International Strategies

There are many factors that a firms has to consider when planning to expand internationally, however a good starting framework is to consider the competing needs to

(a) address the needs of the local market; and

(b) a firm's need for an integrated organisation

When each market has specific requirements and the firm is not overly concerned about all overseas operations being integrated, then the overseas branches will be able to make important decisions to match the local needs.  This is known as a multi-domestic strategy i.e. many autonomous firms within the organisation.

However, when the firm considers that it must have a strong global presence and identity e.g. a strong brand image, the need for integration predominates and decision making tends to be centralised at headquarters.  This is known as an 'international strategy'or multi-national strategy.  Coca Cola is a leading example of a company adopting an international strategy.  can you think of any other companies in this category?  Starbucks struggled to make an impact in the Chinese market simply because it did not address the local needs

What about MacDonalds? There is both strong pressure to build a dominant global presence but there is also demands to meet local needs with appropriate menus.  For example in India, MacDonalds is much more spicy with very different ingredients to that in the UK.  In France, they had to address the demand for more comfortable dining arrangements and the need to serve wine with their meals in some inner city outlets.  This is known as a transnational strategy and requires headquarters to find the balance between retaining control on the key issues of a global presence and delegating a considerable amount of control to address the local needs.

Before the next article (session), please undertake the following activities:

• Undertake some research to find examples of companies that have adopted a multi-domestic strategy (probably when one company owns a variety companies globally all with different names in each countries)
• Make a list of the dominant features in a firm that would suggest that a transnational strategy is most appropriate
• make a list of the ways in which a Uk based firm could expand internationally.

The next session / article will be on the advantages and problems of international expansion.