Local responsiveness refers to the degree to which a company needs to customize its methods and products to meet the conditions of other countries. Local responsiveness represents the bottom-up knowledge as subsidiaries develop innovative and learning capabilities and create new knowledge in the host country by integrating with indigenous stakeholders. This paper discusses how 360 Express Collisions and Detailing can achieve local responsiveness through global, transnational, and multi-domestic strategies. The paper will additionally analyze how differences in the strength of pressures for cost reductions versus those for local responsiveness affect the company
In global strategy, the business is centralized and controlled by a home office and seeks to maximize global efficiency. Under the global strategy, products and services are more likely to be standardized rather than tailored to local markets (Cuervo‐Cazurra et al., 2019). The company can sell the same services and products the same way in every county. The home office attempts to achieve integration across these businesses, while the strategic business unit operating in each country is assumed to be different. A global market for 360 Express Collisions and Detailing will assume economies of scale and offer the company greater opportunities for innovation developed in the home country or at the corporate level. It would be easy for 360 Express Collisions and Detailing to utilize global strategy by keeping a home office somewhere here in the United States and then have the businesses in other countries run the same way. Management will be the same regarding auto detailing, collision repair, wheel repair, pricing, and general operations.
Transnational strategy is when organizations strive for global integration and efficiency. The companies have a central global office in a decentralized management team. The team office is responsible for coordinating all company’s international operations. Strategies are standardized across all locations to maintain efficiency and cost lowering. Generally, each organization branch follows central marketing and operates as directed by the head management team. Companies that implement transnational strategies observe local markets where they are located. This means that the organizations offer services or products globally but may offer additional those exclusive to the local market. Products that are irrelevant or not in demand in the local market may be unavailable in those regions.
Transnational companies have marketing strategies and global branding but maintain their communication, messaging, and campaigning depending on the region that the marketing airs in. The companies understand the significance of being sensitive toward local language culture, lifestyle, and other factors in the new countries (Hyun, 2018). The organization may ensure that its marketing content aligns with the region’s local culture. 360 Express Collisions and Detailing Company would benefit from using transnational strategies, which may enable them to offer services established in the US but additional services specific to their local markets in other countries.
The multidomestic strategy entails that organizations are more decentralized compared to the other two strategies. The strategy allows autonomy in each country where the company is located and allows the branches to operate differently. An organization that uses a multi-domestic strategy makes adapting to different business environments easier (Liu, 2019). Smaller companies may often struggle with the strategy due to limited resources, hence the need for decentralization. Often, the multi-domestic organization has multiple branches of the company that have become independent. All branches have to rely on the same financing source, identify their suppliers, and operate separately from one another.
Branch independence enables the business to find it much easier to adjust to local conditions. Still, it may become a challenge if the separate branches end up competing with one another over the one to receive higher priority. Most domestic companies are more careful when choosing markets and focus on them to maximize the effect of competitive advantage. A business with a service or product that nobody provides has a higher chance of succeeding in the market. The company may not benefit from this strategy as ventures cannot be customized specifically for the market. It may be challenging to choose a market where the company would have a competitive advantage.
A pressure for cost reduction works best when a service or product is a universal need. It is better when the major competitors are in a lower-cost area which is essential to create a constant growth of excessive capacity. Consumers face low switch costs and are powerful, which they incur due to changing suppliers, brands, or products. Pressure for local responsiveness is differences in consumer preferences and tastes (Wei & Nguyen, 2020). The pressure arises in differences in infrastructure, traditional practices, governing demands, and distribution channels. These factors will play an essential role as the company selects its strategy.
In conclusion, there are minimal local responsiveness pressures and strong cost reduction pressures in the global strategy. The transnational strategy works best when there is higher pressure from local responsiveness and cost reduction. The multi-domestic strategy will work best when there is low pressure from competition. In my opinion, a global strategy will be the best for 360 Express Collisions and Detailing. The company will gain many benefits, such as brand recognition, economies of scope and scale, lower labor cost, customer satisfaction, and a lower cost for development and research.
References
Cuervo‐Cazurra, A., Mudambi, R., & Pedersen, T. (2019). Clarifying the relationships between institutions and global strategy.Global Strategy Journal, 9(2), 151-175. Web.
Hyun, J. H. (2018). Emerging multinational entering emerging market: The transnational strategy of Xiaomi in the Indian smart phone market.Korea Business Review, 22(4), 99-120. Web.
Liu, Y. (2019). The processes of new product development decentralization towards a transnational emphasis in multinational corporations.Journal of International Management, 25(1), 19-36. Web.
Wei, Z., & Nguyen, Q. T. (2020). Local responsiveness strategy of foreign subsidiaries of Chinese multinationals: The impacts of relational-assets, market-seeking FDI, and host country institutional environments.Asia Pacific Journal of Management, 37(3). Web.