Question Tag: Transnational Strategy

i) International Strategy:

An international strategy involves exporting products or services from the home country to international markets with minimal local customization. The focus is on maintaining a strong home base while leveraging core competencies globally.

Risks:

1. Limited Responsiveness: There is a risk of not meeting the specific needs of local markets due to the lack of customization, which can lead to a loss of market share.
2. Logistics and Distribution Challenges: Managing logistics and distribution from a central home base can be complex and costly, leading to potential delays and increased expenses.

ii) Global Strategy:

A global strategy involves treating the world as a single market, standardizing products and services across all markets to achieve economies of scale and cost advantages.

Risks:

1. Cultural Insensitivity: The standardized approach may fail to address cultural differences in various markets, leading to a lack of acceptance of the product or service.
2. High Coordination Costs: Implementing a global strategy requires significant coordination across different countries, which can be expensive and difficult to manage.

iii) Multidomestic/Multinational Strategy:

A multidomestic strategy focuses on adapting products and services to fit the unique needs of each local market. The strategy emphasizes local responsiveness over global efficiency.

Risks:

1. Higher Costs: Customizing products and services for each market can be costly, reducing the potential for economies of scale.
2. Complex Management: Managing a diverse portfolio of customized offerings across different markets can be complex, leading to potential inefficiencies and management challenges.

iv) Transnational Strategy:

A transnational strategy seeks to combine the benefits of global integration and local responsiveness. Companies adopting this strategy aim to achieve both global efficiency and local adaptation.

Risks:

1. Balancing Act: The need to balance global standardization with local adaptation can be challenging, leading to potential conflicts and compromises that may weaken the overall strategy.
2. Resource Intensive: Implementing a transnational strategy requires significant resources and investment, which can strain the organization and lead to operational difficulties.