Explain the implementation of the multidomestic strategy of global expansion

What will be an ideal response?

A multidomestic strategy is oriented toward local responsiveness. A company pursuing this strategy decentralizes control to subsidiaries and divisions in each country in which it operates to produce and customize products to local markets.

When a company pursues a multidomestic strategy, it generally operates with a global geographic structure. When using this structure, a company duplicates all value-creation activities and establishes an overseas division in every country or world area in which it operates. Authority is then decentralized to managers in each overseas division, and they devise the appropriate strategy for responding to the needs of the local environment. Managers at global headquarters use market and output controls, such as return on investment, growth in market share, and operation costs, to evaluate the performance of overseas divisions. On the basis of such global comparisons, they can make decisions about capital allocation and orchestrate the transfer of new knowledge among divisions.

One problem with a global geographic structure and a multidomestic strategy is that the duplication of specialist activities across countries raises a company's overall cost structure. Moreover, the company is not taking advantage of opportunities to transfer, share, or leverage its competences and capabilities on a global basis.