The title of this article conveys a clear meaning that is selling of products in markets outside a company’s domestic market. An international strategy may be one of the two types: a company group level or business level strategy. At the corporate level firms can form three types of methods: At the business level firms that follow generic strategies must realize a core competence based on unique skills, resources and capabilities.
Global firms try to differentiate their products in outside markets by highlighting special features of their brands using aggressive marketing campaigns. An international cigarette firm has used such a strategy to promote its products globally with great success. The campaign was in line with local customers and practices. Parker pen tried centralized international marketing campaigns to promote its line of ink pens initially. After incurring heavy losses, it has gone in favour of a decentralized country specific advertising – which in the end proved quite successful. Global firms have realized the importance of combining their global expertise with native skills and local resources while trying to differentiate their key products across nations now. One reason for McDonald’s success in moving into new countries is its willingness to adapt its operation to the needs of the local partners that it typically uses in its foreign operations. McDonald’s corporate managers regularly depend upon their operators for advice on such matters as menu changes.
McDonald’s Pizza McPuff, McAloo Tikki, Paneer Salsa Wrap, Veg Surprise have all been local versions adapted to suit local tastes and customers in India. Almost 100% of the company’s raw materials, too, are locally sourced. Pricing is aimed at luring the Indian middle class. The emphasis is always on projecting McDonald’s as a global brand relevant to the local community. The local partners in the joint ventures are given full freedom to take critical decisions independently. The success of such localization efforts could be gauged from the fact that McDonald’s India exports its McAloo, Tikki, Pizza McPuff etc to China, Hong Kong, UK, US and several countries in the Gulf region.
The international low cost strategy is likely to develop in a country with large demand. International firms generally rely on outsourcing especially in case of low value added operations but retain high value added operations in the home country. The whole exercise is meant to maximize returns through economies of scale based on adaption in local countries. Industries such as commercial air craft, heavy construction equipment, chemicals, have much of their value added in R&D product design and manufacturing activities (all upstream) and each of these industries is dominated by firms with strong world links. By centralizing these upstream activities such firms can lower their costs and gain efficiencies. Industries such as fast foods, security services add much of their value in downstream activities such as marketing and sales and services. Such industries tend toward strategies in line with local countries.
Sony, for example follows a multi domestic approach while distributing its television programmes and films (nearly 25 channels operating in more than 60 countries) — using local managers’ native skills to turn out country specific programmes. Sometimes the host country government plays a strong role in determining what the MNC’s strategy will be. Indian Government does not allow foreigners to hold a majority stake in print media business. In such case MNCs have to rely on a multi domestic approach or choose not to operate in India at all.
Extending low cost competitive advantage to global markets: Nike Way
Nike’s funding strategy involved creating competitive advantage in the US market using the low cost , high quality athletic shoe manufacturing base in Japan. This outsourcing plan helped Nike to concentrate more on brand building and obtain economies through efficient distribution in the United States. Later on, Nike was able to leverage its strong US brand in international markets, creating one of the strongest global brands. When manufacturing costs increased in Japan, Nike exploited low cost manufacturing advantages available in Korea, Taiwan, Indonesia and Thailand. Thus. Nike initially sought competitive advantage in the low cost manufacture in Japan, later extended the competitive advantage of its strong US brand into other countries, and then relocated production to maintain low cost leadership.
The ceramic tile industry in Italy contains a number of medium – sized and small fragmented firms that produce approximately 50 per cent of the world’s tile. Some of these firms have devoted themselves fully to quality and aesthetics whereas others have focused on image, design, advertising and show room expositions. They are able to survive and flourish in a tough global market because of their focus on selected customer tastes and preferences.