Types Of International Strategy

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Types of International Strategy: Multi-domestic vs. Global Multi-domestic Strategy • Product customized for each market • Decentralized control - local decision making • Effective when large differences exist between countries • Advantages: product differentiation, local responsiveness, minimized political risk, minimized exchange rate risk Global Strategy • Product is the same in all countries. • Centralized control - little decision-making authority on the local level • Effective when differences between countries are small • Advantages: cost, coordinated activities, faster product development A fully multi-local value chain will have every function from R&D to distribution and service performed entirely at the local level in each country. At the other extreme, a fully global value chain will source each activity in a different country. Philips is a good example of a company that followed a multidomestic strategy. This strategy resulted in: • Innovation from local R&D • Entrepreneurial spirit • Products tailored to individual countries • High quality due to backward integration The multi-domestic strategy also presented Philips with many challenges: • High costs due to tailored products and duplication across countries • The innovation from the local R&D groups resulted in products that were R&D driven instead of market driven. • Decentralized control meant that national buy-in was required before introducing a product - time to market was slow. Matsushita is a good example of a company that followed a global strategy. This strategy resulted in: • Strong global distribution network • Company-wide mission statement that was followed closely • Financial control • More applied R&D • Ability to get to market quickly and force standards since individual
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