1. Internationalisation : Goals
Internationalisation is about going beyond the home base to foreign countries in multiple ways.When companies intend
to internationalise , they are broadly guided by 3 primary goals mentioned below.
(Ref : Transnational Management [5th edition ] by Bartlett , Ghoshal & Beamish )
(A) Global efficiency : This is about achieving cost economies and revenue maximization through global
integration and response to customer needs in varied markets.Companies need to achieve Global integration
through deciding on the critical decision of locating their value adding activities , critical components of their
value chain. This can call for centralization or decentralization of the value adding activities , introduction of
standardized products or customized products , and relevant strategies.Companies achieve Global efficiency
through scale economies and scope economies.Scale economies relate to benefits which arise as a result of
world wide reach , span and coverage . Scope economies relate to benefits which arise out of capabilities to
produce as per world wide requirements.
(B) Multinational flexibility : This refers to the ability of an organization to address the challenges & opportunities
which surface as a result of the dynamic nature of the macro & micro environments.In the context of
multinational flexibility , companies need to address 4 primary risks which are macro economic risks , political
risks , competitive risks and resource risks respectively.Macro economic risks relate to risks of exchange rate
fluctuations , inflation , interest rates and accordingly. Political risks relate to issues like , relationships between
governments, threat of sanctions , and accordingly . Competitive threats relate to risks in the micro
environment with regards to competitor strategies .Resource risks relate to risks of availability & access to
critical resources like raw materials , labour , capital and technology.
(C) World wide learning : This is about gaining insight of the multiple countries with respect to the key business
environment , key business stakeholders , varied technology platforms , ways of doing business and
accordingly. It is about utilizing the insight for further strengthening of operations in each country.It is about
cross application of business insights for overall benefit of the world wide network.This learning can be a key
competitive advantage for a company and companies should endeavour to invest in this learning .
In the pursuit of internationalization , 4 options exist for a multi national enterprise (MNE) which are mentioned below.
Each of the 4 options has been explained in detail in the forthcoming sections.
(A) Global strategy
(B) Multi domestic strategy
(C) Transnational strategy
(D) International strategy
Internationalisation Strategies : Options
Internationalisation Strategies
World wide integration
High Global Transnational
Strategy Strategy
International Multi Domestic
Low Strategy Strategy
Low High
Need of a country specific customised response
(Developed on the model proposed by Richard Lynch in Corporate Strategy)
2

2. MNE Pursuing a Global Strategy :
In a global strategy , standardized products are offered in each of the countries in which the company operates in , and
relevant value adding activities are concentrated in a limited set of locations. The fundamental aspect of a global strategy
is that through this kind of a strategy , a standardized product exists for each of the countries in which the company
operates in.Global strategy is pursued when there exists acceptance of a standardized product in each of the countries in
which the company plans to operate in , and there does not exist the need of a customized product for each of the
countries in which the company plans to operate in. Consequently as a result of the highlighted situation , the company
develops a centralized Global manufacturing base , which produces standardized products for each of the countries in
which the company operates in.Product standardization as a natural consequence brings the standardization in supply
chain.The fundamental presence of product standardazation being there , standardization can be pursued in all the other
relevant aspects of the business , for example , marketing , advertising , distribution structure . When a company pursues
standardization in all the relevant aspects of the business , in each of the countries in which it operates in , it truly
pursues a global strategy.
Some of the significant attributes which are associated with a truly global strategy , are mentioned below :
• Acceptance of a standardized product in each of the countries in which the company operates in.
• Non existence of the need of a customized product in each of the countries in which the company operates in.
• Globally centralized manufacturing base and supply chain.
• Standardized marketing , distribution and branding programmes for each of the countries in which the
company operates in.
• Standardized business policies in each of the countries in which the company operates in .
• High levels of investment in technology & R&D.
• High levels of investment in marketing & branding.
• Economies of scale in production & sourcing.
• Need of a Global brand image.
Some examples of companies which pursue a global strategy are Airbus , Boeing , Embraer, Rolls Royce Cars , Gucci ,
Bombardier Transportation , Alstom Transportation , Kawasaki Rail Car, BAE Systems .
The possible organization structure which a global strategy can have , is mentioned below.
Global Strategy : Organisation Structure
Corporate
Level
Global Global
Global Sales
Supply Production
& Marketing
Chain Base
Country A Country B Country C Country D Country E
Sales & Sales & Sales & Sales & Sales &
Marketing Marketing Marketing Marketing Marketing
(Not adapted from any source)
(Not adapted from any source)
3

3. MNE Pursuing a Multi Domestic Strategy
Multi domestic strategy is that kind of strategy in which an organization customizes its response to the country specific
needs.The idea of the strategy stems from the existence of the need of a country specific customized product .
Progressing in the direction of the need of a country specific product , the dimension of customizing other relevant
aspects of the business to a country specific requirements have been incorporated , and in the process the full idea and
understanding of a multi domestic strategy has emerged. In a truly multi domestic strategy , besides product
customization , marketing , advertising , branding , distribution and R& D are also customized to the country’s needs.So,
multi domestic strategy is that kind of strategy in which a company customizes its response to the existing country
specific requirements. Offering of a customized product puts a lot of emphasis on the establishment of a full scale value
chain for the respective subsidiary in the country.Very naturally , companies pursuing a multi domestic strategy ,
establish an exclusive manufacturing base and supply chain base to support customization of the product as per
country’s needs. Such companies have tailor made marketing , advertising and branding programmes for the respective
country.
The automotive industry in particular pursues a multi domestic strategy in general . General Motors’ Opel was a
customized response for Germany , Honda has introduced varied variants of Accord & Civic in multiple countries .Reid &
Taylor , a premium suits brand , offers customized suitings in countries in which it operates.Van Heuson , an American
brand for men’s wear , also customizes its products in the countries in which it operates. In the banking industry , HSBC ,
Citi Bank and ABN Amro have customized branding programmes for each of the countries in which they operate in.Mc
Donalds faces a lot of pressure to customize its offerings to lacal tastes and expectations. Hilton Towers &
Intercontinnental offer country tailored experience to its customers world wide.
An example of the organization structure which a company pursuing multi domestic strategy shall have , is mentioned
below.The diagram is illustrative in nature and details for each country have not been included because of space
constraint.
Multi Domestic Strategy : Organisation Structure
(Area Structure)
CEO
Continent A Continent B
Country A Country B Country C Country D Country E Country F
Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary
Supply Sales & Supply Sales &
Production Production
chain Marketing chain Marketing
(Adapted from International Business (4th edition) : Rugman & Collinson)
4

4. MNE Pursuing a Transnational Strategy [Global aswell as Local]
A transnational strategy is that kind of strategy in which there exists the presence of country specific customization aswell
as standardization. It is these transnational MNEs that aim at being Global aswell as local.These transnational companies
strive to strike a balance in between the extent to which they should standardize and the extent to which they should
pursue country specific customization.Such strategies are pursued with the objective of achieving global efficiency ,
multi national flexibility and world wide learning.An MNE pusuing a transnational strategy , has the following 3 key
attributes.
(Ref : Transnational Management [5th edition ] by Bartlett , Ghoshal & Beamish )
(A) Multidimensional perspectives : This is about national subsidiary management , Global business management
and Worldwide functional management. National subsidiary management relates to addressal of country
specific needs.This customization has to be translated into a competitive advantage for the sake of
sustainability of the world wide network.From this perspective companies need to fundamentally understand
and respond to a country’s tastes , preferences , culture , heritage value , beliefs and systems.Global business
management is about competitive intelligence and competition. Transnational companies need to defend
themselves persistently from mature players , new entrants and accordingly.World wide functional
management is about dispersion of attained knowledge across countries so as to strengthen operations in each
country of operation.The entire network of subsidiaries should benefit from this world wide learning. This
attribute is about cross border application of best practices.Transnational companies aim at a participative
framework in which the corporate parent and respective subsidiaries play a sharing role.
(B) Distributed interdependent capabilities : This attribute is about the culture of a transnational company to
recognize the merit in resourcefulness of a particular country , and in the process the making of the respective
country the world wide supply source , centre of excellence.Transnational companies exhibit the culture in
which technological advancements and innovations in countries surrounding the centre of excellence , get
incorporated in the centre of excellence.So in an MNE pursuing a transnational strategy , a country in the
network has the opportunity of getting recognized as a Global champion / Global souce of supply / Global
centre of excellence , fostering also exchange of ideas and capabilities in between the countries in the
network.So a transnational company attempts to be unique in nature.
(C) Flexible integrative process : This attribute is about the co existence of centralization , formalization and
socialization. Centralisation refers to the right of the corporate parent to take decisions as per its own
discretion. Formalisation is about delegated tasks and responsibilities of subsidiaries. Socialisation is about
collaborative participation of each subsidiary in the entire multi national network , for fostering exchange of
ideas and capabilities across borders.
As mentioned , these transnational companies strive to strike a balance in between the extent to which they should
pursue standardization and the extent to which they should pursue country specific customization.Besides this , such
transnational companies strike to achieve a balance in between the extent to which their value adding activities should
be centralized or decentralized.Balance is achieved by such companies through weighing the benefits of economies of
scale and economies of scope against country specific localization.Some of the world wide pressures which prompt
companies to be Global aswell as local are mentioned below :
• Existence of varied customer preferences , needs and expectations world wide.
• Existence of varied forms of competition and competitors world wide.
• Existence of product categories in different stages of product life cycle world wide.
• Existence of rich resources in certain parts of world while existence of poor resources in certain parts of the
world.
• Existence of protectionist measures for domestic businesses in certain countries and existence of delicensing in
certain countries.
• Existence of cost diseconomies with respect to establishment of full value chain in each country of operation.
• Existence of high hetrogeneity in customer needs world wide with respect to a particular product.
A perfect example of a company pursuing a transnational strategy could be with respect to a manufacturing company
whose products require customization to country specific needs , however its supply chain and manufacturing base are
still centrally located.In this relevant scenario , the existing supply chain base of the company caters to the world wide
variation in product components .The manufacturing base of the company either has dedicated production lines for each
country specific product variant or else on an established production line all the multiple product variants are
sequentially manufactured. There could be several factors which shall decide on the establishment of the supply chain
and manufacturing base. Some of the significant factors could be availability of economical labour ,availability of skilled
workforce, high technology concentration and availability in the given area, proximity and good connectivity with all
forms of transportation of the finished products to multiple locations world wide,tax advantages and accordingly.
5

5. Need for being Global aswell as local has led to the development of the matrix organization structure.Fundamentally , a
matrix organization structure emerges when the strategy of an organization involves multiple basis , as we find the
presence of standardization aswell as customization in the case of transnational strategies.A matrix organization structure
still emerges when close cooperation is required in between groups and divisions. For example, Royal Dutch Shell needs
to take decisions pertaining to its oil,gas and chemical products aswell as the countries like U.K. , Germany and USA
where it operates in.Such situations necessitate the creation of roles being accountable to both product dimension and
area dimension.Such dual responsibility based organization structures are called matrix organization structures.The dual
dimensions can be any , depending on the relevant situation.
The merits and demerits of a matrix organization structure are mentioned below.
Merits:
• The organization structure addresses the need of close coordination where decision making might face
conflcts.
• The organization structure has adaptability to specific strategic requirements.
• The organization structure aims at replacing bureaucracy with discussion based decision making.
• The organization structure aims at increasing managerial involvement.
Demerits:
• The organization structure develops complexity and difficulty in attaining consensus because of dual reporting
structure.
• The organization structure tends to have the roles getting ill defined.
• The organization structure gives scope for conflict & tension because of multiple reporting.
Ford’s Global matrix structure of 1995 has been highlighted below as an example .
Automotive
Strategy Office Ford’s Global Matrix Structure : 1995
Alligned Objectives Ford Product
Automotive Office Alligned Objectives Development
Functions
Europe : USA : USA : USA: USA :
Small Large RWD Personal use Commercial
FWD FWD Vehicle Car Vehicle truck vehicle truck vehicle
Vehicle
Manufacturing
Vehicle operations
Powertrain operations
Component operations
Sales & Marketing
W/W sales & marketing
operations
Regional sales &
marketing operations
Customer
communications &
satisfaction group
Production &
Purchasing (Adapted from Corporate Strategy by Richard Lynch)
6

6. Collecting the Differences in Between Global ,
Multidomestic , Transnational & International MNEs
Having had described a Global MNE , Multidomestic MNE , Transnational MNE & International MNE in the preceeding
sections , the differences in between them have been collectively highlighted below.
Organisation Configuration Models
Decentralised Federation : MultiDomestic Strategy Coordinated Federation : International Strategy
Centralised Federation : Global Strategy Integrated Network : Transnational Strategy
(Adapted from Transnational Management [5th edition]: Bartlett , Ghoshal & Beamish)
Basis for critical understanding of the configuration models:
• The box in the centre of a model represents the corporate parent.
• The 6 boxes spread across the central box in a model represent world wide subsidiaries.
• Shading in a box shows where does concentration of power with respect to management of world wide
subsidiaries lie.
• With respect to the lines connecting a corporate parent with the world wide subsidiaries , a complete line is
representative of full control being exercised by the corporate parent over the world wide subsidiaries . A
dotted line in representative of less than full control being exercised by the corporate parent over the world
wide subsidiaries. The more are the spaces in the dotted lines , more is the extent to which the corporate
parent does not exercise full control over the world wide subsidiaries.
• With respect to lines interconnecting the subsidiaries , those depict sharing of ideas in between the
subsidiaries.
7

7. Summary of Differences :
(Ref : Transnational Management [5th edition ] by Bartlett , Ghoshal & Beamish )
Multi Domestic MNE Global MNE Transnational MNE International MNE
Product Country specific Standardized Product Country Specific Standardized Product
configuration customization customization
Supply chain Country specific Single source of Dispersed , Core competencies
configuration supply for the entire interdependent and centralized , others
network specialized decentralized
Manufacturing Country specific Single source of Dispersed , Core competencies
configuration manufacturing for interdependent and centralized , others
the entire network specialized decentralized
Marketing Country specific Dispersed across Dispersed , Core competencies
configuration countries under interdependent and centralized , others
Global reporting specialized decentralized
Strategic orientation Building flexibility for Building cost Developing Global Exploiting parent
responding to advantages through efficiency , flexibility company knowledge
national differences centralized , Global and worldwide and capabilities
through strong , scale operations learning capability through worldwide
resourceful and simultaneously diffusion and
entrepreneurial adaptation
national operations
Configuration of Decentralized and Centralized and Dispersed , Sources of core
assets & capabilities nationally self Globally scaled interdependent and competencies
sufficient specialized centralized , others
decentralized
Decision making Decentralized Centralized Shared Shared
Control over Loosely held Tightly held Held in a participative Held in a participative
subsidiaries & collaborative & collaborative
manner manner
Exchange of ideas Not Present Not present Present Not present
within the subsidiary
network
Key strategic Country specific Standardization Global efficiency , Worldwide transfer of
capability customization flexibility & home country
worldwide learning innovations
Role of overseas Sensing & exploiting Implementing parent Worldwide Adapting &
operations local opportunities company strategies collaboration and leveraging parent
exchange of ideas company
within the network competencies
Development & Knowledge Knowledge held with Knowledge Knowledge
diffusion of developed and the corporate parent collaborated and developed at the
knowledge retained within each exchanged in centre and
country between countries transferred to other
countries
8

8. Consulting Companies : Organisation Structure
Given the nature of the consulting business , consulting companies are ideally suited to the adoption of a multi domestic
organization structure or a transnational organization structure.This is so because consulting needs of clients differ world
wide. The consulting needs of a client in USA can be very different to the consulting needs of a client in U.K.Because of
this variation , there is a natural reason for consulting companies to customize their consulting service in each country of
operation.However , consulting companies can include the dimension of standardization aswell , maintaining country
specific customization of their service.Such a strategy shall get classified as a transnational strategy because of presence
of standardization aswell as country specific customization in the service offering of the company.Standardisation can get
introduced trough development of a Global support centre , whose function is to develop Global research databases
which can be valuable sources of information for the consulting practice of each country.Today world leaders in the
strategy consulting industry , Mckinsey & Co , Boston Consulting Group (BCG) , Bain & Co , adopt a transnational
structure resulting from their transnational strategies.Mckinsey & Co has 90 offices world wide and has also instituted
its Mckinsey Global Institute.BCG has 68 offices world wide spread across 3 regions , Americas , Europe & Middle East ,
Asia Pacific.Bain & Co has 36 offices world wide.
Strategy consulting companies for example are organized within each world wide subsidiary across select capabilities.
These capabilities have the breadth of coverage of a range of select industries .For example , Mckinsey & Company has
the following functional practices & industry practices. (Ref : www.mckinsey.com)
Functional Practice Industry Practice
Business Technology Office Automotive & Assembly
Corporate Finance Chemicals
Marketing & Sales Consumer Packaged Goods
Operations Electric Power & Natural Gas
Organization Financial Services
Strategy High Tech
Media & Entertainment
Metals & Mining
Non Profit
Payor / Provider
Petroleum
Pharmaceuticals & Medical Products
Private Equity
Pulp & Paper
Retail
Telecommunications
Travel & Logistics
9

9. For consulting companies having a multi domestic structure as a result of the pursuit of a multi domestic strategy , the
structure has been highlighted below.The structure is only illustrative in nature and does not include details for each
country because of space constraint.
Consulting Company : Organisation Structure
(Multi Domestic Perspective)
CEO
Country A Country B
Subsidiary Division
Marketing & Consulting Marketing & Consulting
Business Delivery Business Delivery
Development (Operations) Development (Operations)
(Not adapted from any source : Simplified demonstration)
For consulting companies having a transnational structure as a result of the pursuit of a transnational strategy , the
structure has been highlighted below.The structure is only illustrative in nature and does not include details for each
country because of space constraint.
Consulting Company : Organisation Structure
(Transnational Perspective)
CEO
Country A Country B
Subsidiary Subsidiary
Global
Marketing & Consulting Support Marketing & Consulting
Business Delivery Centre Business Delivery
Development (Operations) Development (Operations)
(Not adapted from any source : Simplified demonstration)
10

10. References & Bibliography
• Transnatiional Management : Text Cases , and Readings in Cross Border Management: ( 5th edition )
Cristopher Bartlett , Sumantra Ghoshal & Paul Beamish
• Bartlett , C.A. and Ghoshal (1987) : Managing Across Borders;New Strategic Requirements : Sloan
Management Review (Summer) (pages 7 to 17)
• Bartlett , C.A. and Ghoshal (1987) : Matrix Management : Not a Structure , a Frame of Mind : Harvard Business
Review (July – August) (pages 138 to 146)
• Bartlett , C.A. and Ghoshal (1993) : Beyond the M Form : Towards a Managerial Theory of the Firm : Strategic
Management Journal (pages 23 – to 46)
• Porter M.E. (1990) : The Competitive Advantage of Nations : Harvard Business Review : (Summmer)
(pages 7 to 17)
• Mc Dougall , P . and Oviatt , B.M. (1994) : Towards a Theory of International New Ventures : Journal of
International Business Studies (pages 45 to 64)
• Rugman , A (2003) : Regional Strategy and the Demise of Globalization: Journal of International Management :
(pages 409 to 417)
• International Business : (4th edition) : Alan M Rugman & Simon Collinson
• Strategic Management : Gregory Dess & Alex Miller
• Corporate Strategy : Richard Lynch
• Strategic Management : Hoskisson , Hit & Ireland
• Exploring Corporate Strategy : Gerry Johnson, Kevan Scholes & Richard Whittington
• Strategic Marketing Management : Richard M.S.Wilson & Colin Giligan
• Mckinsey & Company : www.mckinsey.com
• Boston Consulting Group : www.bcg.com
• Bain & Company : www.bain.com
• AT Kearney : www.atkearney.com
• Booz Allen & Hamilton : www.boozallen.com
11