MULTIDOMESTIC STRATEGY

Multidomestic Strategy



Multidomestic Strategy

The paper is based on the facts that Companies would benefit from using a multidomestic strategy as compare to the global marketing strategy.

Introduction

A Review of the Differences between Global Strategy and Domestic Strategy Introduction Strategy is arguably one of the most important concepts in management literature while strategy making is one of the most important activities in management practice. According to McAfee 2002, 55-67, strategy entails a long-range planning designed to achieve desired goals. For business, strategy involves an integrated and coordinated set of commitments and actions to gain competitive advantages and obtain above-average returns.

There are inevitably different levels of strategy formulating. The nature of strategy definitely differs from level to level as well. Strategy of a local company operating domestically is clearly not as same as that of a multinational corporation doing business globally (White, 2004: 7). Obviously, a fully understanding about the differences between strategy of companies operating strictly in their home country and strategy of companies doing business outside their country's confines assists managers a lot in their decisions about becoming global (Hitt, Ireland & Hoskisson, 2005, 234). For that purpose, this brief attempts to review the ways in which global strategy differs from domestic strategy. Domestic strategy Most of the firms operating internationally at one time did business domestically (Mellahi, Frynas & Finlay, 2005: 8). Multinational companies such as Nokia and IKEA which are now household names around the world started as small ventures in a single country, namely in Finland and Sweden. Generally, doing business strictly in one market is just an early phase most organizations experience in their business life (Donlon, 1997, 5). In this phase, the domestic enterprises formulate and implement strategies through which they sell their goods or services strictly inside their home-country market (Hitt et al., 2005, 34).

These firms' strategies focus solely on local competitors and local customers as a result. Until the last few decades, as long as the domestic market kept growing and remained profitable, there has been no need for domestic companies to challenge their national boundaries (Solberg, 1997, 34). By staying in their domestic market, these enterprises are able to capitalize shrewdly on their domestic identity.

Explanation

Risk in global marketing strategy

While there are many risks associated with international trade, the most common issues are about intellectual property rights (IPR). While IPR issues may also arise domestically, the mechanisms for protection often stop at country borders. Patent and copyright protections are specific to each country with the laws, rules and remedies varying accordingly. Consider the ramification of IPR theft on your existing business. Would sale or use of your IPR in another country hurt you? Is your product unique enough or difficult enough to reproduce to inherently protect you? (McAfee 2002, 55-67)

Another common risk is currency fluctuation. Currency fluctuations can cause difficulty while processing a transaction. If you are selling a product or service that will be paid immediately upon securing a contract, the risk associated with fluctuation is ...