The localization strategy makes the most sense among industries, where there are major and substantial differences among the target populations. In other words, if cultural and local preferences are drastic, then the industry needs to adopt a localization strategy to meet these unique needs with greater precision and focus (Joshi & Kumar, 2019). However, the global standardization strategy makes the most sense when there is no significant variation in tastes and preferences among target populations, which means the emphasis is put on cost reduction of production and distribution. The main reason is that standardization allows a company to achieve efficiency, which will be reflected in the cost of production.
The main barrier to implementing a transnational strategy revolves around the fact that a company might not know the cultural differences and intricacies of local markets. In addition, language can also become a significant barrier since the local customs, traditions, and religious institutions might affect how the target population communicates and understands the marketing messages. Therefore, these barriers need to be thoroughly studied and analyzed to identify key divergent elements.
A firm attempting to compete in a global market will inevitably stumble upon the differential barrier among different target populations. Therefore, the organizational architecture of such a company needs to be centralized and coordinated (Peng, 2021). The primary reason is that global strategy puts a great deal of emphasis on cost reduction and efficiency since the global market offers more opportunities for workforce and operational improvements. However, a company should build a stronger brand image and identity because international recognition needs to be achieved. However, if there are significant differences, a decentralized structure might also be plausible, but coordination is always relevant.
References
Joshi, L., & Kumar, P. (2019). Adoption of solar photovoltaic lighting in rural India: Role of localization strategy. Energy and Buildings, 202, 1-4. Web.
Peng, M. W. (2021). Global strategy. Boston, MA: Cengage Learning.