1. A MNC will utilize one of four basic international strategies that will determine the level of global integration versus national (regional) responsiveness. Describe and discuss these basic strategies.
Economic imperative focused multinational companies (MNCs) employ worldwide strategy based on cost leadership, differentiation, and segmentation. The strategy is also used when the product is regarded as generic and therefore is not sold in name brand or support service stores. MNCs often sell products for which a large portion of value is added in the upstream activities of the firm's industry value chain. Furthermore, MNCs using political imperativesare country-responsive, and the approach is designed to protect local market niches. These MNCs often use country-centered or multi-domestic strategies.
Nevertheless, there are fundamental tensions in the market to consider. This includes the globalization vs. national responsiveness conflict. But what does all of this entail? If we consider global integration, we see that production and distribution of products and services of a homogenous type and quality on a worldwide basis is a way to appeal to the international market. However, national responsiveness often needs to understand the different consumer tastes in segmented regional markets and respond to different national standards and regulations imposed by autonomous governments and agencies (Lessard, 2003).
Yet, there are four basic international strategies to help the corporation to maximize its presence in international markets. These four strategies include internationalization drivers, market selection, sources of competitive advantage, and finally, the mode of entry in to the market. To highlight some of the components for individual companies, we must evaluate the extent to which a firm may build on a home-based initiative to reach the international market. In addition, the company will need to distinguish itself among the various general national advantages that are available.
Now, while the four different strategies may be related, they are certainly not distinct. For example, successful companies will likely shift among the four different strategies as outlined above. In addition, the strategies will be influenced by changes in the drivers of internationalization. Also, there are standardized tastes to take in to account as well. The market may also have less economies of scale, leading and supporting the multidomestic flavor.
References
Lessard, D. (2003) Frameworks for Global Strategic Analysis. Journal of Strategic Management Education. 1(1).