Modern Multidomestic Model

2007/// Filed in: MNEs
The modern multidomestic follows the tradition of the old (pure) multidomestic but it gives a more significant role to the corporate headquarters. As such, it is no longer a loose confederation of assets, but a MNE with a strong culture of operational decentralization, local adaptation, product differentiation, and local responsiveness. Having disperse national subsidiaries with significant autonomy, a strong geographical dimension and empowered country managers help the modern multidomestics to maintain their local responsiveness and their ability to differentiate and adapt to local environments. Contrary to the traditional multidomestic where the center had very little value added, in the modern multidomestic the center is critical to enhance the competitive strength of the multidomestic. While the role of the subsidiary is to be locally responsive, the role of the center triangle is to enhance the global integration by developing global corporate and competitive strategies, play a significant role in resource allocation, selection of markets, developing strategic analysis, mergers and acquisitions, decisions regarding R\&D and technology matters, eliminating duplication of capital intensive assets, and knowledge transfer. A representative example of the modern multidomestic is Nestle (Segal-Horn.99, Yip.96,Yip.91,Yip.91a,Yip.89,Yip.00,Yip.97a,Yip.88,Yip.96a). In summary:

- Matrix Position: medium global integration / high localization.
- Subsidiary role: local responsiveness, country/region specific strategies.
- Center role: global integration, coordination, resource allocation, R\&D, knowledge transfer
- Management Decisions: bottom--down (differentiation) and top--down (integration).
- Technology & Knowledge Transfer: knowledge transfer across borders.
- Percentage of Foreign Sales: high.
- Example: Nestle.

Tags: ,