Multinational Strategy Definition & Example

What is Multinational Strategy

The multinational strategy is a strategy by which a company operates as stand-alone business units in multiple countries to optimize the products or services based on the preferences of local customers and competitive conditions to gain a competitive advantage. A multinational strategy, also known as multidomestic strategy.

A multinational strategy uses subsidiaries in each host country in which the company does business to respond to local conditions. Each local subsidiary has its own function that is required for operating in the host country such as manufacturing, R&D, human resources, and marketing functions. Thus each multinational subsidiary can customize the products and strategies independently based on the preferences of local customers and competitive conditions.

A good example of a multinational firm is the MTV tv show which customizes the show based on the countries, including South Korea, India, New Zealand, and Portugal. Instead of trying to use American MTV for viewers around the world.

According to the Bartlett & Ghoshal matrix, compared with another remaining global integration model, the multinational strategy is the least pressure for global integration but highly adapting to local conditions for the competitive advantages.

Advantage of Multinational Strategy

The advantages of using a multinational strategy are the benefit of strong local autonomy includes the following advantages:

• Multinational subsidiary can customize the products and strategies based on the preferences of local customers and competitive conditions.
• Faster for making business decisions against rapid changes in local conditions.
• Less issue from a misunderstanding of difference between cultural, lifestyle, political, and social structure.
• Easily access the competitive advantages from a local resources, such as labor, distribution, and natural resources.

However, the major disadvantage of the multinational strategy is higher manufacturing costs and duplication of effort in each subsidiary.

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