Differentiate global strategy from multidomestic strategy for a business wanting to compete abroad. Discuss the advantages and disadvantages of each strategy.
What will be an ideal response?
If managers decide that their organization should sell the same standardized product in each national market in which it competes, and use the same basic marketing approach, they adopt a global strategy. Such companies undertake little, if any, customization to suit the specific needs of customers in different countries. But if managers decide to customize products and marketing strategies to specific national conditions, they adopt a multidomestic strategy.
The major advantage of a global strategy is the significant cost savings associated with not having to customize products and marketing approaches to different national conditions. The major disadvantage of pursuing a global strategy is that by ignoring national differences, managers may leave themselves vulnerable to local competitors that differentiate their products to suit local tastes.
The major advantage of a multidomestic strategy is that by customizing product offerings and marketing approaches to local conditions, managers may be able to gain market share or charge higher prices for their products. The major disadvantage is that customization raises production costs and puts the multidomestic company at a price disadvantage because it often has to charge prices higher than the prices charged by competitors pursuing a global strategy.
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