The Multidomestic Company

   In the multi-domestic company the subsidiaries in different countries operate the entire value chain including purchasing, production, marketing, sales activities and R&D. The integration between activities across subsidiaries and country borders are limited. Export to neighbour countries may occur, but typically the multi-domestic company concentrates on the local business. Subsidiaries' interactions across borders mainly concern administration and finances, rather than production and services. Multi-domestic companies often exploit a firm-specific advantage abroad, which focuses on local responsiveness. The reasons for that are differences in markets, cost of transportation and importance of a close link to specific customers etc. The multi-domestic company becomes international because of the companies it owns in several countries, rather than due to cross-border operations. The dominant form of internationalisation for the multi-domestic company is foreign acquisitions. In the multi-domestic company the operations of the different subsidiaries are adapted to the different host-markets, and their operations are relatively independent of the parent company. The strategic role of the subsidiary is the role of a local innovator.