With the help of internationalization strategies, organizations expand their market by offering goods and services outside the borders of their own country or market. To achieve this, companies use four types of internationalization strategy. These are multi-domestic, international strategies, global and transnational. These strategies are vastly different in their operational strategy and orientation, world perception and methods of companies that operate in multiple countries. Multinational companies pick one of the four fundamental strategies to participate and thrive in a global marketplace. These strategies assist firms in meeting the requirements that are necessary for reaching global integration and flexibility.
International Corporate-Level Strategies
The global business-level strategies a business employs are the type of international corporate-level strategy the company has implemented. In certain companies’ local business units, local businesses have the power to determine their strategy. They are also more decentralized in their decision-making. For instance, Unilever gives each of its business units in the total world freedom to develop strategies that suit their market. In other firms, they have international corporations strategies that central office set to ensure a greater standardization of the products and services of the company and in the distribution of resources.
An international corporate-level strategy requires businesses with operations across various countries and sectors. A company will set the general direction of the design from the corporation’s headquarters. However, implementation is in decentralization to each business unit under the organization’s corporate policy.
Key Types of Internationalization Strategy
Global organizations must develop strategies for expansion into international markets and diversification and integration to maximize the utilization of capacities and resources. The basis for implementing the global strategy is to view every country or region as a market and to create competitive advantages within each. It applies to the location and working in tandem with the other parts of the company.
1. Global Company Strategy
A global business has different strategies than an MNC. While the MNC has operations in various countries and views each of them as SBUS. It is one of the types of internationalization strategy. The global company could adopt the approach of being either an international manufacturing company or an international sourcing company. The company decides to concentrate on different markets around the world. However, the source of its supply is only one country. Under the Global sourcing strategy, it is possible to source its products from all over the world. However, it focuses on its local markets. If it can manage its value chain efficiently, management could turn global company strategies to gain competitive advantages.
To successfully implement an international strategy, the company has to ensure uniformity and consistency throughout its global operations. The focus is often on cost reductions rather than local responsiveness regarding this method. The Global company strategy is a types of internationalization strategy. A firm that follows this approach will strive to be a cost-effective manufacturer in its sector. The company will produce large-scale productions in just a few low-cost areas. R&D production, marketing, and R&D are also not spread out.
However, they are in concentration to certain places to increase their effectiveness. The company’s various operations are in link through links maintained by a solid management team. The management team is based in the corporate headquarters, which oversees the entire effort. For instance, Walmart gets its apparel produce in low-cost areas such as China and, in the future, Bangladesh. Walmart’s headquarters is located in Arkansas, USA.
2. International Company Strategy
In the international company strategy, the company looks into potential business opportunities outside of its own country. It expands its manufacturing, marketing and other business activities outside the country of its origin. It is based on the notion that the methods, practices and products from the country of origin are far superior to other countries. It is one of the types of internationalization strategy.
The management team usually includes individuals with international experience who have put together. The business employs the marketing strategy that is primarily an extension of the one used in the country where they are. The marketing elements, such as promotional products, advertising and more, were not helpful for different markets but are modified versions of the home country.
3. Transnational Company Strategy
The transnational corporation is different from the two other companies in that it seeks to make the most of its core competencies, make the most of local advantages, and adapt to local demands. It is a fully integrated organization that draws on global resources and can respond to local needs. It is the most direct way to deal with the increasing globalization phenomenon.
Numerous companies across the world exhibit the characteristics of an international business. It makes use of its global brands’ brand equity. It also focuses on local requirements that differ between markets.
International business has a geocentric strategy. Transnational company strategy is one of the types of internationalization strategy. It only tailors its products to local markets if there is a need. In contrast to a multinational corporation, it recognizes that a business person must take care of certain market variations. However, at all times, it uses the similarities to the greatest extent that it is. It remains the same to adjust and only does so when necessary. The fundamental premise that decides when the need for adaptation is there is the benefit it can bring to the user.
4. Multi domestic Company Strategy
The company’s multi-domestic strategy recognizes the vast divergence in requirements of the different markets it caters. It determines to create an individual approach for each country it works. The focus of this strategy shifts from ethnocentric towards polycentric. It consequently alters how it markets (product price, product, and promotion) for all the countries that are part of its portfolio.
The successful ingredients for each market differ significantly and guide the polycentric mindset. Hence, the only way a company can meet its objectives is to employ a unique strategy for each call. In a multinational corporation that is polycentric, that is, all of the company’s operations are handling as if it was a different town or state.