Sample: Implementation of International Business Strategy, Major Strategic Issues
2.4.1 Major strategic issues for multinational corporations
Tallman and Yip (2001) identified three major strategic issues for multinational corporations. These are discussed as follows:
Geographic spread: This aspect has to do with the spread of business beyond the borders of the home country-the original issue in international business. It concerns strategic issues related to the internationalization process of the firm such as various modes of entry.
Local adaptation: This aspect is about the degree to which business is adapted to the specific circumstances of the entering or entered foreign market; for example, how much to adapt products to the different demands in the new market. Another strategic question in this context is how much knowledge is needed about the local market environment to be able to make the right adaptations.
Global Integration: This issue is about to what extent the MNC integrates its business operations between different national markets, for example in order to better leverage its locally based resources. Usually there is some integration, since the MNC does not have completely separate and localized activities. Examples of options for this major strategic issue are the extent of global market participation, how much standardization of products and other marketing variables can be achieved, the location of various business activities, and how competitive moves are integrated between different country markets. The global integration aspect concerns the MNC as a whole, and is about how the company takes advantage of its geographical spread. The adaptation aspect, in contrast, mainly concerns how each individual subsidiary locally exploits the resources and capabilities at its disposal.
Most literature on international business strategy concerns these three issues. However in this research we are concerned with the last two strategic issues, that is, the strategic dilemma MNCs face between local adaptation and global integration. Bartlett and Ghoshal's (1992) well-established typology, for example, is about this dilemma. The multinational strategy focuses on local adaptation, and the global strategy on global integration, while the international strategy and the transnational strategy directly concentrate on the dilemma by discussing various mixes of these two major strategic issues (Pangarkar, 2002).
The strategic dilemma between local responsiveness and global integration is also a key issue in doing business especially in emerging country markets. It is a well known fact that the products sold by an MNC on different world markets vary a lot. Some products are only sold in certain markets, while others are sold more widely (Jansson, 2007). Most products are adapted in one way or another to the greatly varying market demands. This variation is also true for other MNC operations than marketing, for example production, purchasing and financing as well as for how the MNC acts towards governments in different countries.
- 2.1 Introduction
- 2.2 International Business and strategy
- 2.2.1 Environment of international business and its significance
- 2.3 Linkage effect of international with local players
- 2.4 Internationalization in emerging country markets
- 2.4.1 Major strategic issues for multinational corporations
- 2.4.2 Fundamental business problems
- 2.5 MNC operations in Indian markets
- 2.6 Summary
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