What is transnational strategy?
A coordinated approach to internationalization in which the firm strives to be more responsive to local needs while retaining suffcient central control of operations to ensure efficiency and learning. Further, the transnational strategy combines the major strengths of both multi-domestic and global strategies while minimizing their disadvantages. Transnational strategy implies a flexible approach : standardize where feasible; adapt where appropriate.
How the strategy works ?
The transnational strategy expects overseas subsidiary units to develop core competencies and contribute actively to the overall development of firm’s knowledge management capabilities and share it with other international locations. This strategy also uses both centralized and decentralized methods to promote interdependence and specialization of units. However, achieving this strategy is difficult because it puts conflicting requirements on firms to integrate activities across all units while being very responsive to local market needs.
In practice, managers implement transnational strategy by:
Exploiting scale economies by sourcing from a reduced set of global suppliers and concentrating the production of offerings in relatively few locations where competitives advantage can be maximized. Organizing production, marketing, and other value-chain activities on a global scale Optimizing local responsiveness and flexibility
Facilitating global learning and knowledge transfer
Coordinating competitive moves – that is, how the firm deals with its competitors, on a global, integrated basis.
What the Strategy requires?
Transnational strategy requires :
Uniform policies on a global basis.
Firm standardize products as much as possible while adapting them as needed to ensure ample sales in individual markets.
What are advantages
Transnational strategies can provide businesses with many...
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