Question

The choice of strategy for a multinational firm must depend on a comparison of the benefits of that strategy, in terms of value creation, with the costs of implementing it as defined by organizational architecture necessary for implementation of particular strategy. On this basis, it may be logical for some firms to pursue a localization strategy, others a global or international strategy, and still others a transnational strategy.” Is this statement correct? Present your argument with an illustration of a company of your choice with international business operations scope.

Answer 1

Multinational enterprises involve in international trade and enter into the different markets across the globe. In these markets, they assess the local responsiveness of the people and adopt the strategy. It helps them to build acceptability in the market and compete with the local players In this regard, the statement is correct and it can be understood with the examples. McDonald is a fast food retail chain that has presence in many countries. This company follows localization strategy to remain successful in each market. When McDonald is is USA, then it offers hamburger and when the company is in Indian subcontinent, then it sells Veg burger or aaloo-tikki burger that suits to the local people in India. It is a mean to localize and cater to the local taste of the people. It is done by McDonald and become highly successful.

But, some MNCs follow global strategy because it is the global appeal that makes them successful. For example, it is Coca cola company that has uniformity in its products and people opt for it due to its global appeal. Hence, the company follows global strategy and remain successful. Hence, it is the local market, its local responsiveness of each market that makes MNCs to follow the strategy and become competitive.