The World is Spiky – Th I t ti li ti The Internationalization Process

Pressures for Local Adaptation
• Diversity of local customer needs. Businesses, such as clothing and
food, require significant adaptation to local customer needs.
• Differences in distribution channels. Small retailers in Japan
understand local customs and needs, so locally responsive MNEs use
them.
• Local competition.
When competing against numerous local rivals,
centrally-controlled MNEs will have difficulty gaining market share with
global products that are not adapted to local needs.
• 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 requirements and regulations. When governments
impose trade barriers or complex business regulations, it can halt or
reverse the competitive threat of foreign firms.