three basic strategies utilized by companies engaging in international business

Mng 1204
Week 5 paper
9-25-13

The three basic strategies utilized by companies engaging in international business are the global strategy, the multi-domestic strategy, and the transnational strategy. The differences in these three strategies can be beneficial or detrimental to a company depending on its type of business, and these three strategies are evident when examining many well-known companies worldwide. A company pursuing a global strategy sacrifices responsiveness to local necessities within each of its markets in favor of emphasizing efficiency. Some minor alterations to products and services may be made in various markets, but a global strategy stresses the need to gain economies of scale by offering essentially the same products or services in each market. Computer companies, such as Microsoft, are a prime example of companies who use a global strategy. Microsoft offers the same software programs around the world, but adjusts the programs to match local languages.
A multi-domestic strategy is the complete opposite of a global strategy. A company pursuing a multi-domestic strategy places focus on emphasizing responsiveness to local requirements within each of its markets instead of efficiency. MTV is a great example of a company using a multi-domestic strategy. Rather than trying to force all of its American-made shows onto viewers around the globe, MTV customizes the programming that is shown on its channels within dozens of countries, including New Zealand, Portugal, Pakistan, and India.
A transnational strategy seeks a middle ground between a global strategy and a multi-domestic strategy. Such a firm tries to balance the desire for efficiency with the need to adjust to local preferences within various countries. For example, large fast-food chains such as McDonald’s and Kentucky Fried Chicken rely on the same brand names and the same core menu items around the world. However, these firms make some changes to their food so that it matches the local tastes. In France, for example, wine can be purchased at a McDonald’s restaurant. Selling wine in their restaurants in France makes sense for McDonald’s, because wine is a central element of French diets.