What is a Transnational Strategy and How Can It Drive Global Expansion? 

There are several strategies available to brands with an eye on global expansion. Transnational strategy is just one of these. While a transnational strategy can accommodate the specific needs of a local market, operations are largely controlled and kept in line with global strategies to maintain efficiency and control costs. 

Planning on penetrating untapped markets? When executed well, a transnational strategy can prove incredibly lucrative. Below, we’ll explore this strategy in more detail, weigh it against other expansion models, and spotlight some brands that have enjoyed considerable success with it.

What is a transnational strategy?  

A translational strategy involves adapting to some local and regional preferences while keeping an eye on operational costs and overall efficiency. Generally speaking, this business strategy model involves aspects of multi-domestic and global strategy. 

Standardization of operational processes is used to make a business more economical. Meanwhile, a transnational business benefits from high local responsiveness. However, a transnational business can still deviate from the standard. By having a deep understanding of international markets and local demands, businesses can quickly decide whether customization makes financial sense. 

Transnational strategy vs. other global expansion strategies 

A transnational strategy isn’t the only option for businesses thinking about global expansion. Below are a few of the main alternatives to the traditional transnational model. 

Types of global expansion strategies

Multi-domestic strategy 

This approach involves heavy customization to accommodate cultural differences and the particular needs of an individual market. With a multi-domestic strategy, companies tailor services and products to ensure they remain as competitive as possible in international markets. This strategy is typically highly responsive but falls short when it comes to global integration. As such, multi-domestic strategies tend to be more expensive than other approaches. 

International strategy 

Some global business entities choose to adopt an international strategy. You’ll typically encounter international strategy with a company that specializes in imports and exports. In these cases, the majority of business operations remain in a single country, even if goods are exported to other territories. It’s generally used by manufacturers and retailers of luxury goods, such as high-end fashions or wine. As companies are responding to existing demand for said products, things like price points and product features are rarely adapted for new markets. 

Global strategy 

A global business strategy focuses heavily on cost and efficiency gains. Even if an international business is dealing with many different territories, costs are controlled by offering similar products and services. Companies that use a global strategy tend to be very competitive, scoring highly for affordability. As cost leaders, these businesses rarely make any major changes to their product offerings, brand identity, or marketing strategy. 

Benefits of a transnational strategy 

A transnational strategy can be seen as a hybrid of a global strategy and a multi-domestic strategy. It brings together the best elements of both approaches, even if the benefits aren’t instantly obvious. Some of the biggest advantages of a transnational strategy include: 

High global integration and standardization 

For many businesses, a transnational strategy allows for high global integration. In most instances, an international business maintains an overarching head office in one country. It’s here that key decisions are made and from where operations in international markets are ultimately coordinated. 

This standardization helps maintain a consistent brand identity across the globe. Moreover, a clearly defined organizational structure results in streamlined processes in everything from supply chain management to price setting. This generally results in lower costs and higher profits. 

High local responsiveness 

A successful transnational strategy also requires businesses to monitor the needs of local markets. Rather than look to other countries as foreign markets, a transnational strategy calls for a customer-centric mindset and optimizing operations for high local responsiveness. 

Doing so increases the odds of a company maintaining an advantage over the competition. Furthermore, it can bolster brand awareness and allow for deeper market penetration. Sometimes, businesses need to go further when localizing their product, services, and marketing messages for international markets. Everything from product packaging to sales strategies may need to be reconsidered. 

Local customization 

Another major benefit of a transnational strategy is that companies can better provide for customers. By understanding and adapting to the particular preferences and needs of specific markets, companies more easily acquire and retain customers. 

Challenges associated with adopting a transnational strategy 

Although companies that invest in a transnational strategy tend to be more competitive and cost-efficient, there are a couple of major challenges to overcome. There’s always the risk that a transnational company may fail to understand the needs of customers based in the markets they’re expanding into. The cultural differences between some countries might be minor, while in other cases, the gulf can be extreme. If businesses don’t have a firm grasp on these nuances, they can alienate local customers. 

One way a business can overcome this is by using local talent whenever possible. In an ideal world, everyone from an entry-level employee to someone sitting in an executive position should be sourced locally. This bridges the cultural divide between the head office and target markets.

Integration can also prove a challenge for transnational operations. With many different branches and offices scattered across the globe, businesses may find that core values and standards aren’t being upheld. As well as putting a dent in profit margins, this lack of integration can damage brand reputation and limit expansion plans. 

Effective management will go a long way in overcoming this issue. However, it can be difficult to find the right candidates locally. If the right personnel can’t be sourced locally, experienced management from head office can be periodically dispatched to monitor performance. 

7 great transnational strategy examples

There have been many transnational strategy success stories, even if no two approaches are exactly the same. Below are just a few companies that have leveraged the full potential of a transnational strategy to their advantage: 

IKEA 

When it comes to transnational strategy, IKEA puts many other businesses to shame. As well as standardizing things like instruction manuals, this Swedish brand has readily adapted to meet the specific challenges of certain markets. While IKEA is considered a cost leader in most parts of the world, it faced a significant hurdle when expanding into China. To remain competitive, IKEA sourced local products and materials. Furthermore, it pivoted its marketing efforts on a younger demographic who were more likely to engage with traditionally Western brands. 

McDonald’s 

This fast-food giant has over 40,000 outlets in more than 110 countries worldwide. While the company name and iconic logo remain the same in every corner of the world, McDonald’s caters to the specific appetites of individual markets. Menu offerings vary considerably between countries, while price points also differ depending on local economies. 

Nike

Headquartered in the United States, Nike now has offices in more than 45 countries across the globe, while its products are sold in more than 170 territories. While the appetite for Nike’s iconic footwear and sports apparel is universal, some products are only available in certain countries due to specific lifestyle requirements. What’s more, social media campaigns, sponsorship deals, and e-commerce platforms tend to vary between territories. 

Samsung

This electronics manufacturer operates in dozens of countries. While smartphones, tablets, and televisions have universal appeal, some products in Samsung’s line have been engineered for specific markets. In Samsung’s native South Korea, you’ll find a refrigerator just for kimchi up for grabs. In China, hardware is engraved with the Chinese symbol for luck. 

Google

Google hasn’t gotten to where it is today without a forward-thinking strategy. The search engine giant understands that certain markets have niche requirements. While there’s always been a focus on operational efficiency at Google, new territories often benefit from increased focus and in-depth market research. 

Coca-Cola 

The Coca-Cola brand is instantly recognizable across the world. Today, you can pick up a chilled bottle of this iconic soft drink in more than 200 countries. However, the brand name isn’t the same everywhere. In certain countries like China, the name has been retooled slightly. However, the general approach to Coca-Cola’s messaging remains the same. It’s simple and to the point, focusing on great taste and sharing. 

Airbnb

Today, Airbnb is available in more than 200 countries and remains a giant in the hospitality sector. Although accessibility and affordability have played a big role in Airbnb’s success, it is its transnational strategy that sets it apart from the competition. Different markets benefit from curated features and content. Recommendations for events, attractions, and restaurants are all location-specific, providing users with a personalized experience, wherever they are in the world. 

Tips for developing a transnational strategy 

Developing a transnational strategy can seem daunting, but it’s surprisingly easy. The most important first step is to understand the markets you’re planning on expanding into. In-depth market research can be cost and time-intensive, but it’s the only way of learning about foreign policies, logistical challenges, and regulations that might prove an obstacle to your expansion efforts. 

Once you’ve identified these obstacles, your market research should focus more on consumer demographics. Probe cultural nuances and language differences. If you’re making moves into a country where natives speak many different dialects, you’ll need to consider how this will affect your marketing strategy. 

Unless your business specializes in the export of luxury goods, you’ll also need to get to grips with the local economy. If you want to be a cost leader in a particular territory, you’ll need to understand local spending habits. Once you’ve done this, you’ll be able to set price points accordingly so you stand a chance of being competitive. 

If your aim is to expand into multiple territories within a relatively tight timeframe, you’ll need to undertake market research of many countries simultaneously. Consumer personas will need to be drafted for each territory, while products and marketing messaging will need to be tailored accordingly. 

How to implement a transnational business strategy with BLEND

If you’re planning on global expansion, you need to consider what strategy your business will be adopting. A multi-domestic strategy can ensure you’re catering to the specific demands of local markets, but it lacks global integration and comes at a significant cost. International strategy is another option. However, unless you’re operating within very niche markets with high consumer demand, your brand probably isn’t in a position to leverage this approach. For companies looking to maintain their position as cost leaders in saturated markets, a global strategy is yet another option. 

The perks of a transnational strategy outstrip the benefits of these other expansion models. High local responsiveness means companies can adopt a customer-centric mentality, while high global integration yields significant cost and efficiency gains. Looking for an experienced translation and localization partner to streamline your transnational strategy? You’ve come to the right place.

At BLEND, we can help you make moves into untapped markets and take advantage of lucrative revenue streams. With thousands of expert linguists producing content in more than 120 languages, no market is off limits when you choose BLEND. Eager to learn more about how we can help you? Get in touch with the team today.

Corinne Sharabi

Corinne is the Social Media and Content Lead at BLEND. She is dedicated to keeping global business professionals up to date on all things localization, translation, language and culture.

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