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246 Part 2: Strategic Actions: Strategy Formulation

international differentiation business-level strategy in China to better serve customers.

However, it is still far behind other luxury brands such as BMW, Audi, and Cadillac which

are growing faster than Lexus. Several analysts noted that it was not getting the traction

desired in part because Toyota decided not to put a production facility in China, thus

having to pay a 25 percent tariff for each vehicle sold.^32

8-2b International Corporate-Level Strategy

A firm’s international business-level strategy is also based, at least partially, on its inter-

national corporate-level strategy. Some international corporate-level strategies give indi-

vidual country units the authority to develop their own business-level strategies, while

others dictate the business-level strategies in order to standardize the firm’s products

and sharing of resources across countries.^33

International corporate-level strategy focuses on the scope of a firm’s operations

through geographic diversification.^34 International corporate-level strategy is required

when the firm operates in multiple industries that are located in multiple countries or

regions (e.g., Southeast Asia or the European Union) and in which it sells multiple products.

The headquarters unit guides the strategy, although as noted, business- or country-level

managers can have substantial strategic input depending on the type of international

corporate-level strategy the firm uses. The three international corporate-level strategies

are shown in Figure 8.4; the international corporate-level strategies vary in terms of two

dimensions—the need for global integration and the need for local responsiveness.

Multidomestic Strategy

A multidomestic strategy is an international strategy in which strategic and operating

decisions are decentralized to the strategic business units in individual countries or

A multidomestic strategy
is an international strategy in
which strategic and operating
decisions are decentralized
to the strategic business
units in individual countries
or regions for the purpose
of allowing each unit the
opportunity to tailor products
to the local market.

Figure 8.4 International Corporate-Level Strategies

Need for Global Integration

Need for Local Responsiveness

High

Low

Multidomestic

strategy

High

Low

Global

strategy

Transnational

strategy