Have you ever thought about what type of corporation your company falls into? Did you know there is a perfectly thought theory by Barnette and Ghosal about different types of global strategies that a company can opt for?

Due to the increasing globalization during the past decade, even small companies have made their way into the international sea of business. Often there are many names given to these firms, like global companies, multi-national companies, and international companies, but are they all the same? No, they are not. Keep reading on to establish the difference between these companies.

In the research paper published by Barnette and Ghosal, they say any international market is influenced by 2 things. The first is global integration, and the second is local responsiveness. Global integration is the degree to which a company can use the same product and methodology in different countries. It is adopted to reduce costs and increase the brand size of the company.

Local responsiveness, on the other hand, means the company has to tweak its products and strategies to fit within the local culture of different countries to generate revenue.

According to Barnette and Ghosal, there are a total of 4 different types of a global strategy that a company can categorize into through global integration and local responsiveness, namely International corporation, Multi domestic corporation, Global corporation, and Transnational corporation.

International Strategy- Low Global integration and Low Local responsiveness

International companies are those who trade in export and imports. The product is developed in the home country and is distributed to different markets by export. There are zero to no subsidiary firms established in the different countries. The intensity of global integration and local responsiveness is low. Various wine companies from France and Italy are perfect examples of international companies.

Multi Domestic Strategy- Low Global integration and High Local responsiveness

Multi domestic strategy is where the companies have to tailor their products according to the needs and demands of the local market. Companies have to develop strategies, plans, and ideas and innovate new customized products to reach their audience. Multi-domestic strategies have a very decentralized approach in which the subsidiary has given control in operating their way. Companies such as Danone and Nestle are perfect examples.

Global Strategy- High Global integration and Low Local responsiveness

Global strategies are adopted by firms such as Microsoft and Pfizer. They do not have to change their product according to every country and the interest of the local market. They focus on one product and, with slight changes in that, can capture the global world. In global strategy, global integration is high.

Transnational Strategy- High Global integration and High Local responsiveness

Transnational strategy companies try to find the right balance between global integration and local responsiveness. Companies enter global markets with their core elements but with changes in their product. The perfect example of a transnational company is Starbucks and Mcdonald’s. The ambiance, the color structure, and the authenticity of these brands are similar across the world, but there are changes in the food menu.

Conclusion

Global strategies and companies’ business plans can be alternating and change with the changing times. So, after going through all these strategies and tables, what do you think? Which one of these international strategies does your company fall into? Establishing this will help in planning strategies for your business in a much more effective and efficient manner.