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The global standardization strategy focuses on increasing profitability and profit growth by reaping the cost reductions that come from economies of scale, learning effects, and location economies. The strategic goal is to pursue a low-cost strategy on a global scale. The global standardization strategy makes sense when: there are strong pressures for cost reductions, demands for local responsiveness are minimal. The production, marketing & R&D activities of firms pursuing a global standardization are concentrated in a few favorable locations. The localization strategy focuses on increasing profitability by customizing the firmís goods or services. The localization strategy makes sense when there are substantial differences across nations with regard to consumer tastes and preferences, where cost pressures are not too intense. The transnational strategy tries to simultaneously, achieve low costs through location economies, economies of scale, and learning effects; differentiate the product offering across geographic markets to account for local differences; foster a multi-directional flow of skills between different subsidiaries in the firmís global network of operations. The transnational strategy makes sense when: cost pressures are intense pressures for local responsiveness is intense. The international strategy involves taking products first produced for the domestic market and then selling them internationally with only minimal local customization. The international strategy makes sense when there are low cost pressures; low pressures for local responsiveness. Enterprise tends to centralize product development functions such as R&D at home country. They may undertake some local customization of product offering marketing strategy, in tends to be rather in scope.
Document Type: Article Topic Area: Business Submitted: 18th Oct 2013 Country: Malaysia
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