Question

Please answer the following two questions: In what kind of industries does a localization strategy makes sense? Why? When does a global standardization strategy make most sense? Why? What do you see as the main organizational problems that are likely to be associated with implementation of a transnational strategy? Explain.

Answer 1

Localization strategy requires that firms grow with local culture.Localization strategy looks into the tastes and preferences of local markets.Firms often change their strategy to match local market. Localization strategy in product, human resources ,marketing helps a firm to enter market of other countries.Companies like KFC, Coca cola,Procter and Gamble used localisation strategy to become successful.This is because when a company enters the local market it has to face a lot of problem with the consumers and the local government.If the multinational company implements local culture it can enter local market rapidly.Localization helps in reducing cost and creating a brand image.

Global standardization policy is effective when the competition is all over the world and when the differences between countries are less.Global standardization makes sense in some aspects.firstly firms can make use of economies of scale to reduce cost,secondly it helps to have control of global marketing of the product,thirdly it establishes product image and reputation in the global market. Mc Donald became a renowned food chain in the world by taking advantage of this strategy.This strategy brought global image for Mc Donald.

There are several problems associated with transnational strategy that is extending business across national borders.The firm may face the problem of lack of expertise outside own country.Then again in trying to operate transnationally, the company may come across political and legal risks.There is also the problem of many different tax and accounting methods which adds to the cost and finally there is currency risk when operating with different currencies.