MULTI-DOMESTIC STRATEGY IN PREFERENCE TO A GLOBAL MARKETING STRATEGY

Multi-domestic Strategy In Preference To a Global Marketing Strategy

Multi-domestic Strategy In Preference To a Global Marketing Strategy

Introduction

A company's global strategy is closely related to its corporate strategy. The corporate strategy guides the performance of a company's overall business activities and the allocations of resources to achieve established business goals. Yip (1989) provides a detailed framework for evaluating whether and how to globalize an individual company's corporate strategy. The framework emphasizes the potentials for achieving competitive benefits and provides illustrations of companies that have applied globalization issues in their corporate strategies. The formulation of a global strategy is a major challenge in itself, but its execution requires far-reaching changes to be made in corporate structures and procedures (e.g. Lorenz, 1986).

Multi-domestic international strategies refer to those that address competition in each country or region on an individual basis, whereas global strategy refers to addressing competition in an integrated and holistic manner across country and regional boundaries. Hence, multi-domestic international strategies attempt to appeal to the needs of customers in different countries or regions, while global strategies attempt to standardize products and marketing to work across boundaries. Instead of relying on one of these strategies, multinational companies might adopt a different strategy for different products or services. For example, a company might use a global strategy for its electronics and a multi-domestic strategy for its appliances.

Discussion

Levitt (1983) makes a distinction between the multinational corporation and the global corporation. The multinational corporation operates in a number of countries, and adjusts its products and practices in each, while the global corporation operates with resolute constancy, as if the entire world, or major regions of it, was a single entity. The global corporation sells the same things in the same way everywhere. Accordingly, Levitt (1983) states that the uniformity of global business activities should be applied on a worldwide basis without local adaptations. Keegan and Green (2000, p. 26) define a global strategy as:

… a design to create a winning offering on a global scale …

Consequently, they also apply a worldwide approach to the term global strategy. Allio (1989) states that global competitors exploit the similarities between countries to enhance the competitive advantage, while the multidomestic or multinational competitors exploit the differences between countries.

Simon-Miller (1986) argues that the adoption of a global strategy may give a competitive advantage. In contrast to multinational companies, global corporations view the world or its major regions as one entity instead of a collection of national markets. These world marketers compete on a basis of appropriate value, i.e. an optimal combination of the marketing mix that is identical in design and function. Yip (1989, p. 31) distinguishes between a multidomestic strategy and a global strategy:

… a multidomestic strategy seeks to maximize worldwide performance by maximizing local competitive advantage, revenues, or profits; a global strategy seeks to maximize worldwide performance through sharing and integration …

In other words, a multidomestic strategy is a collection of country or region based strategies due ...