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What Are the Relative Strengths and Weaknesses of Multidomestic, Regional, Transnational and International Strategies? Why Would You Recommend one over Another to a Multinational Corporation?

Autor:   •  June 7, 2016  •  Essay  •  511 Words (3 Pages)  •  1,364 Views

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A multidomestic strategy puts emphasis on differentiating products & services to adapt to local markets. Decisions taken by multidomestic strategy are decentralized and its products & services are tailored to local uses considering language, culture, income levels, customer preferences and distribution systems. The strengths of multidomestic strategy are the ability to adapt products and services to local market conditions, the ability to detect potential opportunities for attractive niches in a given market enhancing revenue, its markets can expand very rapidly, its prices are differentiated by market, and the pressure for lowering cost is low. Besides its strengths, multidomestic strategy has few weakness like it decreases the ability to realize cost saving through economies of scale, faces difficulties in transferring knowledge across countries, and its pressure for local adaptation is very high that may lead to over-adaptation as conditions changes.

A regional strategy is like having the business over a certain region maintaining few countries. It may be more reasonable as distance matters in international business point of view. Commonalities of language, culture, economics, legal & political systems, and infrastructure all make differences to regional strategy. The major strengths of regional strategy is trading alliances and free trade zones to ease trade restrictions, taxes, & tariffs like NAFTA & EU, pressure for local adaptation is low compare to multidomestic strategy. The major weakness of this strategy is the pressure n lowering cost is very high.

A transnational strategy seeks global competitiveness via trade-offs. In this strategy, assets & capabilities are disbursed according to the most beneficial location for a specific activity and some value chain activities are centralized, whereas some are decentralized. The strengths of this strategy are ability to attain economies of scale, ability

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