Global, Multidomestic, & Transnational Business Strategies: Global Efficiency & Local Responsiveness
Summary
TLDRThis video explores corporate and business-level strategies in international business. It covers three key corporate strategies: global, multi-domestic, and transnational. A global strategy focuses on standardization and economies of scale, while a multi-domestic strategy tailors decisions to local markets. The transnational strategy balances both global efficiency and local adaptation. Additionally, the video touches on business-level strategies such as cost leadership, differentiation, and focus. It emphasizes the importance of adapting these strategies to international expansion by considering factors like infrastructure, labor, and local resources to achieve success in different markets.
Takeaways
- 🌍 International business strategies operate at both corporate and business levels.
- 🏢 Corporate-level international strategies include global, multi-domestic, and transnational approaches.
- 🌐 A global strategy centralizes decisions to achieve economies of scale and does not adapt to local markets.
- 🏬 A multi-domestic strategy focuses on local market adaptation, allowing decentralized decision-making.
- ⚖️ A transnational strategy balances global efficiency with local market adaptation.
- 🍟 McDonald's and KFC are examples of companies using transnational strategies by adapting menus to local preferences.
- 💡 Business-level strategies include cost leadership, differentiation, and focus strategies.
- 📉 Cost leadership strategies aim to attract customers by offering lower prices.
- 💎 Differentiation strategies focus on uniqueness and high quality to attract customers.
- 📊 International expansion supports business-level strategies by leveraging factors like low-cost labor, infrastructure, and market opportunities.
Q & A
What are the two levels of strategies mentioned for international business?
-The two levels of strategies are corporate-level and business-level strategies.
What are the three types of corporate-level international strategies?
-The three types of corporate-level international strategies are global, multi-domestic, and transnational.
What is a global strategy in international business?
-A global strategy focuses on company-wide standardization and economies of scale, with major decisions centralized at headquarters. It does not adapt to local market conditions.
Can you give an example of a company using a global strategy?
-Payless ShoeSource used a global strategy where inventory ordering was centralized at the headquarters, regardless of store location.
How does a multi-domestic strategy differ from a global strategy?
-A multi-domestic strategy assumes that markets differ from country to country, so each country tailors its business strategy to local needs. This approach is decentralized.
What are some examples of companies using a multi-domestic strategy?
-Coca-Cola sells different flavors in various countries, and Nestlé offers different brands and products depending on the country.
What is a transnational strategy in international business?
-A transnational strategy seeks to balance both global efficiency and local adaptation by combining centralized control with decentralized decision-making for local responsiveness.
How does McDonald's use a transnational strategy?
-McDonald's uses the same menu globally to benefit from economies of scale, but also adapts some items locally to meet regional preferences, such as different menu options in various countries.
What are the three main business-level strategies mentioned?
-The three main business-level strategies are cost leadership, differentiation, and focus.
How can international strategies support business-level strategies?
-International strategies can support business-level strategies by leveraging factors such as low-cost manufacturing, local infrastructure, and natural resources that are specific to each region.
Outlines
🌍 Overview of International Business Strategies
This paragraph introduces international business strategies, dividing them into corporate-level strategies and business-level strategies. It emphasizes the importance of both levels, particularly when addressing global integration and local market adaptation. It briefly mentions global, multi-domestic, and transnational strategies, which will be explored later in the video. Business-level strategies like cost leadership, differentiation, and focused strategies are also referenced, and the relevance of these strategies to international business is teased.
🌐 Corporate-Level International Strategies
This section outlines the two major questions corporate-level international strategies address: the benefits of standardization and global integration, and whether strategies should be adapted to local markets. The paragraph discusses how companies might centralize decisions to achieve economies of scale or decentralize to respond to local conditions. It introduces the global strategy, where decisions are centralized, offering the example of Payless ShoeSource, which used the same inventory approach regardless of store location.
🌏 Global Strategy
This paragraph dives into the global strategy in more detail, explaining that it focuses on company-wide standardization and economies of scale. Key decisions are made centrally, as seen in the example of Payless ShoeSource, which handled inventory from headquarters for stores worldwide. It concludes that a global strategy does not adapt to local market conditions, describing it as 'one big strategy to fit them all.'
🌍 Multi-Domestic Strategy
Here, the multi-domestic strategy is explained, which assumes markets differ from country to country, requiring tailored strategies. Decentralization is key, with local leaders making decisions based on specific market needs. Examples include Coca-Cola and Nestle, which offer different products in different regions to cater to local preferences. The multi-domestic approach focuses on meeting customer needs uniquely in each market.
⚖️ Transnational Strategy
The transnational strategy balances global efficiency with local adaptation, combining centralized control with decentralized decision-making based on local market needs. Although complex, this strategy can result in greater success if both goals are achieved. The example of McDonald's, which standardizes much of its menu but also adapts to local tastes, demonstrates how this strategy works in practice. KFC's adaptation of its side dishes, offering rice instead of mashed potatoes in some regions, is also highlighted.
🏷️ Business-Level Strategies in International Business
This section revisits business-level strategies like cost leadership, differentiation, and focused strategies, providing more detail on how they work. Cost leadership aims to attract customers by lowering costs, differentiation focuses on uniqueness and high quality, and focus strategies target specific customer groups. It highlights the possibility of combining these strategies, such as offering high-quality athletic wear to women under 40. The paragraph concludes by connecting business-level strategies to international business expansion.
🌍 Supporting Business-Level Strategies Through International Expansion
This paragraph discusses how international strategies support business-level strategies. Factors such as low-cost labor, infrastructure, natural resources, and access to new populations can strengthen various business strategies. It explains how companies can leverage these international elements to execute their strategies, like using low-cost countries for call centers. The paragraph also touches on the importance of related and supporting industries, from logistics and manufacturing to education and legal protections, in facilitating international business expansion.
🔍 Evaluating International Strategies
The final section encourages businesses to have clear strategic reasons for international expansion. It advises finding examples of companies in the same industry that utilize global, multi-domestic, or transnational strategies, and assessing how these strategies support their business-level goals. The section emphasizes the importance of understanding how international operations align with overall business strategies for success.
Mindmap
Keywords
💡Corporate-Level Strategy
💡Global Strategy
💡Multi-Domestic Strategy
💡Transnational Strategy
💡Business-Level Strategy
💡Cost Leadership
💡Differentiation
💡Focus Strategy
💡Economies of Scale
💡Local Adaptation
Highlights
International business strategies include Global, Multi-domestic, and Transnational strategies.
At the corporate level, international strategies address the benefits of standardization and global integration, focusing on economies of scale.
Global strategies prioritize company-wide standardization, with big decisions centralized at headquarters.
Payless ShoeSource used a global strategy, centralizing inventory ordering at headquarters, regardless of store location.
Global strategies do not adapt to local market conditions, aiming for a 'one big strategy to fit them all' approach.
Multi-domestic strategies tailor business strategies to each country's market needs, with decentralized decision-making.
Companies like Coca-Cola and Nestlé use multi-domestic strategies to adapt products to local preferences.
Multi-domestic strategies focus on treating customers differently based on the specific market.
Transnational strategies balance global efficiency and local adaptation, with a mix of central control and decentralized planning.
McDonald's uses a transnational strategy, with a largely standardized menu, but allows for local adaptations.
KFC adapts its menu to local preferences, offering different side dishes in different regions (e.g., rice instead of mashed potatoes).
Business-level strategies include cost leadership, differentiation, and focus strategies.
Cost leadership strategies aim to attract customers by offering lower costs, while differentiation strategies focus on uniqueness and high quality.
Focus strategies target specific customer groups, such as children, mothers, or college students.
International strategies can support business-level strategies through elements like low-cost labor, infrastructure, natural resources, and digital communication systems.
Transcripts
international business strategies can
involve both business and corporate
level strategies at the corporate or
company-wide level International
strategies include Global multi-domestic
and transnational we'll discuss what
these mean and why they could matter to
your business at the business level
companies may consider cost leadership
differentiation and focused strategies I
cover business level strategies in much
more detail in the videos listed in the
description however later in this video
I will also discuss how these business
level strategies apply to international
business corporate level International
strategies seek to address two major
questions number one is their benefit
for standardization and Global
integration a major concern here is
trying to achieve economies of scale
and number two should the company adapt
strategies to local market conditions
the first International strategy to
consider is the global strategy the
global strategy focuses on company-wide
standardization and economies of scale
big decisions are centralized to the
company's headquarters for example when
I worked at Payless ShoeSource ordering
inventory was done at the headquarters
in Kansas regardless of whether a store
was in Kansas New York Jamaica or Panama
a global strategy does not adapt to
local market conditions to sum it up a
global strategy could be described as
one big strategy to fit them all the
second corporate level International
strategy is the multi-domestic strategy
the multi-domestic strategy assumes that
market conditions are different from one
country to another so each country
should have a business strategy that is
tailored to its particular needs because
of this company leaders in each country
make strategy and operating decisions it
is a decentralized approach Coca-Cola
sells different flavors in different
countries to adapt to local tastes
Nestle has different brands and products
depending on the country where it
operates the focus of a multi-domestic
strategy is beating customers
differently in different markets
according to each Market's needs the
third corporate level International
strategy is the transnational strategy
the transnational strategy seeks to
balance both Global efficiency and local
adaptation the transnational strategy is
more complex but it can lead to Greater
success for the company if it can
succeed in achieving both Global
efficiency because of central control
and also local responsiveness because of
decentralized planning and decentralized
decision making according to local
market needs McDonald's provides much of
the same menu in different places and
certainly leverages its brand name and
economies of scale worldwide however
there are some menu differences from one
place to another because of local
preferences KFC provides its signature
Fried Chicken in South America but it
sells rice instead of mashed potatoes
it's a local adaptation now I promise to
talk about business level strategy as
well while you can certainly find more
detail on other videos here are the
basics companies with a cost leadership
strategy seek to attract customers with
lower cost companies with a
differentiation strategy seek to attract
customers with uniqueness and high
quality and companies with a focus
strategy Target a specific customer
group such as kids moms or college
students you can combine more than one
of these strategies at the same time
such as high quality athletic wear to
women under 40 or affordable furniture
to young middle class buyers an
international strategy can help to
support business level strategies in
different markets according to the
company's needs low-cost manufacturing
labor supports a cost leadership
strategy the right infrastructure could
support any business level strategy but
it may differ based on location natural
resources are necessary to carry out
many business level strategies a huge
new population provides access to new
customers employees and other growth
opportunities even digital communication
systems can help support a business
level strategy such as when companies
seek to save money by operating call
centers in low-cost countries to carry
out your business level strategy through
International expansion you will also
want to consider related and supporting
industries that help with Logistics
design manufacturing education of the
local people legal protections and many
other factors you should have clear
strategic reasons to do business
internationally find a company in your
industry that engages in international
strategy do they use a global
multi-domestic or transnational strategy
how can you tell finally how do
International activities support that
company's business level strategy thanks
for joining today I hope you like the
video have a wonderful day take care
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