What is transnational business strategy?

A transnational strategy combines a standardization strategy and a
multidomestic strategy. It is used when a company faces significant
cost pressure from international competitors but must also offer
products that meet local customer needs.
What are the PROS and CONS of transnational
business strategy?
Advantages

Expanding of Business
The biggest advantage of transnational strategy is that it helps
the company in expanding its business because once
company adopts this strategy than the whole world is the
market for company’s products and its reach widens from
home country to the whole world and wider the market higher
are the chances of company generating bumper sales
resulting in higher profits for the business.

Saving of Expenses
Another advantage of transnational strategy is that since
the company has decentralized the business it can
employ as well as using cheap labor and raw material
from the country in which it is operating and hence
company will be able to save a lot of money on the
production side of the business. Hence for example, if it
costs $20 to $25 per hour for producing a good in a
developed nation like the USA than the same thing cost
$3 to $5 in developing nations of Asia and Africa region.
Disadvantages

Lack of Understanding
The biggest disadvantage of transnational strategy is that
company does not have the full understanding of the markets
in which company is trying to operate. Hence, for example, a
USA based company cannot have a complete understanding
about the local markets about the countries like India and
China as the consumers of these countries have a different
culture, fashion, and taste when one compares it with
consumers of USA. Therefore lack of understanding about the
foreign markets is perhaps the biggest shortcoming when the
company is adopting the transnational strategy.

Political, Legal and Operational Risk
Another demerit of transnational strategy is that company
is always exposed to political, legal and operational risk
which are associated with operating in different countries
and if company is not big enough to have resources, time
and money at its disposal for handling this risk than the
whole strategy of doing business in other countries may
backfire resulting in loss for the company.
What are the companies using transnational
business strategy?

MCDONALDS
As a part of business strategy McDonalds seems to adhere to differentiation Strategy. It
attempts to establish and maintain the image that this fast food line is unique from others in
the same market segment. McDonalds compete by charging reasonable prices for quality
goods and services. Also, McDonalds’ expansion policy has used the franchising strategy
worldwide. It has successfully replicated its business model, not in the US but also in the
global locations. Today more than 80% of the restaurants of the company are operated
through the franchisees. This calls for McDonalds to focus on achieving highly efficient
operating procedures so that its costs are lower than its competitors’. This allows it to sell its
food service for lower prices and reflects McDonalds’ overall cost leadership strategy.

KFC
A transnational strategy is simply a plan of action whereby a business decides to
conduct its activities across international borders. In the past five years, Yum! Yum! This
strategy is invested in overseas operations and assets, connecting them to every nation
in which the company operates. These firms make some concessions to local tastes too.
Transnational Strategy. Let’s take a look at KFC market penetration success story in a
Transnational business strategy is the need of today shrinking world. ... (KFC) rely on the
same brand names and the same core menu items around the world. Considering the
same, KFC has developed a strategy of offering Wi-Fi services along with offering
morning services. Transnational Strategy For example, large fast-food chains such as
McDonald's and Kentucky Fried Chicken (KFC) rely on the same brand names and the
same core menu items around the world. The local cultural strategy helps KFC to
increase customer loyalty. The world largest fast food restaurant company Yum! The
multidomestic strategy is sometimes called the multinational strategy.
HOW INTERNET EFFECT FOR TRANSNATIONAL BUSINESS STRATEGY OF
GLOBAL BUSINESS?
When analyzing the Internet's effect on the global market and small business, it is
important to remember that the Internet carries information as well as commerce.
The effects of instant information can be as powerful as the ability to reach a
worldwide audience. But small business still needs to carefully examine the effects
of the Internet on international markets to understand whether or not an online
presence is the right move.
Product Development

Prior to the advent of the Internet, information traveled around the world via
telephone, television or print. Large businesses that were working on advances
in technology would have access to the newest information, but small
businesses would have to hunt for the information on their own. The Internet has
allowed small businesses instant access to any new product developments and
technological advances that can help improve their products and compete
with larger companies.
Information Exchange

The way that small businesses exchange information has changed
drastically since the Internet has become popular. Small businesses did not
have the financial resources to arrange large meetings with suppliers or
developers that would require air travel and accommodation expenses.
Now, through email, online video conferencing and document-exchange
websites, small businesses can collaborate with developers and vendors all
over the world inexpensively and with a full exchange of necessary
information.
Marketing

One of the more significant effects that the Internet has on global markets for
small business is the ability for small businesses to reach an international
audience for a very low cost. A corporate website can become a marketing
resource for a company that can be accessed by anyone in the world. Social
networking websites allow companies to interact with millions of potential
clients worldwide at no cost.
Monitoring

The Internet allows small business owners to be more mobile by making it easier
to manage a business from anywhere. A small business owner on a business trip
can stay in real-time contact with his office through an online chat function
and exchange important documents with anyone from any location in the
world. The Internet has allowed small business owners the freedom to pursue
business opportunities while still maintaining control over their businesses.
THE END
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