FREE online courses on Information Technology - Chapter 5 MANAGING INFORMATION TECHNOLOGY - INTERNATIONAL BUSINESS STRATEGIES

 

Four major types of international business strategies are portrayed in Figure below (Barlett and Ghoshal, 1989).

 

Figure to be inserted

 

Figure : Global business strategies

 

 

Multinationals: The multinational strategy focuses on local responsiveness. Subsidiaries operate autonomously or in a loose federation. The advantage of this type of approach is that the firm can quickly respond to different local needs and opportunities. This strategy reduces the need for communications because local subsidiaries can make many decisions. There are heavy reporting requirements though, as the results from the subsidiaries have to be monitored at a headquarter location.

 

Global: A global strategy stresses efficiency because there is strong central control from headquarters. Economics come from standard product designs and global manufacturing. An extensive communications and control system is necessary to centrally manage the global firm.

 

International: The international strategy is much like the multinational as there are autonomous local subsidiaries. However, these subsidiaries are very dependent on headquarters for new processes and products. A good example is a pharmaceuticals company. The research labs in the headquarter company develop products for introduction around the world. Local subsidiaries stress product approval by local governments and local marketing.

 

Transnational: The transactional firm attempts to do everything! It seeks global efficiency while retaining local responsiveness. The firm integrates global activities through cooperation among headquarters and foreign same time that it obtains the advantage of global integration, efficiency, and innovation.

          We predict that the various types of firms will tend to strive toward the transnational model over world.