Understand what a transnational strategy involves and be able to offer an example.
A firm that has operations in more than one country is known as a multinational corporation (MNC). The largest MNCs are major players within the international arena. Walmart’s annual worldwide sales, for example, are larger than the dollar value of the entire economies of Austria, Norway, and Saudi Arabia. Although Walmart tends to be viewed as an American retailer, the firm earns more than one-quarter of its revenues outside the United States. Walmart owns significant numbers of stores in Mexico (1,730 as of mid-2011), Central America (549), Brazil (479), Japan (414), the United Kingdom (385), Canada (325), Chile (279), and Argentina (63). Walmart also participates in joint ventures in China (328 stores) and India (5).1 Even more modestly sized MNCs are still very powerful. If Kia were a country, its current sales level of approximately $21 billion would place it in the top 100 among the more than 180 nations in the world.
Multinationals such as Kia and Walmart must choose an international strategy to guide their efforts in various countries. There are three main international strategies available: (1) multidomestic, (2) global, and (3) transnational (Table 7.10 “International Strategy”). Each strategy involves a different approach to trying to build efficiency across nations and trying to be responsiveness to variation in customer preferences and market conditions across nations.
A firm using a multidomestic strategy sacrifices efficiency in favor of emphasizing responsiveness to local requirements within each of its markets. Rather than trying to force all of its American-made shows on viewers around the globe, MTV customizes the programming that is shown on its channels within dozens of countries, including New Zealand, Portugal, Pakistan, and India. Similarly, food company H. J. Heinz adapts its products to match local preferences. Because some Indians will not eat garlic and onion, for example, Heinz offers them a version of its signature ketchup that does not include these two ingredients.
Table 7.10 International Strategy
Kenny_lex – Tabasco – CC BY 2.0; Pete – Project 365 #138: 180509 Oooooh, cheeky! – public domain; Ged Carroll – Kit-Kat new
– CC BY 2.0; Creative Tools – CreativeTools.se – PackshotCreator – Heinz Chili Sauce – CC BY 2.0; Windell Oskay – HP Sauce –
2 – CC BY 2.0; Andrew Maiman – Green Tea Kit-Kat (from Japan) – CC BY 2.0; Bodo – Butterfinger – CC BY 2.0.
229 Mastering Strategic Management