Business Strategy Alignment
Touting Global Reach May Not Pay Off for U.S. Companies, Study Says

Projecting an image as a brand with global appeal is often a fundamental aspect of multinational corporations' (MNCs') strategy - a core focus of their marketing campaigns, employee recruitment efforts, and relationships with supply chain partners and others. But some markets and certain consumers prefer local firms, according to research in the Journal of International Marketing.

The study authors' analysis began with the recognition that corporate brands succeed largely because they can provide two types of value to consumers. The first is functional, and entails offering a higher-quality product or a product that is a better value for the money than products offered by competitors. The second type of value is psychological, and involves appealing to consumers’ emotions or providing them with social signifiers via their branded products (luxury watches, for example, or eco-friendly vehicles).

Overall, foreign MNCs benefit more from their international appeal than do their domestic rivals — particularly in countries with emerging economies and in Japan, where trust in local firms seems to be lagging — and foreign MNCs “can more ably play the global card,” the authors write. However, in the developed countries of U.S. and Italy, there’s no significant advantage to being an overseas MNC with a global reputation. The authors posit that consumers in these countries have less sensitivity to foreignness because of their longer history of participation in the world marketplace, higher levels of immigration, and more ethnically diverse populations.

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The study authors' analysis began with the recognition that corporate brands succeed largely because they can provide two types of value to consumers. The first is functional, and entails offering a higher-quality product or a product that is a better value for the money than products offered by competitors. The second type of value is psychological, and involves appealing to consumers’ emotions or providing them with social signifiers via their branded products (luxury watches, for example, or eco-friendly vehicles).

Overall, foreign MNCs benefit more from their international appeal than do their domestic rivals — particularly in countries with emerging economies and in Japan, where trust in local firms seems to be lagging — and foreign MNCs “can more ably play the global card,” the authors write. However, in the developed countries of U.S. and Italy, there’s no significant advantage to being an overseas MNC with a global reputation. The authors posit that consumers in these countries have less sensitivity to foreignness because of their longer history of participation in the world marketplace, higher levels of immigration, and more ethnically diverse populations.

Read Full Article