Ping! There’s your first sale from someone in Mexico. Denmark. Brazil. Italy.
Expanding your business across international borders can be seamless with the power of e-commerce. But the way to stable international growth requires repeatable systems and processes that take your company from selling to different countries to a global brand.
What you need is a transnational strategy.
What is a Transnational Strategy?
Any business with centralized operations based in one country but additional overseas operations and assets is defined as transnational. A transnational strategy determines the levels of global integration and local responsiveness for a given brand.
This isn’t the only way companies expand globally — in fact, many companies choose entirely different methods of expansion, such as:
- International strategy: When businesses focus on imports and exports, keeping most of their operations in their home country. Luxury products, especially food and wine, often use this strategy because the country of origin matters to customers.
- Multi-domestic strategy: When businesses use completely different sales, marketing, and product strategies based on the specific companies they’re operating in. Rather than one global brand, there are many smaller, country-specific brands. The chocolate manufacturer Nestle is an excellent example of this — and why it’s so much fun to go to the candy aisle in the grocery store when you’re traveling!
- Global strategy: When businesses define one global brand, making little to zero changes for other markets. Apple’s sleek iPhone, Macbook, and iPad are examples of this. While the software and keyboards may be localized, the brand is the same everywhere you go.
Think of it as a graph, with one axis as local responsiveness (how companies serve a specific market’s needs) and the other as global integration (a global brand with little to no differences between various countries).
An international strategy ranks highly on global integration but low on local responsiveness — ditto for global strategies. Multi-domestic strategies rank highly for local responsiveness but low for global integration.
A transnational strategy gives you the best of both.
High Global Integration
With high global integration, transnational businesses operate with a central or head office in one country that coordinates local subsidiaries in international markets. This organizational structure means that there is one overarching brand and center of operations that determine overall decision-making and supply chain management, harnessing the power of scale.
Optimizing your business for high global integration gives you several advantages:
- A global, standardized brand that is immediately recognizable
- More efficient processes and consolidated management
- Lower costs with centralization and streamlined operations
- A global scale and thousand-foot-view
Some businesses give more autonomy to their local branches than others. Balancing corporate decisions vs. local decisions remains one of the biggest challenges for global companies — especially with a distributed workforce.
High Local Responsiveness
Combining the power of economies of scale with high local responsiveness — or attention to local markets — ensures a level of customer-centricity that differentiates your brand. Keeping local customers in mind, rather than just selling to foreign markets, is what makes transnational strategies so successful.
Depending on the type of business, this can look like hiring local country managers or field marketers, changing product packaging or colors, or localizing marketing and sales strategies. Optimizing your business for high local responsiveness gives you several advantages:
- Competitive advantage in local markets
- Deeper market penetration and brand awareness
- Organic, locally-driven decisions and organizational structure
- Capitalizing on market advantages of foreign operations (such as labor costs, proximity to natural resources, or shipping lanes)
Attuning your business to win in local markets requires more than just translating your marketing messages or product packaging and shipping them to a new market. It’s much more challenging to coordinate teams around the world, for one.
High local responsiveness also requires you to evaluate product-market fit by country, adjust prices, add currency and payment methods, and think about imagery and colors — in essence, your localization strategy.
5 Transnational Strategy Examples
A successful transnational model combines high global integration with high local responsiveness, giving you the benefits of both. While not every global business looks the same, in practice, it means international companies must take a global, forward-thinking strategy and combine it with local expertise and changes that best suit each market.
Take five of the most successful multinational companies (MNC) in the world:
- McDonald’s has 36,000 fast food locations in more than 100 different countries worldwide, with menu and prices that change based on the local market. You can order a McSpicy Paneer in India (fried paneer cheese, tandoori sauce, and lettuce) or poutine (french fries with gravy) in Canada, but the golden arches and company name stays the same. McDonald’s prices constantly change — and are so accurate that economists use the “Big Mac Index” to measure the value of the dollar.
- Unilever, the parent company for over 400 brands like Klondike, Lipton Tea, Dove, Axe, and Vaseline, operates in 190 countries. They embody the idea of “thinking globally, acting locally” when it comes to their operations, hiring local managers to run their in-country operations and manufacturing facilities, and dividing the company based on the product offering. Their network of brands puts them in a strong position in nearly every market, focusing on the products that play best in that particular sphere (such as marmite in Australia and mayonnaise in the United States.)
- Nike sneakers and sports apparel can be found in over 170 countries. Nike’s marketing strategy included adopting social media, e-commerce, and sponsorships for elite athletes in foreign markets early on to great success. With a network of influential sports celebrities from soccer phenomenon Cristiano Ronaldo to basketball star LeBron James and tennis champion Rafael Nadal.
- Samsung, the Korean electronics company, now operates in 74 countries. With a global design for their phones and computers, they adapt each product to local markets. For example, they offer a Smart oven designed explicitly for yogurt fermentation for Bulgaria, a bespoke kimchi refrigerator for South Korea, and embossing the character for luck, 福, on the back of PC monitors for China.
- Coca-Cola operates in more than 200 countries and takes a localization approach that means you can order a “Coke,” a “Cola,” or a “Coca,” depending on the global market. Every local market has slightly different messaging and formula, but they use simplified, universal messaging that works no matter the market: happiness, enjoyment, and sharing. Combining this standardization with variations in local flavors and packaging is what makes them so successful.
Implement a Transnational Business Strategy with Smartling
The good news? While localization and translation may seem like the most daunting aspects of a transnational strategy, they don’t have to be. Smartling offers a world-class translation software solution and top-notch language services.
That way, you can professionally translate and localize all of your content across devices and platforms without sending a single email, touching any button, or managing strings in spreadsheets...no matter how many markets you choose to enter.