Multinational strategies: an efficient, decentralized approach to international business

By Acclaro

Ready to expand into new locales, connect with new customers, and grow your business? You’ll need a global strategy—a plan for how to scale your expansion and compete in new markets. A multinational strategy is one option to consider. This approach drives success by tailoring offerings and structuring operations to meet the unique needs and preferences of customers in each market.

What is a multinational strategy?

Companies using a multinational strategy operate through subsidiaries in each of their markets. These business units have a significant amount of independence, allowing them to make decisions that are fine-tuned to conditions in that locale.

While multinational companies do standardize production for efficiency, their overseas subsidiaries have the capability to tailor products or services as needed for their market. Other core functions, such as sales, human resources, marketing, and customer service, are also adapted to better serve local audiences.

What are the advantages of a multinational strategy?

A multinational strategy concentrates on giving customers what they need and want. This approach can deliver powerful benefits, including:

Easier entry into new markets—Winning over new audiences can be challenging. Customers already have relationships with local businesses that they trust and rely on. In a 2021 Harvard Business Review survey, 80% of respondents said they consider trust the deciding factor in their purchasing decisions.

A multinational strategy helps your brand build trust with overseas customers. By localizing your offerings, marketing, and customer service, your company demonstrates an understanding of and commitment to local buyers that can help you earn their business.

Increased agility—Market conditions vary widely from one locale to the next and can change on a dime. Being able to react quickly makes all the difference to your company’s success. The decentralized structure of multinational companies allows for agile business decisions and faster responses to local trends.
Greater competitive advantage—A multinational strategy enables companies to tap into cheaper labor markets and less expensive local resources. When costs are lower, businesses can offer lower prices to customers and gain a competitive advantage.
Better local integration—Economic conditions and business practices are unique to each region. Multinational companies, with business units in each market, have firsthand knowledge of local laws, regulations, and customs. Staffed with local employees, these businesses also have a deep understanding of customer needs and preferences. They can connect with customers more authentically and gain traction in new markets more quickly.
Efficient allocation of resources—Market demands are constantly changing. The flexibility of a decentralized structure makes it easier for multinational companies to allocate resources where they’re needed, when they’re needed across the entire global organization.
Reduced operational risks—Centralizing operations can make companies vulnerable to potential damage from political or economic upheavals. Multinational companies mitigate this risk by spreading their operations over different countries and regions.

Localization is the key to success for multinational companies

Localization is the process of adapting a product or content for a specific market or locale. It involves more than simply speaking your audience’s language. Localization takes into account culture, customs, perspectives, and preferences, so that your offerings and messages truly resonate with your customers.

For multinational companies, localization is the cornerstone of their success. Products are heavily tailored to meet the needs of customers in each market. Messaging is adapted to optimize engagement and avoid costly cultural missteps.

How multinational companies benefit from localization

Localizing your products or services, along with your messaging, can deliver big benefits for your business, allowing you to:

Fuel business growth—To successfully enter new markets, companies need to win over new customers. Adapting your brand and offerings to appeal to local audiences is a powerful way to do that. It can help to distinguish your company from other international brands and make your business more competitive against existing local companies.

All of this is good for business growth. A survey of Fortune 500 companies by CSA Research found that companies investing in translation were 2.04 times more likely to record an increase in profits and 1.27 times more likely to boost earnings per share.

Increase trust in your brand—Unless your company is an internationally recognized brand, audiences in new locales will have little or no information about your business and what you offer. You’ll need to build a relationship with these potential customers and establish your company’s reputation. Localization is a great way to start.

By speaking the audience’s language and respecting their culture and values, you demonstrate your commitment to the market and make it easier to connect with your brand. By adapting your products or services, you make your offerings more relevant and useful to prospective customers. All of this goes a long way toward earning the trust of the local audience.

Improve the customer experience—Nothing has a bigger impact on your brand’s reputation than the customer experience. In a survey, 66% of customers said that they expect companies to understand their needs and expectations. Another survey found that one in four customers is willing to pay up to 10% more for a superior customer experience. Customer-centric companies are 60% more profitable than companies that don’t put customers first.

Localization is key for providing the high-quality experience that customers demand. This is especially important when you consider that 40% of buyers surveyed will not purchase from websites in other languages and 68% will switch to a brand that offers customer service in their language.

Key takeaways about multinational strategy

For your business to succeed internationally, you need the right plan. A multinational strategy is one approach to consider
Multinational companies are decentralized organizations. Core operations are located in each market. Overseas subsidiaries are empowered to make decisions finetuned for local business conditions
Companies pursuing a multinational strategy rely on localization for their global success. They win over customers in new markets by adapting their offerings and messages for each market’s language, culture, tastes, and preferences

Build your multinational strategy with an experienced localization partner

Global expansion can fuel your company’s growth. You just need the right plan for moving forward. A full-service translation and localization company will partner with you every step of the way.

At Acclaro, we provide deep insights into your target markets that allow you to build lasting customer relationships around the globe. We’ve helped some of the world’s top brands navigate their way to international business success. Get started today to learn how we can help your company build a winning global strategy.