Multinational companies which have a presence in numerous foreign markets need to rely on a clear philosophy which can serve as the foundation and provide them with guidance for their operations abroad. There are several possible options which multinationals can utilize when designing their international trade philosophy. Nevertheless, despite the existing variety of perspectives, the best philosophy of international trade which a multinational could adopt is the focus on complete localization.
The philosophy which relies on localization has many advantages compared to the alternatives and can provide companies with better opportunities. The localization philosophy manifests itself in a multi-domestic approach which implies responsiveness to the requirements of local markets (Kennedy, 2020). Instead of attempting to force the original product globally, companies need to customize their goods to the needs of the locals. Essentially, companies have to adapt their products to match the preferences of people living in different countries. Although such an approach may not be relevant for certain companies, generally, it is the best solution. For instance, food companies may change their recipes depending on the tastes of local populations in different nations. As a result, companies can offer several versions of the same product. Such an approach makes products to be more consistent with the local demand and allows companies to be flexible. Additionally, the localization philosophy provides companies with a chance to be more responsive to the changes in demand and adapt their products based on the new trends.
The best choice of philosophy for international trade is the focus on full localization since it lets companies respond to the local markets’ needs more correctly. The localization philosophy rests on the idea that multinational organizations must adapt their products to fit the requirements of consumers in different countries. Thus, the multi-domestic philosophy must be the ultimate solution for companies wishing to engage in international trade.
Reference List
Kennedy, R. (2020) Strategic management. Blacksburg, VA: Pamplin College of Business.