How is transnational strategy defined?
The transnational strategy is a method of translating linguistic units from one language to another. We can say that a transnational strategy is simply a plan of action, which determines the business to conduct its activities across international borders. This strategy invests in foreign operations and assets, connecting the company with every country where it operates. This strategy imposes benefits similar to globalization, but it differs from multinational, international, and global business strategies.
Examples of transnational business strategies
- A popular example of a transnational corporation is McDonald’s, one of the world’s largest fast-food chains with a globally consistent menu and brand identity and virtually the same marketing material. McDonald’s offers various regional foods tailored to regional tastes, such as wine in France and rice burgers in the Philippines. All these unique products are tailored to market preferences and reflect local diets.
- One example is that a global corporation will offer precisely the same products worldwide, regardless of cultural preferences. For example, businesses selling laptops or smart phones are unlikely to have local variations in their product offerings because they are global and do not depend on cultural preferences.
- Among the examples of transnational businesses, Unilever is another, with brands used across different regions in the same company’s corporate identity and culture. Though the company does business in multiple categories, including food, beverages, household care, cosmetics, and personal care, all its brands have a common goal to achieve sustainable business practices and create positive social impact.
- A popular sugar-sweetened drink called Coca-Cola is an example of a transnational product. The beverage recipe of this company is kept secret for many years and has never been altered. It is available in over 200 countries around the world, and the company retains everything the same. Even though the bottle’s label displays the local language, the logo and contents remain the same.
Which statement points out the main difference between the global, Multi domestic, and transnational strategy?
Here we will discuss these strategies in detail;
The Multi domestic Strategy
By employing a multi-domestic strategy, the company compromises efficiency in order to focus on local requirements within each of its markets. Instead of forcing its American shows on everyone worldwide, MTV customizes the programming shown on its channels to regional preferences, such as those in New York, Portugal, Pakistan, and India. Due to the fact that some Indians dislike the taste of garlic and onion, Heinz ketchup omits those ingredients when preparing it for them. An excellent example of a multinational company that uses a multi-domestic approach is Nestle. In every market, the firm has its marketing and sales approach. Different products are also developed according to the preferences of different markets in order to attract consumers. A popular hamburger chain is an excellent example of a multi-nationwide strategy. The company conducts extensive research into each country’s local foods and cultures before developing its menu items and opening its first store. For example, in India, the chain of restaurants guarantees its customers that beef sandwiches are unavailable because the cow is considered a sacred animal. American theme parks are another example of multi-nation companies.
The Global Strategy
A company that adheres to a global strategy restricts responsiveness to local requirements within each market to concentrate on efficiency. It differs from multinational strategy. The global strategy stresses the importance of gaining economies of scale by providing the same products or services everywhere, regardless of product size or location. Software companies such as Microsoft offer the same programs worldwide but adjust the software for local languages. A consumer goods maker such as Procter and Gamble strives to establish its global brands. Companies whose product or service is primarily hidden from customers’ viewpoints, such as silicon chip maker Intel, can also benefit from global strategies.
The Transnational Strategy
An organization that uses a transnational strategy aims to combine a multinational and a global strategy. This firm seeks to balance the need for efficiency with adapting to local preferences within various countries. For example, Fast-food chains such as McDonald’s and Kentucky Fried Chicken (KFC) adhere to the same brand name and offer essentially the same menu items throughout the world. However, these chains do cater to local tastes as well. For example, France is one of the countries where wine can be bought at McDonald’s. This approach offers McDonald’s great benefits since wine is integral to the French diet.
What are the primary characteristics of transnational business strategy?
A transnational business strategy consists of the following characteristics.
- A high degree of global integration
- High level of local responsiveness
A high degree of global integration
An international company has a management team coordinating its international operations and a centralized office, which centralized management. Unlike domestic companies with almost entirely independent subsidiary offices in each restricted area, regional divisions of a transnational competitor are dependent on the headquarters’ global offices. The transnational business strategy will vary depending on the number of local divisions that the company has. Still, the minimum requirement for a transnational corporation is a high level of integration throughout all of the company’s operations.
The company standardized strategies across all regions to reduce costs as much as possible and maintain efficiency. The head management team will typically determine the overall business and marketing strategy followed by each regional branch of the company. These regional branches will operate within the parameters set by the head branch.
High level of local responsiveness
Despite the fact that many transnational corporations aim to integrate the global market and make a profit, they still need to observe the local market in which they operate to make informed decisions. It’s possible that a company will have one product or service that is distributed globally but may be targeting a specific local market with its products and services. Services and products in high demand in that particular market may not be offered locally. Furthermore, a transnational business strategy will tailor its brand and marketing campaigns, messages, and communication strategies depending on the region in which the marketing is being broadcast.
The transnational companies understand that balancing local culture and language with the local lifestyle is essential and, as such, will tailor their marketing content accordingly. Multinational companies will typically give regional managers complete autonomy in creating marketing content. In contrast, multinational corporations will allow local branches to translate the company’s global message in their dialect, keeping cultural norms and consumer preferences in mind. Since transnational corporations aim for worldwide standardization and efficiency while still tailoring services and products to local markets, they are said to be balancing thinking globally and acting locally.
What characteristics make a transnational strategy different from a multi-domestic one?
Businesses of all sizes have the ability to compete on a global scale with multinational companies and transnational companies. Multinational companies adjust their products to the needs of each country and its local environment, whereas a transnational firm retains its specific features worldwide. A multinational company that carries out international business tailors its product line to each country’s need in which it operates. You make sure your product’s feature features specific to the local market, taking into account different dietary preferences, religious beliefs, and others that define that locality.
A local audience may more effectively receive the goods produced by your company if you take this step to avoid being branded as a foreign company. Transnational companies sell their products in numerous countries worldwide as well. The marketing strategy varies based on which country the product is being marketed. An international product maintains the same characteristics regardless of its distribution country. The effects of the substances don’t differ based on the location. They are the same irrespective of whether they are shipped from Asia to Mexico to the United States or Europe.
How can transnational strategy be tackled?
Some challenges and strategies to minimize their impact are listed below;
Developing clinically useful biomarkers
Biomarkers must be widely used in the clinic for transnational research to succeed, yet few of these tests have been developed to date. In laboratory medicine, the transition of promising research assays to daily practice may take years and is often accompanied by many tedious and sequential steps. A significant obstacle to achieving a good understanding of human pathology is that many research approaches tend to focus on nonhuman animals. Further, there is a persistent concern that results are not as reliable and reproducible as they should be because samples are handled incorrectly before and during analytical processes. In order to transfer the results of a novel and promising diagnostic procedure to the daily laboratory practice, the collection procedures should be standardized and made as feasible as possible.
Study limitations in preclinical and clinical research
Transnational research needs a proof-of-concept study in the preclinical phase. Conducting and analyzing preclinical studies pose significant challenges due to data variability and bias in interpretation. Hence, in order to ensure the effectiveness of an intervention, the effect size must exceed the inherent variability within the model. Research on smaller samples is more vulnerable to the effects of missing data; an extraneous data point can alter the findings and conclusions of a study. So, it is essential to plan to deal with missing data and outliers. There should be a discussion of animal deaths and handling missing data with outliers along with the study results, if applicable. Research on preclinical studies often faces the problem of multiple statistical tests, which goes unchecked.
Currently, the practice of treating various groups of patients using a single approach does not lend itself well to developing molecularly targeted drugs, given the inherent variability in drug response between individuals. It is more complex to establish individualized medicines for each patient; however, this will improve the success rate of development since it will benefit both patients and the healthcare industry.
Factors unrelated to science
A wide range of non-scientific factors has impacted transnational research. There are a number of essential and fundamental concerns regarding funding, conflict of interests, regulatory burdens, the right to privacy, fragmented infrastructure, lack of qualified investigators and willing participants, incompatible databases, and the lack of congressional and public support. The partnership between academia and industry, in which academia provides researchers skilled in transnational research and drive, helps to sponsor such programs, consider alternative funding sources, decrease the cost of clinical trials, and increase public support could greatly alleviate these concerns.
Differences between internal and external cultures
Global strategies need to meet many cultural challenges. There are no differences between internal or external cultures, making it imperative to consider these differences in making strategic decisions. An organization’s strategy should incorporate differences in opinions, beliefs, tastes, and preferences. Companies need to spend significant time and money on appropriate market research to react rapidly to sudden changes in market demand. Cultural differences can result in misunderstandings and problems. On the other hand, creativity, especially of this kind, is essential for companies currently operating in an environment where the business environment is rapidly changing.
The literature does not include an agreed-upon time frame for market research processes, which would be sufficient to prepare you in advance for any circumstances abroad.
However, the research suggests that the longer the market survey is carried out, the better the outcome will be. By utilizing local differences and preserving global consistency, companies need to create a system that can be used effectively across many countries. International character means that it should be, on the one hand, open to local changes and, on the other hand, employ consistent approaches. Despite the difficulty of implementing transnational strategies, it is essential to be competitive in global markets. That is why it is necessary to adopt this approach and find a degree of adaptation that would work.
An example would be IKEA, which recently introduced a specific print of textiles and tableware. The print design is from an Olle Eksell famous designer and depicts children playing football together. Two boys are drawn, one as white and the other as black. As these boys interact, the drawing does not have any racism. Every market in IKEA has been adapted from this range. In any case, a co-worker at IKEA in the US decided that it was offensive. He felt that the drawing of the colored kid’s facial expression was not as precise as that of the other kid’s. This illustrates that people see things differently depending on their cultural background. It resulted in the mass withdrawal of the American product range from American retailers. IKEA US later figured out that they had previously ordered large quantities of products depicted in this specific drawing.
As a result, there were severe problems in the bedspread industry because the US’s sizes varied significantly from other countries. This example illustrates how a company should include cultural awareness internally and externally. Therefore cultural intelligence is required of all international operating companies. People from different cultures tend to reflect who they are in their communications, so business communication should be handled cautiously.
The transnational strategy’s advantages
There are several advantages to transnational cooperation.
- Efficiencies are higher; therefore, costs are lower
- Market penetration increases
As transnational business strategies prefer global standardization and efficiency, they are less expensive than multi-domestic business strategies. Businesses with an international scope can centralize resources as much as possible, thus cutting costs. Although multinational companies can still exploit the benefits of multi-domestic strategy by adapting to specific local markets in which they operate, transnational companies must go beyond their local needs. In this way, global and international companies can more easily reach local markets, which may not necessarily benefit consumers in the region.
What are the disadvantages of transnational strategy?
- It’s hard to centralize worldwide offices
- Local consumers may become alienated
Transnational business strategies have the downside of managing a global presence from one central location is complex and requires extensive management. A management team lacking expertise and dedication can hinder the company’s progress in executing its global presence. Managing branches around the world require highly qualified and experienced personnel; thus, transnational companies must rely on highly skilled and experienced personnel within their management space. Furthermore, transnational companies risk failing to understand the local cultural and linguistic nuances and requirements since they lack the personnel and resources. Any blunders could further alienate the local market.
Our study concluded that these transnational business strategies might be a great combination of two positive aspects of global business – high integration and high responsiveness – but they aren’t intended to be the right fit for every business.