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Quote-1
The Future
The only certainty about the future is that it will be
uncertain and change will occur at an increasing rate.
It will also be more complex.
Dr. Ravindra Pratap Gupta
Global Marketing Management
Stages of development of the Transnational
Corporation
• Stage one - domestic
• Stage two - International
• Stage three - multinational
• Stage four - global
• Stage five - transnational
The International Marketing Planning Process
Stage one - Domestic
 Domestic in focus, visions and operations
 Environment scanning is local
 ‘If it’s not happening in the home country, it’s not
happening’
 Often conscious decision
 Can develop to be stage two company
 Examples: Indian Railways, MSEB
Stage two - International
 Strategy of Extension. Extends marketing, manufacturing
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and other activities outside the main country.
Export-Import remains to be the major driver.
Remains ethnocentric (home country orientated)
Groups people together in an international division
Global development always begins in stage two
Example: SME & MSME exporting products.
Stage three - Multinational
 A multinational company operates in more than one
country and typically operates in a number of major global
markets.
 Discover that different markets need some degree of
adaptation.
 Adapts domestic marketing mix to suit the differing
international markets
 Example: Some of the Indian MNC’s Asian Paints, Bharat
Forge, Hindalco, ICICI Bank, Infosys, TCS, Larsen &
Toubro, Aptec, NIIT, Essel Propack
Stage four - Global
 Global Organisations which create value by extending
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products and programmes on serving emerging global
markets.
Recognising that markets around the world consist of
similarities and differences and develop global strategies
based on similarities to obtain economies of scale, but also
recognise and respond to cost effective differences with
time.
Major strategic departure. Company's strategies are a
combination of extension, adaptation and creation. Its
unpredictable in behaviour and always alert to
opportunities
Global marketing and/or sourcing strategy
Example Coca Cola, Harley Davidson
Stage five - Transnational
 Transnational Companies have the capability to
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combine global efficiencies, local responsiveness and
the ability to leverage knowledge across the worldwide
system.
They go well beyond a unidimensional approach which
focuses exclusively on global efficiencies or local
responsiveness or which considers all business to be
alike.
A flexible multidimensional approach is the essence of
transnational corporation.
Sales, investments and operations in many countries
Integrated world enterprise that links global markets
and global supplies
 Geocentric - recognises similarities and differences and
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adapts to them. Adaptation adds value
Key assets are dispersed, interdependent and
specialised e.g. R&D
Experience and knowledge are shared globally. Scans
the world for information
‘Grow or die’ - aspirations are global
Global bias for key functions e.g. Finance, supply chain
management etc.
Example : J & J, Wockhardt
Bartlett and Goshal Classification of
Company-Characteristics
 Bartlett and Ghosal classify four types of company
operating foreign interests:
 International
 Multinational
 Transnational
 Global
 (Bartlett, C.A. and Ghosal, S. 1989: Managing Across
the Borders: The Transnational Solution, Hutchinson,
Business Books.)
International Companies
 Headquarters Control-Headquarters of International company
retains considerable control over the subsidiary’s management
systems and marketing policy, but less so than in the global
company.
 Home country Centered-Products and technologies are
developed for the home market, extended to other countries
with similar market characteristics, then diffused elsewhere, and
the developmental sequence is decided on the basis of managing
the product lifecycle as efficiently and flexibility as possible
 Companies have no foreign direct investments (FDI) and
make their product or service only in their home country. In
other words, they’re exporters and importers. They may have
no staff, warehouses, or sales offices in foreign countries.
 The best examples of international companies small local
manufacturers that export to neighbouring countries.
Multinational Companies
 Companies cross the FDI threshold- They invest directly in
foreign assets, whether it’s a lease contract on a building to house
service operations, a plant on foreign soil, or a foreign marketing
campaign.
 Generally, though. Multinational companies, however, have FDI
only in a limited number of countries
 They do not attempt to homogenize their product offering
throughout the countries they operate in — they focus much
more on being responsive to local preferences than a global
company would.
Global Companies
 Centralize Key Functions -The GLOBAL company,
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exemplified by such Unilever and Pfizer, centralizes key
functions – including marketing and finance.
Headquarters Control-Headquarters produces the new
technology and disseminates it to subsidiaries.
Economies of Scale-Cost advantages are achieved through
economies of scale and global-scale operations.
The need for efficiency and economies of scale means that
products are developed that exploit needs felt across the range of
countries.
Local Ignorance-Specific local needs tend to be ignored.
Transnational Companies
 Evolution-The Transnational company evolved in the 1980s in
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response to environmental forces and simultaneous demands for
global efficiency, national responsiveness, and worldwide
learning.
Mix of all-The transnational model combines features of
multinational, global, and international models.
Strategy of Global Extension & Adaptation-A product is
designed to be globally competitive, and is differentiated and
adapted by local subsidiaries to meet local market demands.
Management Challenge-Companies are often very complex
and extremely difficult to manage.
They invest directly in dozens of countries and experience
strong pressures both for cost reduction and local
responsiveness.
Transnational Companies….
 Decision making largely decentralised-These companies may
have a global headquarters, but they also distribute decisionmaking power to various national headquarters
 National Market Development for R & D-They have
dedicated R&D activities for different national markets.
 Whereas the international company originates the product
in the headquarters country and then transfers it to the
subsidiary, the transnational might reverse this process.
Resources, including technology and managerial talent,
might be distributed among subsidiaries and integrated
between them through strong interdependencies.
Strengths at each level
 International
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Exploit’s the parent company’s knowledge and capabilities
through worldwide diffusion of products
 Multinational
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Flexible ability to respond to national differences. Strategic &
operating decisions are decentralized to the strategic
business unit in each country to tailor products to the local
market.
 Global
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Cost advantage through centralised operations. Assumes
more standardization of products across country markets
 Transnational
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Combines above in an integrated network, which leverages
worldwide learning and experience. The firm seeks to
achieve both global efficiency and local responsiveness
Four Stages of International Evolution
Strategic
Orientation
Stage of
Development
Structure
Market
Potential
I.
II.
III.
IV.
Domestic
International
Multinational
Global
Domestically
oriented
Export-oriented,
multi-domestic
Multinational
Global
Initial foreign
involvement
Competitive
positioning
Explosion
Global
Domestic
structure plus
export
department
Domestic structure Worldwide
plus international
geographic,
division
product
Matrix, transnational
Moderate,
mostly
domestic
Large,
multidomestic
Whole world
Very large,
multinational
Global Integration vs. National
Responsiveness
National responsiveness
Global integration
Low
High
High
Global
strategy
Transnational
strategy
Low
International
strategy
Multinational
Matching Organizational Structure to
International Advantage
When Forces for
Global
Integration are . .
.
And Forces for
National
Responsiveness
Low
Low
are . . .
Strategy
Structure
Export
International
Division
(International)
High
Low
Globalization
(Global)
Low
High
High
High
Multi-domestic
Global Product
Structure
(Multinational)
Global Geographic
Structure
Globalization and
Multi-domestic
Global Matrix
Structure
(Transnational)
International corporations -TNC vs MNC
 International corporations have categories depending on the
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business structure, investment and product/service offerings.
 Transnational companies (TNC) and Multinational
companies(MNC) are two of these categories.
Both MNC and TNC are enterprises that manage production or delivers
services in more than one country.
Home and host country Management-A multinational corporation
is an organization that owns or controls production of goods or services
in one or more countries other than their home country.
MNC are characterized as business entities that have their
management headquarters in one country, known as the home country,
and operate in several other countries, known as host countries.
Multinational corporations do move their HQ as conditions
and incentives warrant. For example, HSBC's HQ has bounced
between Hong Kong and London a few times over the last decade.
TNC vs MNC …..
 TNC is a commercial enterprise that operates substantial facilities, does
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business in more than one country and does not consider any particular
country its national home.
Industries in TNC’s & MNC’s- like manufacturing, oil mining, agriculture,
consulting, accounting, construction, legal, advertising, entertainment,
banking, telecommunications and lodging are often run through TNC’s and
MNC’s.
Mixture-The said corporations maintain various bases all over the world.
Many of them are owned by a mixture of domestic and foreign stock
holders.
Influential-Most TNC’s and MNC’s are massive with budgets that
outweigh smaller nations’ GDPs.
Thus, TNC and MNC alike are highly influential to globalization, economic
and environmental lobbying in most countries.
TNC vs MNC ….
 Because of their influence, countries and regional political districts at
times tender incentives to MNC and TNC in form of tax breaks, pledges
of governmental assistance or improved infrastructure, political favors
and lenient environmental and labor standards enforcement in order to
be at an advantage from their competitors.
 Also due to their size, they can have a significant impact on
government policy, primarily through the threat of market withdrawal.
 They are powerful enough to initiate lobbying that is directed at a
variety of business concerns such as tariff structures, aiming to restrict
competition of foreign industries.
TNC vs MNC….
 Complexity-Transnational companies (TNC) are much more complex
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firms. They have invested in foreign operations, have a central
corporate facility but give decision-making, R&D and marketing
powers to each individual foreign market.
Product Offering
MNC does not have coordinated product offerings in each country. It is
more focused on adapting their products and service to each
individual local market.
TNC gives decision-making, R&D and marketing powers to each
individual foreign market.
Member Countries
Multinationals have branches in other countries.
Transnationals have subsidiaries.
TNC vs MNC….
 Examples
 {MNC}-Proctor & Gamble, Microsoft, Apple Inc, Hewlett Packard
(HP), Nestle, PepsiCo, Sony Corporation, IBM etc.
 {TNC} General Electric, Royal Dutch, Ford Motor, Allianz, AXA, Exxon
Mobil, etc
TNC/MNC Advantages
 Advantage
MNC’s result in a significant increase of foreign exchange reserves.
 They assist in building good relations with other countries and in
promotion of parent country’s culture and traditions in other countries.
 Apart from establishing itself globally, one of the significant advantages
of a transnational company is that they are able to maintain a greater
degree of responsiveness to the local markets where they maintain
facilities.
 Also, they have an ability to use foreign subsidiaries to minimize taxliability.
TNC/MNC Evolution
 Multinational companies are not a recent phenomenon,
but it is a fact that today because of modern and fast and
efficient means of communications and transportation,
companies and businesses find it easy to operate in many other
countries apart from their parent country. It is customary to call
such companies as multinational corporations.
 When a company grows at a rate faster than its products or
services can be utilized by people in the home country, it
tries to internationalize its business in anticipation of greater
profits. Thus, when a company invests in another country
besides its own and does business with another country, it is
termed as a multinational. A single company can have operations
in any number of countries. Today we have multinationals
referred to as MNC’s.
What is the difference between
Multinational and Transnational?
 Transnational corporations are a type of multinational
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corporations.
MNC have an international identity as belonging to a particular
home country where they are headquartered.
On the other hand, transnational corporations are more or less
borderless in this regard as they do not consider a particular
country as their base.
Multinationals have branches in other countries, whereas
transnational have subsidiaries.
Hence the basic difference between a multinational and a
transnational lies in the fact that transnational company is
borderless, as it does not consider any particular country as its
base, home or headquarters.
Global vs MNC
 Global companies-have invested and are present in many
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countries.
Standardization Strategy-They market their products through
the use of the same coordinated image/brand in all markets.
Generally one corporate office that is responsible for global
strategy.
Emphasis on volume, cost management and efficiency.
Multinational companies-have investment in other countries,
but do not have coordinated product offerings in each country.
Adaptation Strategy-More focused on adapting their products
and service to each individual local market.
Quote-2
“"The most serious mistakes are not being made
as a result of wrong answers. The truly dangerous
thing is not asking the right questions."
Dr Ravindra Pratap Gupta
Question
 Q 1. Discuss stages of development of Transnational Corporation?
 Q 2. Discuss Bartlett and Goshal Classification of Company-
Characteristics?
 Q 3. Discuss TNC vs MNC & TNC vs Global? Discuss MNC/TNC
Evolution and advantages?
Thanks