A fundamental strategic dilemma faced by all multinational companies when competing internationally. It is Global-local dilemma. It is a choice between a local responsiveness or global integration.
These two basic strategic needs: To integrate value chain activities globally and to create products and processes that are responsive to local market needs
Pressures for global integration
Multinational customers - Pressures for global integration are due to the importance of multinational customers. The dependence of customers on a global basis means that firms must co-ordinate their activities globally.
Cost reduction - The pressure for cost reduction means that global integration is more necessary for a firm to benefit from various economies of scale.
Competitors - There is also the presence of global competitors, which means that companies need to improve their global co-ordination in order to compete.
Access to raw materials - Finally, pressures for global integration stems from increased accessed to raw materials and cheap energy, which can be achieved if manufacturing is concentrated in a single area, remote from other activities, thus requiring integration and co-ordination.
Pressures for Local Responsiveness
Diversity of local customer needs. responsiveness is required when needs differ between countries
Differences in distribution channels - When distribution channels differ between countries, local responsiveness is needed to deal with differences in pricing, promotion, and product positioning.
Cultural differences. For those products where cultural differences are important, such as clothing and furniture, local managers require considerable freedom from HQ to adapt the product and marketing.
Host government demands. Countries have differing rules and regulations imposed by each government, which require a local response
