Implementation of Transnational Strategy
Transnational strategy is a business tool used to manage global business. Globalization is the new style of business whereby companies are stretching beyond the boundaries to do business. Technology advancement, availability of resources and ready markets are critical factors behind global businesses. Transnational strategy maintains central decision-making, unlike multinational business where decisions are made in the subsidiaries. Transnational features may include operations in foreign markets, benefits centralization, local market customization and centralization in decision-making. Transnational strategy involves the use of common strategies for the different subsidiaries. A company can just come up with one marketing strategy to cater for the foreign markets. That can include the use of a global brand or minor adjustments to give local brands for local acceptability (Aswathappa, 2010).
Main problems likely to be associated with transnational strategy implementation
With all its advantages to the organization, transnational strategy has numerous problems with the organization. These challenges may include. Culture diversity. Global businesses have a market in different foreign countries worldwide. Meeting the needs of these various foreign countries is a challenge because different cultures come with different preferences. Operating with a single strategy, for example, marketing will be a challenge because one cannot advertise something like pork to Muslims (Simon Harris, 2010).
Unexpected additional costs. It is better for a subsidiary to manage its expenses and activities than the head office to do the same (Simon Harris, 2010). Different locations will have different expenses and legal requirements and there it is always difficult to budget for all subsidiaries at once without considering their business environments.
Political influences. Global businesses will involve exposure to different political environments. The political environment will determine the success of the strategy. In the case of unfair political interventions in various markets, the strategy fails but when the political influence favors the global business, the strategy implementation succeeds (Simon Harris, 2010).
Communication barriers. Global business involves communicating the business values and strategies. There is a need for a fundamental communication language and understanding of the foreign languages. Subsidiary managers, for example, need to be trained to understand the languages in the countries they are representing their company (Mary Ellen Guffey, 2012).
Lack of the required resources. Global business should be provided with the right resources, from capital resource to human resource. Getting the right resources in the foreign countries might be a challenge hence training and outsourcing are opted for despite their effects. Some countries have cheap but unskilled labor and so it is at the end expensive to train the employees to give their best as per the international standards (Paul, 2011).
Global business has a broad range of market hence more returns. Managing the business is the challenge for many international companies. Transnational strategy is one of the many tools for international business management. It involves centralizing everything from decisions to benefits. Global organizations are faced with a number of challenges in implementation and even after implementation of the transnational strategy. Above are just a few of them like the different cultural issues faced. Management should consider these factors in implementing transnational strategy and doing global business.
Aswathappa. (2010). International Busines4E. Noida: Tata McGraw-Hill Education.
Mary Ellen Guffey, D. L. (2012). Essentials of Business Communication. Boston: Cengage Learning.
Paul, J. (2011). International Business. New Delhi: PHI Learning Pvt. Ltd.
Simon Harris, O. K. (2010). International Business: New Challenges, New Forms, New Perspectives. London: Palgrave Mcmillan.
Implementation of Transnational Strategy