(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: 

1. The potential cost gains from being globally integrated (such as marketing, production or research economies of scale) 
2. The pressures to respond to local market conditions.

Bartlett & Ghoshal – Diagram

Source: aqa.org.uk

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.

Questions

1. What is Bartlett & Ghoshal’s Theory? (2 marks)

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2. Analyse the four different approaches examined in Bartlett & Ghoshal’s theory to manage businesses that operate internationally? (12 Marks)

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