Pressures for local responsiveness crop up due to differences in consumers’ tastes and preferences, differences in infrastructure, differences in distribution channels, and the demands of the host government. Consumers’ tastes and preferences differ significantly between countries due to historic or cultural reasons. Hence, the product and marketing messages have to be customised to appeal to the tastes and preferences of local consumers in such cases. This typically requires entrusting the production and marketing decisions to local subsidiaries. Pressures for local responsiveness also crop up due to differences in infrastructure and/or traditional practices among countries, creating a need to customise products suitably. This may again require the delegation of manufacturing and production functions to local subsidiaries.
Differences in distribution channels among countries may require adopting different strategies. This may necessitate the delegation of marketing functions to national subsidiaries. Finally, economic and political demands imposed by host governments may necessitate a degree of local responsiveness. Generally, threats of protectionism, economic nationalism, and local content rules all dictate that international businesses manufacture locally. Pressures for local responsiveness restrict a firm from realizing full benefits from experience-curve effects and location advantages. In addition, pressures for local responsiveness imply that it may not be possible to transfer from one nation to another the skills and products associated with a company’s distinctive competencies.