13 Jan If your company’s

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.

value:
12.50 points

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.

value:
12.50 points

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.

value:
12.50 points

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.

value:
12.50 points

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.