Bartlett and Ghoshal’s Theory
Bartlett and Ghoshal’s Theory
(International, multi-domestic, transnational and global strategies)
Exam Boards: Edexcel, AQA, WJEC, CIE, OCR Level: AS/A LEVELS/IB/IAL
What is Bartlett & Ghoshal’s Theory?
This theory examines the different approaches to managing businesses that operate internationally.
It highlights two key factors in choosing how to manage an international business:
- The potential cost gains from being globally integrated (such as marketing, production or research economies of scale)
- The pressures to respond to local market conditions.
Bartlett & Ghoshal – Diagram
Bartlett & Ghoshal – Diagram axis explained
Local responsiveness – Business considerations
- The company might have to consider the requirements of the local population.
- The company will have to consider domestic competition.
Cost pressure – Business considerations
- Business must consider the implications/costs on the business of differentiating its product or service in a variety of global markets.
- Business must consider if it will be able to use the same branding and marketing techniques and materials to be successful internationally.
Multi domestic: Low Integration and High Responsiveness
- Aims to meet the needs of the local market.
- Tailor products and services to suit the local market.
- Low pressure for global integration.
- Decentralised structure.
- Unique marketing and sales approach to each individual market.
- E.g. Nestle and Pfizer.
Global: High Integration and Low Responsiveness e.g. Pfizer
- Global companies are the opposite of multi-domestic companies.
- They offer the same product worldwide.
- Their goal is to maximize efficiencies in order to reduce costs as much as possible.
- Global companies are highly centralised.
- All worldwide branches are very dependent on the headquarters.
- A company example would be Pfizer.
Transnational: High Integration and High Responsiveness e.g. Unilever
- This is a mix between both transnational and multidimensional.
- It will aim to respond both locally and gain benefits of integration.
- They will be independent but also integrated with their headquarters and strive to achieve the company’s global mission, aim and objective.
- A great example of a transnational company is Unilever.
International: Low Integration and Low Responsiveness
- This strategy was not originally in Bartlett & Ghoshal’s theory. This part of the theory was created by others.
- This part of the theory believes there is little need for local adaptation and global integration.
- The majority of the main activities will be maintained at the headquarter.
- This strategy is also often related to an exporting strategy.
- A good example would be large wine brands around the world.
1. What is Bartlett & Ghoshal’s Theory? (2 marks)
2. Analyse the four different approaches examined in Bartlett & Ghoshal’s theory to manage businesses that operate internationally? (12 Marks)