The four basic strategies that firms use to compete in international markets are the international strategy, the globalstandardization strategy, the localization strategy, and the transnational strategy. The international strategy is most appropriate when there is lowpressure for local responsiveness and low pressure for cost reduction. When there is high pressure for cost reduction, but low pressure for localresponsiveness the global standardization strategy makes sense. A localization strategy is appropriate when pressure for local responsivenessis high, but pressure for cost reduction is low. Finally, when pressure for both cost reduction and local responsiveness is high, the transnationalstrategy is best.101.(p. 419-420)Firms that pursue a global standardization strategy focus on increasing profitability and profit growth by reaping the costreductions that come from economies of scale, learning effects, and location economies. The strategic goal of firms following a globalstandardization strategy is to pursue a low cost strategy and a global scale. This strategy makes most sense in those cases where there are strongpressures for cost reductions, and where demands for local responsiveness are minimal.MTV is an example of a company that has successfully expanded internationally using a localization strategy. Localization was imperative forMTV if the company was to gain market share from local competitors. However, the firm also had to be aware of the costs involved in developinglocal programming.102.(p. 420-421)A localization strategy focuses on increasing profitability by customizing the firm's goods or services so that they provide a goodmatch to tastes and preferences in different national markets. This strategy is most appropriate when there are substantial differences across nationswith regard to consumer tastes and preferences.103.(p. 421-422)Firms that are pursuing a transnational strategy are trying to simultaneously achieve low costs through location economies,economies of scale, and learning effects; differentiate their product offering across geographic markets to account for local differences; and fostera multidirectional flow of skills between different subsidiaries in the firm's global network of operations. Because this strategy puts conflictingdemands on the company, it is difficult to achieve. Building an organization that is capable of supporting a transnational strategic posture iscomplex and difficult. In essence, a transnational strategy requires a firm to simultaneously achieve cost efficiencies, global learning, and localresponsiveness. This strategy makes sense when a firm faces high pressures for cost reductions and high pressures for local responsiveness.104.(p. 422)When a firm is facing low cost pressures and low pressures for local responsiveness, an international strategy whereby the firm takesproducts initially developed for the domestic market and sells them internationally with only minimal local customization, may be appropriate. Show
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