When competing internationally, strategy making is more complex for five reasons: (1) different countries have home-country advantages in different industries; (2) there exists location-based advantages to performing different value chain activities in different parts of the world; (3) varying political and economic risks make the business climate of some countries more favorable than others; (4) companies face the risk of adverse shifts in exchange rates when operating in foreign countries; and (5) differences in buyer tastes and preferences present a conundrum concerning the trade-off between customizing and standardizing products and services. A company must choose among three alternative approaches for competing internationally: (1) a multidomestic strategy or "think-local, act-local" approach to crafting international strategy; (2) a global strategya "think-global, act-global" approach; and (3) a combination of "think-global, act-local" approach, known as a transnational strategy. A think-local, act-local or multidomestic strategy is appropriate for industries or companies that must vary their product offerings and competitive approaches from country to country in order to accommodate different buyer preferences and market conditions. The think-global, act-global approach (or global strategy) works best when there are substantial cost benefits to be gained from taking a standardized and globally integrated approach and little need for local responsiveness. A transnational approach ("think global, act local") is called for when there is a high need for local responsiveness as well as substantial benefits from taking a globally integrated approach. In this approach, a company strives to employ the same basic competitive strategy in all markets but still customize its product offering and some aspect of its operations to fit local market circumstances.

Case:

Assume you are in charge of developing the strategy for a multinational company selling products in some 50 countries around the world. One issue you face is whether to employ a multidomestic strategy, a transnational, or a global strategy. Answer the questions provided in the scenarios below.

If your companys product is mobile phones, do you think it would make better strategic sense to employ a multidomestic strategy, a transnational strategy, or a global strategy?

A- A global strategy makes best strategic sense since country-to-country customization to fit local market conditions is necessary

B- A transnational strategy would make better strategic sense it would be difficult to employ essentially the same strategic theme in all country markets.

C- A global strategy would be appropriate since most mobile phones are constructed to work globally and buyer needs across the world are relatively universal.

D- A multidomestic strategy is called for since mobile phones must be tailored to the specific market conditions and buyer preferences in each country market.

E- A transnational strategy would be appropriate since the same strategic theme could be employed, but coutry-to-country customization is necessary to accommodate consumer preferences in mobile phone features.