A multinational strategy is one of the effective approaches for companies to expand into foreign markets. Its outstanding feature is the ability to adjust products and services to the needs and preferences of each local market, while maintaining a certain degree of integration with global operations.
Multinational strategy not only brings benefits in terms of adaptability and conformity to local needs, but also helps companies optimize costs and enhance competitive advantages. To successfully implement this strategy, businesses need a deep understanding of target markets, as well as prepare for adjustments in products and marketing strategies accordingly.
What is a multinational strategy?
A multinational strategy is a global expansion method that companies use to approach local markets by tailoring their products, services, and supply chains to the needs and preferences of each region. This means that companies not only export products from their headquarters but also customize them to suit the culture and tastes of consumers in each country.
Key features of a multinational strategy:
-High localization: This strategy emphasizes the development of products and services tailored to the characteristics and requirements of the local market.
-Decentralization: Decision-making power is often delegated to branches or subsidiaries in foreign markets, giving them greater flexibility in responding to consumer needs.
-Building local brands: The goal is to create brands with strong local recognition, making consumers feel that the product is a domestic choice, not just an imported one.
-Strong competition: By understanding the market and consumer preferences better, companies can build local brands that compete effectively with domestic rivals.
Objectives
The objective of a multinational strategy is to create value for customers by providing the most suitable products and services to the specific needs of each market, thereby building lasting relationships with local consumers.
Differences between multinational strategy and other global expansion strategies
Global expansion strategies include many different approaches, among which multinational strategy is the most focused approach on localizing products and services. Here is a comparison between multinational strategy and other strategies:
1. International strategy
-Features: Less adjustment to local markets, mainly exports from headquarters without building local brands.
-Example: A company manufactures products in its home country and only sells them to foreign markets without any adjustments to suit local needs.
2. Transnational strategy
-Features: Combines cost efficiency with responsiveness to local needs. These companies strive to achieve economies of scale while maintaining a degree of localization.
-Example: A company manufactures some standardized products but also adjusts some features to suit local preferences, balancing efficiency and suitability.
3. Global strategy
-Features: Focuses on cost savings and supply chain efficiency, with little or no product adjustments for each market.
-Example: A company offers the same product with a single brand globally, with unchanged features and functions, adjusting only the language if necessary.
Summary
-Multinational strategy: Customizes products and services to local needs, creates brands with strong local recognition.
-International strategy: Exports without adjustment, focuses on domestic operations.
-Transnational strategy: Combines efficiency and localization.
-Global strategy: Focuses on cost savings, little or no product changes between markets.
Each strategy has its own advantages and disadvantages and is suitable for different types of businesses, industries, and specific objectives. Choosing the right strategy requires careful consideration to ensure success in global expansion.
Benefits of a Multinational Strategy
A multinational strategy offers unique advantages for companies, allowing them to operate like local businesses in each market they enter. Here are some key benefits:
1. Customization of products and services
-Adapting to local needs: Multinational companies have the ability to tailor their products and services to suit the preferences and habits of consumers in each country.
-Local branding: Building a brand that aligns with the local culture and market helps increase customer acceptance.
2. Cost savings
-Reduced transportation costs: When production and distribution activities are carried out in the local market, the company can save on transportation and delivery costs.
-Avoidance of cross-border costs: Operating in each market helps businesses minimize additional costs and complex regulations associated with international operations.
3. Effective competition
-High competitive capacity: With the status of a local company, businesses can directly compete with other local brands, thereby gaining market share more easily.
-Opportunities to reach customers: This strategy allows businesses to access customers whose products are highly attractive, thanks to a deep understanding of the market.
4. Strengthening customer relationships
-Proximity to customers: Operating as a local company allows businesses to be closer to customers, thereby improving service capability and customer satisfaction.
-Quick response: Companies can quickly receive feedback from customers and adjust their business strategies to better meet their needs.
A multinational strategy not only helps companies save costs and enhance competitiveness but also creates stronger connections with local customers. By investing in localization, businesses can achieve sustainable growth and maximize opportunities in the global market.
5 Examples of Leading Multinational Strategies
1. 7-Eleven
7-Eleven is the world’s largest convenience store chain with over 60,000 locations globally. They adjust products and services based on local needs. For example, in Japan, 7-Eleven offers bill payment services and online shopping support, while in the US, stores primarily serve fast food and beverages. Franchising and joint ventures help them effectively penetrate different markets.
2. MTV
MTV started in the United States in the 1980s and quickly expanded globally. Each MTV channel in different regions is localized to suit the music tastes of audiences. In Europe, for example, MTV broadcasts not only American programs but also local hits, demonstrating the flexibility in content and branding.
3. Walgreens Boots Alliance
Walgreens Boots Alliance operates in 9 countries with over 13,000 locations. Each brand, such as Walgreens in the US and GuoDa in China, operates independently and adapts to the local market. The parent company also owns many other pharmaceutical brands, allowing them to maintain a diverse product portfolio and cater to regional needs.
4. Nestlé
Nestlé, the Swiss food and beverage company, has aggressively localized production with over 400 factories worldwide. They tailor products to suit each market, such as producing local dishes in the same countries where they are consumed, thereby creating a strong connection with consumers.
5. Mondelez
Mondelez sells food products in over 150 countries, often acquiring local brands and maintaining their brand recognition. For example, in Vietnam, Kinh Do Corporation, a subsidiary of Mondelez, manufactures popular snacks like Kinh Do Mooncakes, combining a global brand with local products.
These examples demonstrate how a multinational strategy allows companies to flexibly adapt to local market needs, creating value for both businesses and customers. Localization not only enhances customer satisfaction but also strengthens a company’s competitive position in the global market.
Benefits of a Multinational Strategy
A multinational strategy offers numerous benefits for businesses, enabling them to leverage opportunities and overcome challenges in the global marketplace. Here are some of the key benefits:
-**Competing with Local Brands:** A multinational strategy allows businesses to effectively compete with local brands that have deep cultural roots. By tailoring products and services to meet the preferences and needs of local customers, businesses can forge stronger connections with consumers.
-**Strengthening Market Presence:** Establishing a local brand presence helps businesses easily reach new customers, expand their customer base, and boost revenue. Products and services designed specifically for a particular market enhance brand recognition.
-**Cost Savings:** A multinational strategy helps save on transportation and logistics costs, as production and distribution activities take place in the local market. This not only reduces additional expenses but also allows businesses to react quickly to market fluctuations.
-**Flexibility and Adaptability:** Businesses can swiftly adjust their marketing strategies, products, and services to align with local trends and demands. This flexibility enables businesses to effectively seize new opportunities.
-**Enhancing Product Innovation:** Operating in diverse markets allows businesses to gather insights and feedback from local customers. This helps improve products and services, as well as develop innovative solutions.
A multinational strategy not only helps businesses survive but also thrive in the global marketplace. By leveraging the benefits of localization and strengthening their competitive edge, businesses can achieve sustainable success in various markets.
Conclusion
A multinational strategy is one of the most effective ways for businesses to expand into the global market. By focusing on tailoring products and services to the needs and preferences of each local market, businesses can not only better compete with local brands but also enhance their market presence and brand recognition.
The benefits of this strategy include cost savings, flexibility in adjusting marketing strategies, and the ability to develop products based on customer feedback. This not only helps businesses increase revenue but also builds stronger relationships with consumers.
However, to succeed, businesses need to thoroughly research their target market, understand their competitors, and be prepared to adjust their strategies accordingly. Proper preparation and investment will help businesses maximize the potential of a multinational strategy, thereby achieving sustainable growth in the international market.
