When an organization chooses a multi-domestic strategy, it means that competition in each country is handled independently of industry competition in other countries. Thus, a multinational company is present in many countries but it encourages marketing, advertising and product design to be modified and adapted to the specific needs of each country. Many companies reject the idea of a single global market. They have found that the French do not drink orange juice for breakfast, that laundry detergent is used to wash dishes in parts of Mexico and that people in the Middle East prefer toothpaste that tastes spicy. Service companies also have to carefully consider their global strategy. The 7 Eleven convenience store chain uses a multi-domestic strategy because the product mix, advertising approach and payment method need to be tailored to the preferences values and government regulation in different parts of the world, for example credit card use is rare in Japan and Germany. In Japan customers like to sue convenience stores to pay utility and other bills. 7 Eleven in Japan also set up a way for people to pick up and pay for purchases made over the Internet at their local 7 Elevens.
A strategy that combines global coordination to attain efficiency with flexibility to meet specific needs in various countries.
A translational strategy seeks to achieve both global integration and national responsiveness. A true transnational strategy is difficult to achieve, because one goal requires close global coordination while the other goal requires flexibility. However many industries are finding that, although increased competition means they must achieve global efficiency, growing pressure to meet local needs demands responsiveness. One company that effectively uses a transnational strategy is Caterpillar, Inc., a heavy equipment manufacture. Caterpillar achieves global efficiencies by designing its products to use identical components and centralizing manufacturing of components in a few large scale facilities. However, assembly plants located in each of Caterpillar ‘s major markets add certain products features tailored to meet local needs.
Although most multinational companies want to achieve some degree of global integration to hold costs down, even global products may require some customization to meet government regulations in various countries or some tailoring to fit consumer preferences In addition, some products are better suited for standardization than others. Most large multinational corporations with diverse products and services will attempt to use a partial multi-domestic strategy for some products or service lines and global strategies for others. Coordinating global integration with a responsiveness to the heterogeneity of international markets is a difficult balancing act for managers but is increasingly important in today’s global business world.
Purpose of strategy:
What sets the organization apart from others and provides it with a distinctive edge in the marketplace.
Within the overall grand strategy of an organization, executives define an explicit strategy, which is the plan of action that describes resource allocation and activities for dealing with the environment, achieving a competitive advantage and attaining the organization’s goals. Competitive advantage refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customer need in the marketplace. The essence of formulating strategy is choosing how the organizations will be different. Managers make decisions about whether the company will pertain different activities or will execute similar activities differently than competitors do. Strategy necessarily changes over time to fit environmental conditions but to remain competitive, companies develop strategies that focused on core competencies develop synergy and create value for customers
A business activity that an organization does particularly well in comparison to competitors.
Source: New Era Management