The Importance of Multinational Local Strategy (Top 5 Examples)

Expanding into foreign markets brings with it great difficulties. Companies such as Johnson and Johnson, Nestle and Frito-Lay adopt a multinational strategy with a local-first approach and focus on developing smaller brands for the region to increase their revenues.

Have you ever entered a market or store in a different country than the one you are in? Although the general design may seem familiar, you will probably encounter different brands compared to those in your own country. You will also see globally recognized brands such as Red Bull, Coca-Cola or Barilla, but most of the names will be specific to that region or local brands.

Here’s a surprising piece of information: many local brands actually belong to global brands. These companies may be subsidiaries of parent companies that implement a multinational local strategy in line with their goal of going global . Now let’s examine the details of this approach.

What is multinational local strategy?

In multinational local strategy, businesses use country-specific and completely unique sales techniques, marketing strategies and product portfolios. Rather than a single global brand, there are many smaller, regional brands that cater to local demands and customers.

In contrast, other international strategies include:

1. International business strategy: In this first stage of going global, the focus is on imports and exports, most of the operations are carried out in the main country, while regional or national resources are used. This approach can be used for luxury products such as wine.
2. Global strategy: This method highlights the presence of a single global brand with slight changes in colors or messaging. Companies such as Apple or Google represent this strategy by providing instant recognition in every country with little difference between markets.
3. Transnational strategy: Transnational businesses establish their headquarters in one country and coordinate local subsidiaries in international markets from there. They are based on the power of scaling with a single umbrella brand and management center. This balance-focused approach is common at companies such as McDonald’s and Coca-Cola.

The multinational local strategy prioritizes local market responsiveness over global standardization and is the most locally focused strategy among the existing models. This “target market”-focused approach may require a complete change in the product, message, marketing strategy and customer service to suit the region.

This approach often manifests itself in the parent company pursuing a transnational or global strategy, while smaller-scale regional brands meet specific needs in the target market. This may involve managing operations entirely locally (e.g. an all-target market team or a combination of local and company-wide resources in offices or strategic business units). 

The advantages of a multinational local strategy are: 

1. Well localized products and services ensure perfect product-market fit, enabling better market penetration and gaining local competitive advantage.
2. Operating in foreign markets provides easier access to local market advantages such as labor, shipping routes, and natural resources.
3. From a financial perspective, this structure consisting of different business units allows successful investments to be transparently controlled and underperforming operations to be scaled down.
4. Companies can expand more easily in foreign markets through mergers and acquisitions, integrating new brands into the parent company rather than starting from scratch.

However, the biggest challenge of the multinational local approach is that it requires full knowledge of customer preferences. In order to make radical changes in the product, marketing, branding and model specific to each market, it is necessary to know that market and be able to serve a gap within the market.

Shifting decision-making from the central structure to local subsidiaries requires managing multiple teams performing similar tasks in different regions or markets. This leads to the establishment of separate companies in each country (also called Greenfield Investment) and causes some of the advantages of scaling economies to be sacrificed.

To be successful in this model, it is crucial to invest in a comprehensive localization program. Localization adapts your brand to another market, including content, visuals, website, packaging, mobile app, paperwork and software. This process creates a personalized experience by tailoring your products and services to connect with customers in a foreign market. 

Our Focus on the Target Market: The Foundation of Multinational Local Strategy

A multinational strategy emphasizes local market sensitivity and avoids standardizing globally. This approach, which focuses largely on localization, requires a comprehensive understanding of the target market and customer preferences. 

Advantages of Multinational Local Strategy:

1. Strong product-market fit and competitive advantage enabling better market penetration.
2. Access to local market resources such as labor, shipping routes and natural resources.
3. Portfolio-looking financial management that provides transparent control of investments and operations.
4. Possibility of relatively easy expansion in foreign markets through mergers and acquisitions.

However, the success of a multinational approach depends largely on accurately identifying customer preferences. Decentralizing decision-making may lead to the formation of disparate teams and weakening economies of scale. 

Localization: The Building Block of Multinational Local Strategy

To be successful, it is crucial to invest in a comprehensive localization plan. Localization allows you to adapt your brand to different markets and engage customers in foreign regions. 

Key Localization Elements:

• Language: It is of great importance that marketing messages are translated and adapted to local cultural environments.
• Visuals: Adapt to cultural characteristics, icons and colors to create a unique brand identity.
• User Interface: Complete your designs to support large text and top-down and right-to-left languages.
• Payment Methods and Currencies: Use local currencies and payment methods for smooth transactions. 

Successful Multinational Strategy Examples 

1. Johnson & Johnson: operates in more than 60 countries with a portfolio of brands including Band-Aids, Neutrogena, Splenda and Tylenol.
2. Procter & Gamble: It is active in more than 250 brands in 140 countries with classic names such as Pampers, Downy, Gillette, Always, Olay.
3. Nestle: A successful Swiss conglomerate that owns more than 2000 companies in the food and beverage industry and sells in more than 186 countries.
4. Frito-Lay: A subsidiary of Pepsi-Co that sells North American snack products, offering brands such as Stacy’s pita chips and Doritos.
5. Phillips: Moving from a multinational domestic strategy to a transnational strategy, Phillips operates in more than 100 countries, focusing on its core business, the healthcare industry. 

Quick Translation’s Localization Process 

Hızçeviri is a translation and localization company established to enable companies to grow rapidly by making the process of adapting their products and services to global markets less complicated.

As Fast Translation, we facilitate the localization process, enabling companies to reach their customers around the world more efficiently and quickly. 

The benefits we offer as Fast Translation: 

Translation Management: Fast translation offers a central platform that allows companies and freelance translators to manage their translation processes efficiently. Thanks to this system, we streamline translation workflows and increase efficiency by reducing the time and resources required to complete localization projects.

Terminology Management: Thanks to Fast Translation’s terminology management feature, we ensure that your translations are consistent by creating a database for terms and expressions approved by your company. In this way, we ensure that the brand message and image are compatible and consistent across all languages. 

Integration: Fast translation offers seamless and continuous localization services by integrating with numerous content management systems (CMS), product information management (PIM) systems and other platforms. 

Key Achievements of Multinational Strategy 

1. Evaluate the market: Conduct in-depth research on the target market to learn about customer preferences and competitive conditions in the region. 
2. Collaborate locally: Form strategic alliances with local businesses, suppliers and distributors to ease market entry and navigate region-specific regulations. 
3. Invest in localization: Create a brand identity specific to your target market and carry out localization efforts that will enable you to establish a close bond with your customers. 
4. Shift decision-making from headquarters to region: Teams in your target region can make more relevant decisions based on market dynamics and consumer preferences. Empower your regional teams to keep products and services up-to-date and competitive. 
5. Monitor performance: Continuously track and analyze the performance of local brands and adapt your strategies to maintain a competitive advantage in the market.

Executing a multinational domestic strategy can be difficult. However, companies that successfully adapt and serve different markets will return with great gains.

By leveraging the power of localization and focusing on the target market, businesses can expand their sales areas and achieve success in the global market. Contact us so that we can offer the most suitable solutions for your targeted global strategy.