International Strategy

Companies operating in global markets choose from among three basic international strategies: (1) multidomestic, (2) global, and (3) transnational. Each of these strategies responds to the local markets and business efficiency in different ways.

A multidomestic strategy emphasizes local needs rather than pushing products and services from the company’s home country. For example, the television show Master Chef customizes the programming that is shown in different countries.

A global strategy emphasizes operational efficiency to benefit from economies of scale. It offers the same products in different locations. Examples include Microsoft and Intel, where local preferences do not dominate. Consumer goods makers such as Levi’s and L’oreal develop global brands to gain efficiency.

A transnational strategy emphasizes balance between local country preferences and the efficiency of standard products. For example, McDonald’s relies on its brand name but adjusts its offerings in different countries. It does not serve beef in India and it sells wine with food in France.

The three types of international strategies are compared in the figure below.

Chart showing Global Strategy with high global efficiency of operations and low local responsiveness to international country markets; transnational strategy with high global efficiency and high local responsiveness; and multidomestic strategy with low global efficiency and high local responsiveness.
Types of International Strategies

Approaches to International Strategy 

Whichever international strategy is chosen, the entry strategy for international markets needs to present a comprehensive plan that sets goals, allocates resources, and establishes policies to guide international operations over a period long enough to achieve sustainable growth in world markets, often three to five years.

Without a well-integrated entry strategy, there is only a sales approach to international markets. The sales and entry strategy approaches are contrasted in the table below.

Sales Approach versus Entry Strategy Approach


Sales approach

Entry strategy approach

Entry mode

No systematic choice. Take opportunities as they come

Systematic choice of most appropriate mode

Target markets

No systematic selection

Selection based on analysis of market/sales potential

Dominant objective

Immediate sales

Build market position

Resource commitment

Only enough to get immediate sales

Whatever is necessary to gain market position

Time horizons

Short run

Long run (say, 3 to 5 years)

New-product development

Exclusively for home market                

For both home and foreign markets

Product adaptation

Only mandatory adaptations (to meet legal/technical requirements) of domestic products

Adaptation of domestic tests and services to foreign preferences


No effort to control

Implement control to support market objectives


Determined by domestic costs with some adjustments to specific sales situations

Determined by demand, competition, objectives, and other marketing policies, as well as costs


Mainly confirmed to personal selling

Advertising and sales promotion

While the sales approach may be justified as a first attempt, a prolonged adherence to this approach would not be sustainable in the long run.

Choosing a Market and Entry Modes

The assessment and choice of target markets would include the following tasks:

  • define the market—Consider the demographics, location, and common interests or needs of your target customers.
  • perform market analysis—Gain an understanding of market growth rates, forecasted demand, competitors, and potential barriers to entry.
  • assess internal capabilities—Which of the company’s core competencies can be leveraged? Are the sales channels, infrastructure, and relationships in place? What are the time-to-market considerations?
  • prioritize and select markets—What are the gaps in the marketplace that the company can fill better than its competitors?
  • develop market entry options

The selected entry mode could be one or more of the options in the table below.

Entry Modes




  • Indirect
  • Direct agent/distributor
  • Direct branch/subsidiary
  • Licensing
  • Franchising
  • Technical agreements
  • Service contracts
  • Management contracts
  • Turnkey contracts
  • Sole venture, new establishment
  • Sole venture, acquisition
  • Joint venture, new establishment or acquisition

As the company develops its international strategy, it is useful to visualize the long-term evolution of the company in world markets. As seen in the table below, in Stage 1 the company is constrained to one or two entry modes. At Stage 4, the company is able to evaluate all possible entry modes to select the most appropriate one. Stage 4 denotes that the company has become multinational, meaning its foreign market entry strategies is designed from a global perspective rather than a single-country perspective.

Entry Mode Stages

Servicing of occasional, unsolicited export orders. Also includes response to unsolicited licensing arrangements. Marginal commitment to foreign markets.

Penetrate foreign markets through agents or branch. International business viewed as separate and distinct from domestic business.

Penetrate foreign markets through own collection centers and labs in some countries, combined with licensing in other countries.

Multiple national markets served from several national labs. International marketing integrated with domestic business strategy to form corporate business strategy. Home country treated as one of the national markets in which the company happens to have its headquarters.

The choice of entry mode also depends on the degree of control, financial outlay, and risk in each mode over a period of time, as shown in the figure below.

Chart showing risk a increase in control and risk between a franchise and a joint venture, between a direct agent and direct subsidiary, and between direct sales from home base and a sole venture.
Decision on Entry Modes

The actions in the international marketing plan include the following:

  • service—a combination of tangible and intangible attributes that confer benefits on users
  • price—pricing discretion to achieve differentiation in the market. Together with sales volume, price determines sales revenue
  • channel—wwn none, some, or all channel agencies
  • logistics—physical movement of samples, including transportation, handling, and storage, as well as the choice of location of collection centers and labs
  • promotion—includes personal selling, advertising, sales promotion, and publicity

The following evaluation matrix can be used for each of the countries to decide on an entry strategy.

Entry Strategy Evaluation Matrix

Modes\ Criteria




Profit contribution

Market share





Local sales office








































New venture




















Joint venture