Question

a) In what kind of industries does a localization strategy make sense? b) When does a global standardization strategy make most sense? c) Explain the transnational strategy. d) Analyze the different strategies P&G has gone through. e) Explicate the strategies MTV has gone through, since it began selling abroad

Answer 1

Answer to Question A

Localisation Strategy

Localisation strategy is a unique market approach a company takes to address purchasing habits,customer behaviours and overall cultural differences in which country the company operates. It focuses on increasing the profitability by customising the companys products matching to the preferences and tastes in different markets.

This type of strategy will be would more useful for automotive industry ,manufacturing industry,grocery stores. By these firms offer products to local demand whereby increasing the value of product in local market. But this strategy involves some duplication and smaller production runs which is an obstacle to the firm to capture reduction in cost The strategy can be adopted good if added value associated with local customisation supports higher pricing as companies will be able to adjust their higher cost . It there is excessivley high local demand firm can reduce cost as they will gain small scale market for the product.

A good example of company which ahs adopted this strategy is MTV by localising its programmes matching the demand of viewers in different nations . If not it would have lost market to local competitiors,profit would have declined and advertising revenue would have fallen.

Answer to Question B

Global Standarisation Strategy

Companies adopting global standarisation strategy focus on increasing profitability and growth in profit by gathering the cost reduction from economies of scale ,localisation, learning effects . The aim of this is to adopt a low cost strategy on global scale. Companies try not to customise their products and marketing activites to local conditions but prefer to market a standarised product across the world . They alsotend to use their cost advantage to support higher pricing. The strategy is inapporpriate when demand for local response is high.It make sense when the cost is high and demand is limited.

Companies like Texas instruments Motorola is examples for adopting global standarisation strategy.

Answer to Question C

Transnational Strategy

Firms that follow transanational strategy tries to achieve low cost through localisation economies .economies of scale ,learnign effects, differentiate their products across world markets . as different prducts are adopted across the world it faces risk of conflicting demand,therby cost gets increases countering their goal of reducing cost. Companies like Ford have tried to adopt this strategy but found it implement.

Answer to Question D

P & G Strategy

It is one of the international company . It has various products marketed across the world. It was in 1970 their strategy was well established .

The company developed new products ,and depended on small subsidiaries to manufacture ,market and distribute their product in different nations. There by adopting localisation strategy.

By 1980 they strated adopting global standarisation strategy as barriers to cross border trade fall . it made an attempt to control is cost structure and recognise the new global markets.

it ahs also adopted international stragy by late 1990 by taking their products produced on local country and selling across the world with minimum local customisation