In deciding to go abroad the company needs to define its mission, objectives and policies clearly. A mission statement would serve as a basis for evaluating strategic alternatives from time to time. The mission statement should cover the following aspects:
–Product or service, Market and Technology: The MNC mission statement should throw light on the basic market and the company it wants to satisfy. The MNC should specify the priorities clearly.
–The mission statement should indicate how the MNC is going to secure its future growth. The MNC must develop a corporate philosophy that expresses the need for a flow of benefits among the firm and its multiple environments. The mission statement should specify how resources are going to be committed what kind of operations are taken up on a priority basis, how various parts of the company are tied to a unifying purpose/philosophy and how the managers have to coordinate skills, resources and expertise while exploiting global opportunities with a view to ensure survival, growth and profitability.
–The critical concern for the MNC is to decide which of its deep seated beliefs, philosophical needs and cultural values are to be respected across various countries.
–The mission statement should help define the company image clearly: whether the company would march ahead of its rivals through a proactive stance or position itself firmly, assess the competition first then take reactive steps when necessary. In any case, subsidiaries cannot be allowed to determine their own environmental posture if the MNC wants to exploit the potential benefits present in its sphere of influence.
The mission statement should throw light on how the MNC is going to support conditions in each of its operating environments and how this is going to help the company build its image internationally.
Firms pursue a global strategy when they seek to operate with worldwide consistency standardization of products and practices and a system wide perspective to extend competitive advantage. Firms pursuing a global view of all their markets and subsidiaries see them as highly interdependent and mutually supportive. They pool their resources, skills and competencies with a view to delight their customers through a unified value adding delivery system.
Global firms try to standardize their products and designs to a full extent. Product standardization helps them derive scale economies and extend substantial benefits to customers worldwide.
Global firms build their plants, factories laboratories facilities etc. in locations that maximize system wide competitive advantage. For example firms based in Europe and in the US have traditionally located some of their manufacturing and assembly operations offshore to take advantage of cheaper labour. Recently, software firms and other information technology users have sought offshore programming services to reduce software development cost. Thus, the firm is able to use local resources to good effect. Also, it can extend the benefits and economies of scale so derived across all its subsidiaries and markets.
Leverage Technology across Multiple Markets: Where the firm has to incur heavy R&D costs to develop sophisticated products, it has to invariably place its bets on the global markets. It has to come out of its shell, expand its reach, sell worldwide, spread its huge R&D costs and secure a fair share of the global market for its own survival and growth.
Undertake Worldwide Marketing efforts: Global firms dealing with sophisticated products such as nuclear plants, steam turbines, power generation equipment, high-tech medical gadgets have to create a centralized sales team to strike deals with customers who need lot of persuasion and convincing. In order to maintain competent, technically fluent and highly paid sales professionals the firm has to go in search of global markets inevitably.
Firms pursue a multinational strategy as against a multi domestic strategy followed by a firm that operates production plants in different countries but makes no attempt to integrate overall operations. When they adjust their products and operations according to the particular markets being served without sacrificing their global image, product or service quality. A transnational strategy seeks to achieve both global efficiency and local responsiveness.
Realizing these goals is obviously difficult because one goal requires close global coordination while the other demands local flexibility. Therefore flexible coordination – building a shared vision and individual commitment through an integrated network – is required to implement the multinational strategy. A multinational corporation generally tries to adjust and tailor its products and practices to the individual needs of each market where it has a presence in one form or the other.
Product adaptation: MNCs try to modify their products to suit specific tastes and preferences of consumers in respective individual (host country) markets. For example what McDonald’s offers in a restaurant in India is significantly different from the menu offered in France or Germany. This is done to move closer to the hearts of the vlocal customers by observing local laws, customs and traditions scrupulously (e.g. Veg Burgers in India) and thereby expand the sales of their outfits.