The international strategy creates value by transferring the product, skill, human resource in a global market, which opportunity lack the local competitors (Daniels & Radebaugh, 2003). Basically, the multinational company developed a product then it distribute the product all over the world. They always try to differentiate a product that local product. They have developed centralized system all the decisions are controlled from headquarter. Some of multinational company first undertake the popular local company and then only expand their market on that area. When coca cola first time entered in India, Pepsi already exist in market and thumb - ups is another popular brand in India. So coca cola didn’t penetrate the market of both companies after that coca cola decide that first we undertake the one local company which was thumb - ups company then after only expanding the market. Then they acquire thump - Ups Company three times more than its market value (David, 2011). So sometimes these strategies would be useful for other multinational companies. An international strategy make sense if a company has valuable unique competitions than that local competitor in international market lack and if the company faces relatively weak pressures for local responsiveness and cost reduction (). There are three different international choice
Multi - Domestic Strategy (Think Locally and Act Locally)
Global Strategy ( Think Globally and Act Globally)
Transnational Strategy ( Think Globally and Act Locally)
Multi - Domestic Strategy: A Multi - Domestic strategy makes most sense when there are high pressure for local responsiveness and low pressure for cost reductions (Wheelen & Hunger, 2012). It’s locally think and locally act strategy. In multi - domestic strategy always manufacture the local responsive product as per the customer. They have used local human resource and local raw materials. Indian Patangali Company is based on that strategy.
Global Strategy: Companies that follow a global strategy focus on increasing profitability by earning the benefits of cost reductions that come from experience - curve effects and local economy (Hofer, 1997). They are focus a low cost strategy and deliver their product all over the globe. The different activity like marketing, production, and research and development performed from central location. In global strategy, product can’t be customize as per local wants/conditions. The product is equal and same for all over the world. They have think globally and act globally strategy. In this strategy company must follow the same process, channel and marketing technique all over the world not for specific target market. For example, Courier service DHL and boing manufacturing company Air Bus applied the global strategy.
Transitional strategy: Companies whose operations are not confined to any country or a region and which pressure low cost and product differentiation at the same time are referred to as transitional companies (Hofer, 1997). Companies are basically operate on a think globally and act locally is that strategy. Company has always high pressure to maintain the high quality product in global market at low cost. So that they also have a high pressure on developing a differentiate product on a local/global market. Coca cola has followed the transitional strategy. They have same product quality all over the world but different is they applied local distribution marketing channel.
In my point of view, the mobile phones companies have global strategy would be best the best for taking market all over the world. Mobile phones are technical product and they should have same specification all over the world and they are available in same price in a market. I can buy an iPhone or Samsung in a same price all over the globe. They have same types of marketing and distribution system. They provide equal feature product to all not individual customization. Their control is from head office so I can say that they have centralized system.
Similarly as per my understanding, dry soup and canned soups followed a multi - domestic strategy and it would be best fit for them. Company can manufacture the soap and canned soup from local resources and local raw materials and they can make it as per customer choice. There is different in choices of customer, south Asian customer choice different soup than European and American customer. South Asian people are more religious than European and American. So they value their culture and religion and only use those foods which their culture easily accept. In south Asian culture not openly used Beefs and other meat items and soup so when the company designed a product they don’t manufacture a product to all. So that these food items have a multi - domestic strategy.
In my point of view, large home appliances have transitional strategy would be best fit. In transitional strategy is think globally and act locally strategy. The home appliances products are different in size, and shape and price on geographically. South Asia has different culture than Europe’s and Americas. So they want to make a design as per their locality so as a manufacture design a product to all in a differentially.
Similarly I think appeal and software has a transitional strategy. Company should always design the software and appeal product as per geography. Chinas, Japanese and Koreans people have minimum height and weight and European and American people are max hight and weighty. So we sure always keeps those thinks in our mind then only design a product.
Furthermore, because of the duplication of manufacturing facilities, companies that pursue an international strategy tend to incur operating costs. Therefore, this strategy is often unsuitable for industries in which cost pressures are high (Michael & Hitt, 2004).
Daniels, J. D., & Radebaugh, L. H. (2003). Sullivan, International Business: Environments and Operations. Prentice Hall; 10 edition .
David, F. (2011). Strategic Management: Concept and Cases. New Dheli. : Pearson Education.
Hofer, C. (1997). Conceptual for Formulation Corporate and Business Stretagies . New York: Dover, MA: Case Publising.
Michael, A., & Hitt, R. (2004). Strategic Management: Competitiveness and Globalization, Concepts and Cases. South-Western College Pub; 6 edition .
Wheelen, T., & Hunger, J. (2012). Strategic Management and Business Policy. New Dheli: Pearson Education.