Global Sourcing Strategies for Multinational Companies

Date: April 21, 2015

Global Sourcing Strategies for Multinational Companies

Multinational Sourcing Tips

To many business owners, and especially struggling small businesses, multinational companies seem to have figured out the secret to success in running a business. The common misconception, however, is that with revenues to support international growth, multinational companies are set to dominate their industry and reap exponential sales as their global presence increases. Unfortunately, running and operating a company across international borders doesn’t mean that as a business owner, you have already “made it”. In fact, when it comes to sourcing products for an international market, companies have a host of multinational sourcing concerns to consider.

A relatively new global phenomenon is shaping the way multinational companies conduct their business. With the globalization of markets and rapid proliferation of internationally recognized brands like IKEA, Apple, H&M, and the like, people all around the world are now shopping for the same products from the same stores because these products and brands are trusted, desirable, and usually affordable. Retailers now have to consider what customers want by looking at how they are choosing to spend their money rather than predict, however strategically, what consumers may like and choose to buy.

As a multinational company, you must decide what products or services to supply and stock across your international customer base. Are you looking to provide a regular inventory across all outlets, regardless of location (similar to the internationally recognized brands where stores in Stockholm, Beijing, and Cairo all carry the same products) or do you want to customize your individual stores to make a stronger impact with your consumers from a localized standpoint? Generally, most international outlets will choose to source consistently across all locations or offer a combination of both with a majority of the same products in all stores with a special section for local products.

Multinational companies tend to adopt a global sourcing strategy in order to offer a wide range of products to the customers. Although China and India’s large number of direct manufacturers may be able to offer some of the lowest rates available, global sourcing does not have to be limited only to just these two locales. Comparisons between India sourcing and China sourcing.

By sourcing products from a number of manufacturers around the world, your business may be able to offer customers a wider variety of products to choose from, based on quality and price-range, and gain a more wide-reaching appeal and generate higher sales figures. However, it will take time and effort to search for potential manufacturers and products and establish good relationships with each one. 

It is also critical to note the importance of doing thorough market research on local preferences when deciding which products to source to a localized clientele. An item that might sell exceedingly well in one location or country may fail spectacularly in another for cultural, economic, practical, or even political reasons. So understand the needs, desires, resources, and spending habits of your localized customer base before assuming what products will be fast movers.

The world of business is certainly changing fast in the globalized economy, and multinational companies will need to rethink their sourcing strategies to keep abreast of international demands. The key to success for multinational sourcing in a globalized market is to have a solid understanding of the customer bases and have the means to provide them with the range of products they want. 

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