Transnational Strategy - Definition, Importance, Components & Example
What is Transnational Strategy?
Transnational strategy is a combination of the global strategy, the multinational strategy and the international strategy where the control is at a central level but delivery and operations are handled at local level.
In this strategy there might be a common branding and product features across countries but local adaptation and variation might be seen at local and domestic level.
Importance of Transnational Strategy
The world is growing and connecting fast. In the era of technology and connectivity, companies are able to reach to customers across globe and with improved distribution, companies can deliver goods and services locally and control the data and other aspects of business centrally. In international marketing, there is no simple way of success, transnational strategy combines global and local strategies producing synergy in multiple markets.
It helps the company grow and take the products and services across globe but at the same time making sure that the products are not only reaching the customers but are made and positioned in a way local customer expects it.
A customer would see value in a global product but at the same time expect local adjustments pertaining to expectations and local preferences.
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Components of Transnational Strategy
Each of the above mentioned strategies allow organizations to conduct businesses at offshore locations and have unique features such as:
Global
This is focused on central control through the headquarter or location which lead to common decisions across markets on product portfolio, operations etc.
Features:
1. Strong central control
2. Economies of scale through global manufacturing
3. Standardization
Local
This is the aspect which works at a local level may be at a country or city level and works on local adaptation of the company's vision and products.
Features:
1. Local decisions taken by local subsidiaries
2. Allocations of resources done by parent company
Regional
Many times multinational companies also combine many local markets into geographical regions for better control and management e.g. APAC, NA, EU combining multiple countries into one unit.
Features
1. Better Management and visibility into company's performance in a region
2. Quick transfer of knowledge and resources across similar and closely located markets.
The transnational strategy combines the above mentioned strategies to in order to facilitate a firm’s global business activities through coordination, cooperation and interdependence. The transnational strategy relies on the coordination of the center, the operation units and the local subsidiaries for efficient and effective reach. The transnational strategy captures the benefits of central coordination of the global strategy along with the local responsiveness of the multinational and international strategy.
Transnational Strategy Example
HUL and HCCB are subsidiaries of their parent companies Unilever and Coca Cola company which follow a transnational strategy. The operations are locally controlled but centrally coordinated and interdependence among other subsidiaries is also present.
Companies like McDonald's and Burger King though have similar models across the world where they have common offerings of burgers, fries and drinks across globe but they have adapted to local tastes and cuisines.
Hence, this concludes the definition of Transnational Strategy along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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