Table of Contents
- What Is Transnational Strategy?
- International Strategy Methods
- Transnational Strategy Use
- Benefits of Transnational Strategy
- Transnational Strategy Examples
- Lesson Summary
Expanding a business across international borders can seem like a challenging task. But the key to stable growth for a business operating locally and globally is incorporating a transnational strategy. A transnational business is a business that runs in a local country and has additional business operations overseas. The transnational strategy definition refers to a plan of action in which a company decides to manage its operations across global borders. The basic concept incorporated into transnational strategy occurs when a business considers the societal and cultural differences in every market area it expands to and markets the business according to every market group. When a business strives to appeal to the desires and cultural differences of the new market, a business can make marketing strategies and products that make sense and are allowed by the specified audience, creating more brand loyalty and sales.
A multinational corporation defines a business that runs in more than one country. An excellent example of a multinational corporation is Walmart. Most people view Walmart as an American retailer, but many don't know that a massive income of Walmart's revenue comes from outside the USA. Walmart owns a remarkable number of stores in Brazil, Argentina, and Mexico, to name a few. To ensure that all global stores run efficiently, Walmart must use an international strategy. The four key international strategies that businesses with international operations use are:
International and global strategies can sometimes be used interchangeably, but the two strategies have different meanings. The companies that adopt international strategy act independently and run their operations as if they are local companies with minimum to zero coordination from the parent company. On the other hand, the global strategy consists of a carefully made single strategy used for all businesses operating locally and internationally. This strategy requires coordination from the parent company.
The tactics used in transnational strategy involve taking into account the different people with different society's norms and favorites. Companies are able to manufacture products that are relevant and appealing to a particular audience. This explains why one flavor might not work in one country but fits perfectly in another. Businesses adopting this strategy should understand the target audience and adopt marketing appeals that suit their different needs, wants, dislikes, and likes. After the companies understand this, they can customize the products and marketing materials to meet the required cultural differences.
One of the key goals for businesses is the opportunity to experience an expansion that makes them enjoy more profits, have a presence in various counties around the globe, and maximize brand recognition. However, what makes transnational strategies beneficial is the ability to keep both local and foreign markets happy. This strategy gives the best of both:
A business can differentiate its brand from other competitive brands by combining high local responsiveness and the power of economies of scale. Highly locally responsive businesses describe businesses that go the extra mile to adapt their products and services to particular local needs. This can consist of hiring field marketers or local country managers, changing the product's color or packaging, or localizing the sales and marketing strategies. Some of the benefits of optimizing a business for high local responsiveness include:
Businesses that use transnational strategy are run by a head or central office in one country whose primary duty is coordinating local subsidiaries in global markets. This type of organizational structure means that the head office is responsible for the business's supply chain management and overall decision-making. Some of the advantages of optimizing a business for high global integration include:
There are various steps to take for a business to succeed using a transnational strategy. The steps include conducting research in the new market to identify and define the target audience; accessing the market's weaknesses, opportunities, and strengths; and understanding the customer's customs, social norms, preferences, culture, and practices in the new market. Some of the companies that use the transnational strategy include:
Transnational strategy refers to a plan of action defined by a company that conducts its operations across global borders. This is one example of a strategy used by a multinational corporation to appeal to both local markets and international markets. A business operating internationally can also use a method like international strategy, multidomestic strategy, or global strategy. Transnational strategy is impactful when a business considers the societal and cultural differences of every market area and uses a marketing strategy that suits each group. When a business appeals to the cultural differences and desires of the market, it can create marketing strategies and products that the target audience wants, which helps in making more sales and increasing brand loyalty.
McDonald's is an example of a company that uses this type of method. The company uses the same menu and brand name in all countries it operates, but it also makes changes to suit the market preference depending on the country it is operating in. One particular flavor or product may not work in one country but fits perfectly in another. Companies should follow the same steps as they would in a marketing plan for this strategy to succeed. The steps involve conducting research to identify and define the target audience; accessing the opportunities, strengths, and weaknesses of the new market; and understanding the societal norms, customs, and practices of the new country.
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An example of a transnational strategy is KFC. With numerous locations globally, the franchise is known for its transnational marketing strategy that caters directly to the different market's local preferences and tastes.
One fundamental importance of transnational strategy is the ability of a business to enter a local market quickly and effectively. This is because the strategy works by interacting with and understanding different cultures, hence enabling the business to make products that meet the target market's preferences.
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