A multidomestic strategy is the most appropriate strategy for international operations because it drives economies of scale as far as possible and provides a middle-of-the-road product that appeals to the smallest number of consumers in every market.
True / False
Answer: False
Explanation:
Middle of the road products are products which may only be returned unopened. Many are therefore with no warranty.
Economies of Scale- An economics term that describes a competitive advantage that large entities have over smaller entities. Here we observe that there are cost reductions of products because the company increased its production.
Competition of products and services in the international environment may require one or more of these four basic strategies to enter and thrive; (1) global standardization strategy, (2) localization strategy, (3) transnational strategy, and (4) international strategy.
Each of these strategies has pluses and minuses.
The question above follows under localization strategy — multidomestic strategy .
In a multidomestic strategy - we see a firm whose strategic features aims to maximise benefits of meeting local market needs through extensive customisation of its products and services to the local market. Decision-making style of this strategy is decentralised such that demands of products and feedback are exclusively theirs and thus local businesses are treated as separate businesses. Strategies for each country probably are not mutually exclusive. Example of companies with this strategy include ms NESTLE, MTV etc.
Multidomestic strategy forces a firm to emphasis on differentiating its product and service offerings to adapt to the surrounding local markets.
Multidomestic strategy thus isn't the most appropriate strategy for to drive International operations.
