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Business
When companies decide to expand into international markets, there are three approaches (strategies) for competing internationally; multi-domestic, global, and transnational.
• Assess the advantages and disadvantages of each strategy and evaluate how to build a competitive advantage. (you may use notes on textbook)
¢Select a specific organization in a chosen industry or sector and provide examples.
When companies decide to expand into international markets, there are three approaches (strategies) for competing internationally; multi-domestic, global, and transnational.
Multi-domestic,
The firm views itself as operating within the context of numerous independent subsidiaries each of which concentrates on its own domestic locality and market.
The advantages are the following:
innovation from local R&D
Entrepreneurial spirit
Products tailored to individual countries
High quality due to backward integration
However, challenges include
High costs due to tailored products and duplication across countries
The innovation from the local R&D groups resulted in products that were R&D driven instead of market driven.
Decentralized control meant that national buy-in was required before introducing a product - time to market was slow.
Phillips is an example of a company that followed a multi-domestic strategy (Quick MBA Global Strategic Management).
Global,
The firm views the world as a single global marketplace. In turn, it focuses on developing...
The advantages are the following:
Economies of scale
Lower costs
Co-ordination of activities
Faster product development
The disadvantages, however, include the growing global standardization that discourages uniqueness and originality.
Instances of companies that pursue the global strategy are Sony and Panasonic (tutor2U)
Transnational
This approach uses the firm's domestically developed core competency or its specialized advantage as its main weapon when entering foreign markets. In other words, it creates its niche by focusing on its specialty and using that to differentiate itself.
The advantages and disadvantages of this approach depends on the situation that the business and the country that the business is in. On the one hand, certain resources and amenities will be cheaper to the business than others. The company that manufactures items in various countries will be able to capitalize on the cheaper sources of materials, labor, distribution, and so forth; on the other hand, some, or all of these aspects, may be more expensive resulting in a lower margin of profit for the company.
Evaluate how to build a competitive advantage
I would take the best of all the strategies, differentiating myself, developing goals that would standardize the goods according to the particular market and concentrating…
Sources
Market force: case study The Fast Lane: ALDI Achieves Supreme In-store Efficiency with Operational Excellence
tutor2U
http://tutor2u.net/business/strategy/global-business-global-strategy.html
Quick MBA Global Strategic Management
http://www.quickmba.com/strategy/global/
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