What is a global vs. multidomestic industry?
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by Dan Power
Professor Michael Porter argued that industries are either multi-domestic or global. In global industries,
competitors compete in all markets and offer homogeneous products. In multi-domestic industries, firms
compete in each national/separable market independently of other markets.
More specifically a global industry can be defined as:
1) An industry in which firms must compete in all world markets of that product in order to survive
2) An industry in which firm’s gain economies of scale or economies of scope across markets
Companies such as GE, Apple, Sony and Gillette pursue a global strategy by competing in all markets,
providing the same product for each market, strong centralised control, identifying customer needs and
wants across international borders, and locating value adding activities where they can achieve the the
lowest cost.
A global strategy is effective when differences between customers in countries are small and competition
is global.
A multi-domestic strategy involves producing products/services tailored to individual countries. Following
this strategy innovation comes from local R&D; managers decentralise decision making; and encourage
local sourcing. This strategy may result in higher production costs because of tailored products and
duplication of effort across countries.
For each enterprise classification, list three characteristics and two Canadian examples.
Classification
Characteristics
Canadian Example
Multi-domestic
Global
Do you think setting up foreign production plants helps companies be closer to local
customers and serve them better? Why or why not?
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"What is a global vs. multidomestic industry?." 2011. 25 Sep. 2013
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