Discuss how an organization should identify the best strategy for competing in a global marketplace and the four approaches typically used.

Question

What will be an ideal response?

Answer 1

Student answers will vary but should show accurate knowledge of the four approaches to international competition managers can use: the international model, the multinational model, the global model, and the transnational model. In the international model, managers use their firm's core capabilities to expand into foreign markets. It is most appropriate when there are few pressures for economies of scale or local responsiveness. Where global efficiency is not required but adapting to local conditions offers advantages, the multinational model is appropriate. The multinational model, sometimes referred to as multidomestic, uses subsidiaries in each country in which the company does business and allows those offices to respond to local conditions. The global model is designed to market a standardized product in the global marketplace and to manufacture that product in a limited number of locations having favorable mixes of costs and skills. In companies that adopt the transnational model, functions are centralized where it makes sense to do so, but a great deal of decision making also takes place at the local level. In addition, the experiences of local subsidiaries are shared worldwide to improve the firm's overall knowledge and capabilities.