Question

Please answer the following 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

Ans 1: Localization strategies focus on increasing profitability by customizing the firm’s goods or services so that they provide a good match to tastes and preferences in different national markets. This strategy would make sense in an industry that has substantial differences across nations with regards to consumers tastes and preferences along with cost pressures that are not too intense.

Ans 2: Global standardization focuses on increasing profitability and profit growth by reaping the cost reductions that come from the economics of scale, learning effects, and location economies. This strategy would make sense when there is strong pressure for cost reductions and demands for local responsiveness are minimal.

Ans 3: The main problem with pursuing a transnational strategy is it put conflicting demands on the firm. Trying to meet the demands in local demands in different geographic markets raises costs, which runs counter to the goal of reducing costs.