Organizational issues while implementing transnational strategy(Global Business)

The transnational strategy is the tactics to be assumed when the degree for local responsiveness as well as the price sensitivity is high.  The companies come across the price sensitivity through gaining economies of scale and location scales which comes along due to the experiences effect manifested in their positive learning curve and for the local responsiveness the company localizes its strategy.  In comparison to other strategies like international and local responsive strategy, it is challenging because often the direction of cost and local responsiveness are tradeoffs.

At one extreme a centralization is required to maintain the efficiency for the cost minimization whereas a decentralized approach is required for the local responsiveness. Also, the localization issues come from the differences in culture, communication process, level of trust, consumption patterns, language barrier. Walmart though succeeded in India and China, it was not able to localize well in the Germany market, the German consumer preferred small neighborhood stores than impersonal chain which consumes a lot of time in shopping (Macaray, 2017), here though Walmart came across the cost sensitivity of Germany market, it cannot mold itself well with the local expectation.

But, MacDonald’s entry to India has been phenomenal apotheosis of transnational strategy, it revised its menu, eliminated beef items and added vegetarian burgers, the strategy ran well, and Mac is a big fast food chain in India. A similar case of successful strategy was adopted by Caterpillar to compete with low-cost competitor Komatsu, Caterpillar redesigned its product so that it can use identical products in few large manufacturing facilities(to gain economies of scale) and came with the product feature addressing the local requirements(as there could be differences in government regulations across the countries) (Hill, 2011).          

Hence, it would not be wrong to say that the transnational strategy is different and challenging than other global business strategies, but it is of core importance for the global companies and ultimately the transnational is proven to be a sustainable one.

References

Hill, C. W. (2011). International Business : Competing in the Global Market Place,8E. New York: McGraw-Hill Irwin.

Macaray, D. (2017, July 14). Why Did Walmart Leave Germany? Retrieved from www.huffingtonpost.com: https://www.huffingtonpost.com/david-macaray/why-did-walmart-leave-ger_b_940542.html