Question

When should a firm choose the global strategy rather than a multidomestic strategy?

How might a given country’s regulatory environment impact a firm’s international strategy?

How do the international strategies affect the trade-offs managers must make between local responsiveness and global efficiency

Answer 1

The firm should choose a global strategy when they are not able to make a lot of customization to the product and services they sell when they are entering new international markets. They can choose this strategy when they can make a minor modification to the product or a service and sell in the host country. They can also use this strategy when they also have a universal marketing strategy for all the markets and they want to convey the same message to all the customers. The company should also be able to face the competition from the local players who have customized the products and services based on the local market needs.

The country's regulatory environment hugely depends on the local government and its ideology. So the companies cannot make a specific plan and try to execute legal things in different countries. In some countries, the regulations to run the business will change from one state to the other. Some companies might have regulations that promote investment from the foreign companies as they create employment for the locals and some governments might be against the foreign investment. The government also controls the technology, human resources, legal aspects, and real estate. So the country's regulation can make a huge impact on the company's international strategy.

A multi-domestic strategy is known to increase the local responsiveness as it allows the decentralized decision-making authority to local business units. Using this facility they can customers the services based on the local market needs. The transnational strategy also can lead to improved local responsiveness as it combines both multi-domestic and global strategy to combine the advantages of both the strategies and create an excellent business strategy.

A global strategy is used to increase the global efficiency and this is because the company will have a centralized control of the business and the core team of the company will create the strategy to enter new markets and run the business without the involvement of the locals. The global strategy targets the integration of the business units in each country and tries to implement a common strategy. Once again the transnational strategy can be used to improve the global efficiency as well just like how it is used to improve the local responsiveness.