Due to various reasons, companies devise strategies with which to penetrate foreign markets and go international. Each strategy that a company chooses to adopt offers different benefits that enable it to penetrate and survive in foreign markets. By selecting the most appropriate strategy for going international that aligns with the company’s objectives, a company is able to set the podium for success and advancement. Four strategies exist that companies can use to go international, namely, multi-domestic, transnational, global, and international strategies.
Multi-domestic strategy is one in which a company establishes its presence in a foreign market and tailors its products to suit the local markets. In this kind of strategy, companies retain their headquarters in their home countries but also establish subsidiaries in the foreign country to serve as foreign headquarters. An international strategy is used when companies decide to export their goods or services to other countries, but their production headquarters remain in their country of origin.
Another strategy for going global is transnational, whereby a company retains its major headquarters in its home country but also develops operations in foreign markets without changing its products to suit local markets. The products of a transnational company are the same all around the globe. Finally, companies can also use a global strategy in which they retain a central headquarters in their original country but also establish a variety of other operational regions around the world. In this strategy, companies have a leveraged economy of scale that helps them expand their reach and profits.
