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InternationalBusiness 1

InternationalBusiness 1

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Published by: Sham on Mar 04, 2012
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07/23/2013

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Firms pursuing a multidomestic strategy orient
themselves toward achieving maximum local
responsiveness. Multidomestic firms extensively
customize both their product offering and their marketing
strategy to match different national conditions. They also
tend to establish a complete set of value creation
activities--including production, marketing, and R&D--in
each major national market in which they do business.
As a consequence, they generally fail to realize value
from experience curve effects and location economies.
Accordingly, many multidomestic firms have a high cost
structure. They also tend to do a poor job of leveraging
core competencies within the firm. General Motors,
profiled in the opening case, is a good example of a
company that has historically functioned as a
multidomestic corporation, particularly with regard to its
extensive European operations, which are largely self-
contained entities.

A multidomestic strategy makes most sense when there
are high pressures for local responsiveness and low
pressures for cost reductions.

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