Explain the benefits of a multidomestic strategy to firm internationalization. What are some of the disadvantages to this approach?

What will be an ideal response?

The multidomestic approach has several advantages. If the foreign subsidiary includes a factory, locally produced goods and products can be better adapted to local markets. The approach places minimal pressure on headquarters staff because management of country operations is delegated to individual managers in each country. Firms with limited internationalization experience often find multidomestic strategy an easy option as they can delegate many tasks to their country managers (or to foreign distributors, franchisees, or licensees, where they are used).
Nevertheless, multidomestic strategy has some disadvantages. The firm's foreign managers tend to develop strategic vision, culture, and processes that differ substantially from those of headquarters. They have little incentive to share knowledge and experience with managers in the firm's other country markets, which leads to duplication of activities and reduced economies of scale. Limited information sharing also reduces the possibility of developing a knowledge-based competitive advantage. Competition may escalate among the subsidiaries for the firm's resources because subsidiary managers do not share a common corporate vision. While a multidomestic strategy results in firms having a highly responsive presence in different national markets, it leads to inefficient manufacturing, redundant operations, a proliferation of products designed to meet local needs, and generally higher costs of international operations than other strategies.