Business
Business Strategy in the Global Marketplace
International, Multinational, Global and Transnational Corporate Strategies
International, multinational, global and transnational corporate strategies differ in various ways. The various levels of companies employ these strategies in their business operations to maximize their output or to remain in continual business operations. Under multinational strategies, the subsidiaries of the firm in the involved foreign country enjoy strong local autonomies of business regarding decision-making (Nirav, n.d.). Under the global strategies, the governance of the business is central and in a strong manner in order to reap the economies of scale through various global manufacturing and standardized procedures among others.
For the international strategies, the parent company or organization deploys different innovations and prompt resources allocation rapidly through direct foreign investments in various nations. Under these strategies, firms can maintain differentiation strategies (Nirav, n.d.). Lastly, transnational strategies involve rational combination of international, global and multinational strategies.
As a Global Manager, I would choose the transnational strategy. This strategy enables a firm to attain local flexibility simultaneously while rapidly differing and absorbing the innovations of the parent company. Transnational strategies imply seeking of global integration, performance excellence and operational efficiency on a continual basis.
Additionally, since the process of globalization creates interdependent and interlinked economies in the existent international environment of business, the transnational strategy would be highly proficient because it integrates all three strategies in the business operation. As such, the transnational strategy offers a basis for the opening up of national economies. With these reasons, it is important for a company or organization to employ transnational strategies in its operations.
Global Standardization and Globalization of Markets
Levitt argues that the diffusion of technology and global communications, the preferences of consumers are similar everywhere and where there is globalization of markets. Additionally, he suggests that the proletarianize communications, travel and transport has made the impoverished individuals in isolated places to develop the eagerness for the allurements of modernity. I agree with Levitt on this argument because of the evidence that substantiates the argument.
The emergent commercial realities influence the emergence of the global markets for the standardized consumer products on previously unimagined scales of magnitude. For instance, in Brazil, many people and investors are shifting from the pre-industrial Bahian to the more developing coastal cities (Levitt, 1983, p. 95). These coastal regions are suitable because the similarities of consumer preferences such as automobiles, electronics, western clothing and cosmetics among others.
Birnik and Bowman’s article on the marketing mix standardization in the multinational corporations also reiterates the factor of consumer preference is standardized markets. From this article, four possible factors influence the standardization of markets in the world today. These factors include standardization, clustering or regionalization, middle of the road and adaptation (Birnik & Bowman, 2007, p. 310). From these four factors, one can easily draw the relationship between the standardization of markets and consumer preferences.
For instance, regionalization brings together consumers with similar preferences from different regions or ‘middle of the road’. In order for these individuals to come together there has to be proficient technological diffusion as suggested by Levitt. After the meeting of the consumers, they can adapt to the existent market situations and develop interests and preferences about these situations.
Pros and Cons of Global Standardization versus Adaptation
Adaptation and standardization occupy opposing ends of the existent spectrum. Standardization occupies the pros while adaptation tends to occupy the cons. That is; more and less standardization tends to offer stronger evidence as compared to adaptation that offers slightly weaker evidence. For instance, under more standardization, stronger evidence includes industrial products, high-tech products, market similarities and fully owned subsidiaries. On the other hand, under adaptation, the weaker evidence includes essential products, luxury products and indirect modes of entry.
Product Life Cycle and Long Trail Theory
A product life cycle is a technique in business that explains the sequence that a new product develops through starting from introduction, growth, maturity and decline (Cao & Folan, 2012, p. 308). On the other hand, the Long Tail Theory postulates that our economy and culture is shifting rapidly away from a given focus on a considerably smaller number of mainstream products and markets at the head of a demand curve towards a large number of certain niches in the tail. As such, as the Product Life Cycle presents the sequence of product development, the Long Tail Theory postulates the shift of the product on the demand curve as it progresses.
An example of the Product Life Cycle can be in the watching of recorded television as follows: introduction- 3D TVs, growth- Blue ray disks, maturity- DVD, decline- videocassette. For the Long Tail Theory, an example is in Amazon. Amazon employs this theory in its business model, which gives it a greater competitive advantage in the e-commerce segment.
References
Birnik, A., & Bowman, C. (2007). Marketing mix standardization in multinational corporations: A review of the evidence. International Journal of Management Reviews. doi:10.1111/j.1468-2370.2007.00213.x
Cao, H., & Folan, P. (2012). Product life cycle: the evolution of a paradigm and literature review from 1950–2009. Production Planning & Control. doi:10.1080/09537287.2011.577460
Levitt, T. (1983). The Globalization of Markets. Harvard Business Review, 61(3), 92-102.
Nirav, S. (n.d.). What are Multinational, International, Transnational Strategies of Globalisation? Retrieved from http://www.preservearticles.com/2012012821956/what-are-multinational-international-transnational-strategies-of-globalisation.html
