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Illustrate the characteristics of, and distinguish between a global strategy and a multi-domestic strategy. Use real world examples to illuminate your answer.

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Introduction

Illustrate the characteristics of, and distinguish between a global strategy and a multi-domestic strategy. Use real world examples to illuminate your answer. 'A global strategy is a strategy that seeks competitive advantage with strategic moves that are highly interdependent across countries' (REF) Whereas 'a multi-domestic strategy is a strategy that enables individual subsidiaries of a multinational firm to compete independently in different domestic markets' (REF) An important characteristic of a global strategy is a highly centralised management structure with most DM power held in head office, this is done to prevent regional managers from forming their own little empires. A good example of this highly centralised management structure is IBM, they have tight control over the whole company from head office. On the other hand, a multi-domestic strategy has a decentralised management structure where the central office acts as a holding company and local decision making occurs in regional offices. An example of this is Philips whose decent control meant a national buy-in was required before introducing a product therefore the time to market was very slow. ...read more.

Middle

Product functions and other functions with a multi-domestic strategy tend to be localised, each area is likely to have a local sales office. Carlsberg is an example of this with different offices in Denmark and England. (ADD?) Recruitment for a global strategy is overseen by a central office hub of VIP managers and training officers, they will be sent out to run, train and manage new branches to ensure the correct protocol is being followed. Hewlett Packard does this; each time they open a new office it is opened by a fully trained management team who have been trained to the Hewlett Packard way of thinking. On the other hand, with a multi-domestic strategy local recruitment is given priority due to government policies wherever possible. An advantage of employing locals is that they are likely to have a good understanding of the local environment, beliefs and attitudes. PC World uses a multi-domestic strategy and they always put the onus on local recruitment. A global strategy uses transferable marketing like symbols and logos that are recognisable worldwide such as the Windows symbol or the Nike tick. ...read more.

Conclusion

Although there are all these differences between global and multi-domestic strategies, there are some similarities too. Regardless of the strategy, certain rules have to be adhered to; they will have to meet requirements and standards of their central office no matter what country the output centre is in. If they are listed on different stock markets they need to report according to that stock markets particular standard. Any company has to abide by ISO's, no matter what organisation they are or where they are based. (?) In the US, for example, they have a six sigma rule which states that the maximum faults allowed per million is 3.4. Any number of these characteristics can apply to a global strategy or a multi-domestic strategy. However, it must be remembered that not all of these characteristics will will necessarily apply to any one organisation. Neither of these strategies are necessarily the 'best', it is simply a case of the firm adopting the strategy which best suits its current situation. (There are a growing number of global players) 1 ...read more.

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