a global strategy or a transnational strategy? Why or why not? A transnational approach is appropriate. Country-to-country customization to accommodate differences in taste preferences would most likely be necessary. When employing a transnational strategy, the goal is to combine elements of global and multidomestic strategies. A transnational strategy allows for the attainment of benefits inherent in both global and multidomestic strategies. The overseas components are integrated into the overall corporate structure across several dimensions, and each of the components is empowered to become a source of specialized innovation. It is a management approach in which an organization integrates its global business activities through close cooperation and interdependence among its headquarters, operations, and international subsidiaries, and its use of appropriate global information technologies. This is especially important as globalizing becomes the norm, and as firms begin to compete for the same resources on both the regional and global scales. The key philosophy of a transnational organization is adaptation to all environmental situations and achieving flexibility by capitalizing on knowledge flows (which take the form of decisions and value-added information) and two-way communication throughout the organization. The principal characteristic of a transnational strategy is the differentiated contributions by all its units to integrated worldwide operations. As one of its other characteristics, a joint innovation by a company's headquarters and by some of its overseas units leads to the development of relatively standardized yet flexible products and services that can capture several local markets. Having a product or service that is recognizable anywhere and universal enough to capture multiple demographics in multiple regions will enable a firm to successfully develop on the global stage. Structure follows strategy, implying that a transnational strategy must have an appropriate structure in order to implement the strategy. Just as the transnational strategy is a combination or

hybrid strategy between global and multi-domestic strategies, the organizational structure of firms pursuing transnational strategies is a structure that draws on characteristics of the worldwide geographic structure and the worldwide product divisional structure. The combination of mechanisms needed is somewhat contradictory, because the structure must be centralized and decentralized, integrated and nonintegrated, and formalized and informalized. But firms that can successfully implement this strategy and structure often perform better than firms pursuing only multidomestic or global strategies. c. If your company’s product is large home appliances such as washing machines, ranges, ovens, and refrigerators, would it seem to make more sense to pursue a multidomestic strategy, a global strategy, or a transnational strategy? Why? 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. The multidomestic strategy represents the opposite view of international strategy. Resources are dispersed throughout the various countries where the firm does business, decision-making authority is pushed down to the local level, and each business unit is allowed to customize products and market offerings to specific needs. The corporation as a whole foregoes the benefits that could be derived from centralization and coordination of diverse activities.

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