Critical literature review on the concept of transnational strategy (covered in week 5) and explain to what extent do you think such a strategy can help MNEs to deal with the conflicting demands of global efficiencies and local responsiveness?
Unlike the multinational, global and international strategies, the transnational strategy enables the firms to achieve local flexibility with rapid absorbing and differing innovation of parent company. The transnational strategy implies seeks global integration with operational efficiency and performance on a continued basis (Ambler, 2015). The choice is about global strategies where business firms can locate the different operations with availability of raw materials and other resources which are productivity. The globalization implies the increased global dependency of nations with items needs and wants that are produced in different countries rather at a local level. The translational strategy is for attaining the benefits that are inherent in the global and multidomestic strategies (Filatotchev & Stahl, 2015). The components are integrated with overall corporate structure where the specialized innovation includes the management approach with global business activities set through close cooperation.
The transnational strategy is about focusing on firm situations with higher pressures for global scale efficiency with local responsiveness and opportunities that leads to leveraging knowledge and skills among different operations. It helps in creating the value by achieving the costs and other differentiation advantages that leads to facilitating the global learning. The organizations are competing on an international basis in terms of allocation of resources with balancing the authority between central office and business units. The goal is to combine the global and the strategies of multidomestic factors. The global strategy involves the higher concentration of resources and capabilities where there is a centralization of authority to exploit the potential scale and learning economies
Literature Review of Translational Strategy
The translational strategy is about the new smallness of the world which allows the brands and companies to expand at the global footprint with selling the goods and services. This takes into account the cultural and the different societal differences that takes the shapes of the consumers for the nativ environment (Meyer & Su, 2015). It is seen that there is no entering of a global marketplace without a plan till there is an understanding of the market differences between the company. The conflict demands for the forces for globalization which achieving the global efficiencies with response to local differences. The globalization process creates the interlinking and interdependent economies in international business environment which is propelled through by lowering or removing the trading and tariff barriers with opening up to the national economies (Henriksen & Seabrooke, 2016). The globalization, then compels the formation of regional strategic alliances for protecting the countries from economic and technological factors that leads to levering the competitive advantage.
Strategy that can help MNC to deal with conflicting demands
There are different environmental challenges which are related to the achieving of global efficiency with response to local differences. There is a need to develop and diffuse the innovative products and processes that will help in handling the increased marketing access. The regionalization reduces the barriers of country with greater commoditization of products and services (Overdevest & Zeitlin, 2014). The convergence of consumer tastes with de-regulation reducing barriers of trading and investment. The forces of globalization also includes the reducing of barriers between different parts of industry like banking, insurance, pensions with supplier-merger between specialist firms (Whitaker, Ekman & Thompson, 2017). The globalization refers to the trading and investment where there are technological developments that have been increased with international communication (Verbeke & Asmussen, 2016).
How MNE response
The global strategy involves the higher degree of concentration with different resources and capabiliites which are for exploiting the potential scale and the learning economy. The customizations are done at a local level which is low and the multidomestic strategy represents how the resources are dispersed throughout the different countries where the firm has been doing the business. MNE looks for the technological forces with increased costs of research and development (Luxmore & Hull, 2018). It leads to shortening of life cycles for new technologies and products. The competitive forces are increased with internal importance and pressure that leads to creating and diffusing the innovation. The strategies of MNE are based on global, multinational, international and transnational strategy where the pressures for the local responsiveness are measured effectively (Kinght, 2016).
How MNE realize the strategies
Considering the transnational strategy, the firm situations focus on high pressures for global scale efficiency and local responsiveness where there are opportunities to focus on the high pressures for global scale with creating a facilitation of global learning like MTV or Unilever. The strategy allows the attaining of benefits which are for the adaptation to different environmental situations that helps in achieving the flexibility and capitalizing the knowledge flows as well (Breunig, Kvålshaugen, R. and Hydle, 2014). The management approach is about integrating the global business activities through cooperation and then focusing on joint innovation with some of overseas unit leads for development of relatively standardized and flexible products and services. The structure helps in following the strategy where the implication is that the translational strategy works with the combination or the hybrid strategy between the global and the multidomestic strategies (Joossens & Gilmore, 2014). The combinations are based on handling strategic alliances with the customers, suppliers and the business partners for saving the time and capital.
The subsidiary roles for the degree of localization includes the field commander, network contributors and implementers who have a higher local entrepreneur role. The focus is on how the people tend to face the lower pressure of integration and localization, where the exploitation of parent company knowledge and capabilities leads to minimum adaptation of the product and technology. It leads to keeping the costs low with maintaining operational consistency as well (Jasimuddin & Maniruzzaman, 2016).
There are subsidiaries for the local entrepreneurs with the lower pressure of integration and higher pressure of localization. The differentiation is based on the products and services for serving the local needs with key resources that are acquired locally. There are roles where the local market information is input into the HQ strategy development where there are execution of the vertical coordination with the HQ and no or little coordination with other subsidiaries (Bliuc, McGarty, Badea & Boza, 2018). The network contributor tends to focus on coordinating the roles where there are frequent change of information, material and personnel. The network decision making with leverage dispersed network assets helps in managing the different problems of the company (Healey, 2015).
MNE structure Design
Agency Theory: This is when there are delegates with some rights to an agent who are bounded by the formal and the informal contract for representing the principals interest in return. The problems and the costs are for the principal for maximizing the differences between the values that it receives as a result when there are agent actions and the payments it makes to the agent. There are implications of aligning the behavior of subsidiaries with controlling the market contract and then working on the international strategy with transferring core competencies overseas (Studzieniecki, 2016). The global strategy realize about the scale economies with transnational strategy that emphasizes on the local responsiveness with multinational strategy focusing on the pressures which are high.
International Strategy with International Division includes the different global matrix structure where the countries are involved in handling the balance by pursuing the distributed strategy with the hybrid of centralized and decentralized stages (Waterval, Frambach, Driessen & Scherpbier, 2015). The transnational model with the multinational corporation assets and capabilities are set with beneficial locations for specific activities. The transnational firms have a higher degree of coordination with low control that is dispersed in the organization. There is a need to implement the model through the mass customization synergies through global research and development like Frito-Lay, MCI and American Express (He, 2016). The global sourcing and logistics are for Benetton with intelligence and information resources like Andersen Consulting etc (Caruana & Montgomery, 2015). With the changing times, there have been positive associations in between the transitional marketing strategies and performance where the improvements tend to result from efficiencies which are from global integration and flexibility inherent (Román and Hamann, 2014)
MNE control mechanism design
The control mechanisms are for the global product structure where there are international divisions with foreign product diversity that holds the percentage of total sales. The designing is based on the MNE control mechanisms where there are bureaucratic controls to check on opportunism with performance management and output control (Reese, 2015). There are policies that are set with different procedures and practices that helps in cultural control with check on shared parent value. The taxonomy is based on exemplifying the trends towards the cross-national mergers which leads to the firms to mainly consider about the different headquarters. There are operations which helps in bringing the benefit for the new markets and the resources. The global consumer have the firm appearance to be implementing a transnational strategy with centralization decisions that are based on value chain activities (Knight, 2016).
There are different comprehensive taxonomy of translational strategy where there are configurations of value chain activities with different geographical dispersal of firm value components. The coordination and centralization is for the strategic alliances with market integration that refers to the parent corporation views which are important for the single compeititve arena. There have been trends which are set for the cross-national mergers which leads the firms to mainly consider about the future (Verbeke & Asmussen, 2016). The management of flexible network units is set with facilitating the information and the knowledge flows between the units (Alberti, 2014). The operations help in bringing the benefits to access the new markets and opportunities to utilize and develop the resources effectively.
The firm making use of the global strategy is set with the local requirements where the markets are in favor to emphasize on the efficiency. The strategy is completely opposite to the multi-domestic strategy where there are modifications to products and services which are made in various markets. The company, Microsoft, offers a smaller software program to adjust the programs and match with the local languages (Morris, Snell & Bjorkman, 2016). The consumer goods like the P& G attempts to gain efficiency through creating a global brand whenever it is possible for them. The models are determined with advantage over the local business where there are large and well-sourced business that can enter the market efficiently. The strategy is employed with assessing the demands for the specific products in a market without-competing the local vendors through use of efficiencies that is created over the time. The production and the supply chain advantages with marketing makes the transnational more effective than the local business with limited operating capital (Barglowski, Bilecen & Amelina, 2015). There are extraction industries which are working on advancement of technologies and processes to operate effectively more than the localized mining and drilling operations.
The global consumers need to work with handling the implementation of a transnational strategy with making centralization decisions for value chain activities. The closer the consumer in branding, pricing and communication, the more is the possibility to decentralize (Tulung, 2017).
The translational strategy is for attaining the benefits that are inherent in the global and multidomestic strategies. The components are integrated with overall corporate structure where the specialized innovation includes the management approach with global business activities set through close cooperation. The more the deal is with production, logistics and supply chain management, the more centralized decision making it becomes.
There are different theories where the firm is making use of the multidomestic strategy where there are sacrifice efficiency in favor of emphasizing on the responsiveness to the local requirements. MTV focus on customizing the programs that are shown on its channels in different countries like New Zealand, Pakistan and India.
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