Chapter 8: International Strategy 249Pictured above are many of the international brands
that Mondelez manages globally while implementing
the transnational strategy.Because of increasing global competition and the need to simultaneously be cost
efficient and produce differentiated products, the number of firms using a transnational
international corporate-level strategy is increasing.Transnational Strategy
A transnational strategy is an international strategy through which the firm seeks to
achieve both global efficiency and local responsiveness. Realizing the twin goals of global
integration and local responsiveness is difficult because global integration requires close
global coordination while local responsiveness requires local flexibility. “Flexible coor-
dination”—building a shared vision and individual commitment through an integrated
network—is required to implement the transnational strategy. Such integrated networks
allow a firm to manage its connections with customers, suppliers, partners, and other
parties more efficiently rather than using arm’s-length transactions.^43 The transnational
strategy is difficult to use because of its conflicting goals (see Chapter 11 for more on
the implementation of this and other corporate-level international strategies). On the
positive side, effectively implementing a transnational strategy can produce higher
performance than implementing either the multidomestic or global strategies if the
circumstances are right.^44
Transnational strategies are becoming increasingly necessary to successfully compete
in international markets. Reasons for this include the fact that continuing increases in the
number of viable global competitors challenge firms to reduce their costs. Simultaneously,
the increasing sophistication of markets with greater information flows, made possible
largely by the diffusion of the Internet and the desire for specialized products to meet
consumers’ unique needs, pressures firms to differentiate their products in local markets.
Differences in culture and institutional environments also require firms to adapt their
products and approaches to local environments. However, some argue that transnational
strategies are not required to successfully compete in international markets. Those hold-
ing this view suggest that most multinational firms try to compete at the regional level
(e.g., the European Union) rather than at the country level. To the degree this is the case,
the need for the firm to simultaneously offer relatively unique products that are adapted
to local markets and to produce those products at lower costs permitted by developing
scale economies is reduced.^45
The complexities of competing in global markets increase the need for the use of a
transnational strategy. Mondelēz International was created as a spinoff company from
Kraft, which separated its domestic grocery products in order to focus on its high-growth
snack foods business, in which it has 80 percent of sales come from foreign markets.
Mondelēz had $34 billion in revenue in 2014 and has
power brands (brands that are globally known and
respected) and local brands.^46 So, because it globally
integrates its operations to standardize and maintain
its power brands while simultaneously developing
and marketing local brands that are specialized to
meet the needs of local customers, Mondelēz pur-
sues the transnational strategy. It is the global market
leader in biscuits, chocolate, candy, and powdered
beverages, and it holds the number two position in
the global markets for chewing gum and coffee. About
45 percent of its sales come from fast-growing, emerg-
ing markets and with the variety of brands offered,
it must adjust its strategy accordingly. For instance,
besides having recently signed a global agreement
A transnational strategy
is an international strategy
through which the firm
seeks to achieve both
global efficiency and local
responsiveness.