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Multidomestic Strategy: Definition & Examples

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  • 0:00 Looking at…
  • 0:45 Multi-Domestic…
  • 1:55 Advantages of…
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Lesson Transcript
Instructor: Brianna Whiting
Expanding to multiple countries is a great task for even the most seasoned company. There are so many considerations to think about in order to be successful. In this lesson we will learn about multi-domestic strategy and its advantages and disadvantages.

Looking at Multi-Domestic Companies

We all can probably think of a company or two that are located in more than one country. But how many of us really stop and think about what that entails for a company? Every country is different, and so are the preferences, expectations, and needs of the people that live there. So, what might sell in one country could be a huge failure in another. This challenge sets up the need for a company to consider a multi-domestic strategy in which a company essentially tailors their products to each specific country with close attention to customers, religion, and other local characteristics. Come along as we learn more about multi-domestic strategy and why it is so important for those companies that conduct business in multiple countries.

Multi-Domestic Strategy Defined

So let's take a look at some characteristics of a multi-domestic strategy. First of all, it is a way for a company to customize their products for a specific country. For instance, a prime example of a multi-domestic company is a restaurant known for their golden arches and their hamburgers. This company can be found in a plethora of countries. However, not every country that hosts the golden arches eats meat. When this large food chain set up business in India, they customized their menu so that none of their sandwiches contained meat because of how sacred cows are.

Another major characteristic is that decision-making is not done at one central location. What this means is that management and other decision making individuals need to be able to understand the unique needs and wants of the local customers. If all decisions were made at one local area, say in the United States, the needs of other countries might not be met because they are not located there to see what customers are demanding from their products. Being located within the walls of the country, decision makers can see firsthand what customers want. They also can better understand customs, religious practices, and other situations, both political and legal that may vary from country to country.

Advantages of Multi-Domestic Strategy

While having a background in the host country is important to better understand and communicate the needs of customers, it also can act as an advantage. You see, when managers are local, they live among the customers in that country. This means that they shop and demand the same products as the customers they are targeting. This makes a stronger connection between the company and its customers.

A multi-domestic strategy also helps customers feel important. When a company takes the steps necessary to become a part of the local culture, respecting their needs and their wants, customers feel more comfortable giving them business. The company becomes a more local business rather than an outsider trying to force their different, unfamiliar products on the locals.

Disadvantages of Multi-Domestic Strategy

Let's take a look at some of the disadvantages of a multi-domestic strategy. As mentioned earlier, different countries have different policies, laws, and rules. Those laws and policies may make it difficult for a company to set up shop in a variety of countries.

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