Nowadays, companies are becoming more and more global. When a company decides to go into the international market it has to face what it is known as the global-local dilemma. The global local dilemma states that companies have to consider different options when deciding the strategy they are going to use. They can offer local-responsiveness solutions, this is, adapting their products to the national culture or using a global integration solution, carrying out businesses in a similar way throughout the world. The solution of the dilemma will affect many areas of the company. Companies may choose between four different strategies to solve the dilemma: multidomestic, regional, transnational and international (Cullen, 2013).
In the multidomestic …show more content…
It has low capacity of local response, there is no differentiation of the products and they also use similar marketing techniques all over the world. Some activities are done in the home country of the company. One company that follows this strategy is Toys R us (Cullen, 2013).
The regional strategy uses some of the advantages of the international and transnational strategies while adapting their products to the local needs. Economic integrations like the European Union or MERCOSUR develop this strategy.
Transnational and international strategies are appropriated when the company wants to reach a global market. Transnational strategies have a certain degree of flexibility while the flexibility in the internationals is much lower. If a company wants to establish their activities in any country it should use the transnational strategy and they would also reduce costs, as it is the cheapest alternative. This is possible using economies of scale, and as a consequence all the products will be quite similar yet some differentiation is possible. Transnational and international strategies also use the same marketing campaign in all the countries. If the customer needs are the same, it is more likely that a company develops a transnational or international strategy. Regarding trade, if companies have a high volume of imports and exports, a transnational or international strategy would be …show more content…
Companies under the multidomestic strategy have most of the value chain activities in the country where they operate, while the regional can be located in more countries but within the region itself. Products as well as the marketing campaign are made to satisfy the needs of local customers, which makes this process much more expensive. If the selected countries have restrictions on certain activities, it is more likely that the multidomestic or regional strategy is developed (Cullen, 2013). In order to use a regional strategy the company should have significant operations in more than 15 countries and the percentage of sales in the home region should be less than 50%. Regional strategies allow managers to locate the factories in other countries to obtain certain advantages at a lower price or better quality but maintaining a geographic proximity which permits to add value to the final products (Ghemawat,
In the multidomestic …show more content…
It has low capacity of local response, there is no differentiation of the products and they also use similar marketing techniques all over the world. Some activities are done in the home country of the company. One company that follows this strategy is Toys R us (Cullen, 2013).
The regional strategy uses some of the advantages of the international and transnational strategies while adapting their products to the local needs. Economic integrations like the European Union or MERCOSUR develop this strategy.
Transnational and international strategies are appropriated when the company wants to reach a global market. Transnational strategies have a certain degree of flexibility while the flexibility in the internationals is much lower. If a company wants to establish their activities in any country it should use the transnational strategy and they would also reduce costs, as it is the cheapest alternative. This is possible using economies of scale, and as a consequence all the products will be quite similar yet some differentiation is possible. Transnational and international strategies also use the same marketing campaign in all the countries. If the customer needs are the same, it is more likely that a company develops a transnational or international strategy. Regarding trade, if companies have a high volume of imports and exports, a transnational or international strategy would be …show more content…
Companies under the multidomestic strategy have most of the value chain activities in the country where they operate, while the regional can be located in more countries but within the region itself. Products as well as the marketing campaign are made to satisfy the needs of local customers, which makes this process much more expensive. If the selected countries have restrictions on certain activities, it is more likely that the multidomestic or regional strategy is developed (Cullen, 2013). In order to use a regional strategy the company should have significant operations in more than 15 countries and the percentage of sales in the home region should be less than 50%. Regional strategies allow managers to locate the factories in other countries to obtain certain advantages at a lower price or better quality but maintaining a geographic proximity which permits to add value to the final products (Ghemawat,