MULTINATIONAL STRATEGY

1. Multi-domestic Strategy
A multi-domestic strategy is an international strategy in which strategic and operating decisions are
decentralized to the strategic business unit in each country so as to allow that unit to tailor products to the
local market.
- Toyota needs to focus on competition within each country.
- They can use a highly decentralized approach which allows each division to focus on a geographic area,
region, or country. This approach will place less pressure on headquarters staff because the management
of country operations is delegated to individual managers in each country. Thus, the effectiveness and
efficiency of Toyota will increase from time to time.
- As a result, Toyota can produce their car which can be better adapted delegated ted to the local markets.
In short, the use of multi-domestic strategies can expand the firm’s local market share because the firm
can pay attention to the needs of the local clients.
Toyota like many international car manufacturers, realizes the importance of customizing their operations
based on location with multiple design and development locations as well as manufacturing locations in
over 25 countries. The company is using a globalization strategy that includes a multi-domestic strategy
in all aspects of sourcing, manufacturing, product development, and marketing (Toyota Global, 2019).
Quality assurance seems to be the consistent piece across all locations, however, the goal is for each
location be rely less on Japan and to operate independently within its region while keeping "The Toyota
Way". The "Toyota Way" is supported by two main pillars: Continuous improvement and respect for
people (Toyota, Global 2019).
This transnational strategy makes sense to me as it seems like common knowledge that different regions
of the world required different types of vehicles. This is why when you are on vacation overseas you will
likely see Toyota vehicles not sold in the US. The part that is interesting to me is the cultural piece. The
simplicity of the two main pillars allows the culture to work universally across all locations. Striking a
balance with the efficiency of having two main culture pillars that work globally and then the ability to
vary products based on customer needs.
2. Transnational Strategy
A transnational strategy is an international strategy through which the firm seeks to achieve both global
efficiency and local responsiveness.
Toyota Motor Corporation, one of the leading automobile manufacturers globally, has successfully
adopted and implemented a transnational strategy. This strategy focuses on achieving a balance between
global integration and local responsiveness, efficiently responding to the diverse needs of various markets
worldwide. The following is an analysis of Toyota's transnational strategy:
- Toyota needs to conduct a local market survey in order to understand the market before they penetrate
into a particular local market.
Toyota invests heavily in R&D, with facilities in Japan, the United States, and Europe. This global R&D
network helps the company exchange knowledge and technology across its various product lines and
efficiently innovate.
- Besides, Toyota has to be responsive to local demands due to variations in consumers’ tastes and
government regulations across countries mean.
Toyota modifies its vehicles to meet the diverse preferences of customers in various countries,
considering local regulations, road conditions, and customer behaviors. The company has tailored models
for specific regions, like the Etios series for emerging markets or the luxury Lexus brand in the United
States.
Thus, Toyota has to confront significant pressures for cost reductions and for local responsiveness.
- To the almost finished products with many common component parts, Toyota can add local product
features, tailoring the finished product to local needs.
- Thus, Toyota is able to realize many of the benefits of global manufacturing while reacting to pressures
for local responsiveness by differentiating its product among national markets.