Question

Why should a firm choose a global strategy rather than continue to have just a domestic strategy?

Answer 1

New advances in technology and connectivity have made it easier for businesses to market their products and services globally than ever before. A business will perform a comprehensive cross-cultural analysis before new market entry, in order to compare key similarities and differences between country markets. The results of the cross-cultural analysis and the form of product sold will decide the correct global or multi-domestic foreign strategy.

A global marketing strategy assumes the same is true for all customers in all countries or geographic regions. This strategy is best suited for generic products such as copy machines and Coca-Cola, where product differentiation is little to no longer needed. For starters, coca-cola can be found worldwide, and is easily identified as such. International marketing has distinct advantages, allowing for centralized management and integration of critical business functions like human resources, accounting, and product development.

Potential obstacles to an effective multi-domestic marketing strategy include legal, financial, and cultural barriers, but often the greatest is culture. The country manager has to be careful not to commit to ethnocentrism. Ethnocentrism is the idea that your own community or party is superior to all others according to Merriam-Webster's online dictionary. Ethnocentrism in the international business climate is particularly harmful, as it could cause a country manager to ignore the valuable insight of host country workers and contribute to organizational misunderstandings.

A multi-domestic marketing strategy assumes that customers differ dramatically from each other in different countries or geographic regions. Goods are customized to the needs and wishes of customers for each market. Ideal for highly differentiated goods such as laundry detergent and sweets, or any other commodity determined by local tastes, is a multi-domestic marketing strategy. Control of decision-making is decentralized, so management must be able to respond at local level.