Discuss about the Globalization Managing Across Borders.
With the expansion of markets and increase in globalization, it is difficult to find opportunities for growth. Globalization can be defined as the process of international integration from the interchange of products, services, ideas or even culture. The organizations have been competing against each other with their unique competencies and cultures. The current world has companies competing with everyone thereby making the international and local markets more complex for survival. The concept of globalization involves developing standardized products with a standardized marketing mix. The phrase ‘Think Global, Act Local’ is often highlighted within the context of globalization. In simple terms, the phrase is used in business strategy where the multinationals are encouraged to build local roots. In other words, the term is also known as ‘glocal’ formed by the combination of ‘global’ and ‘local’ (Beck 2015). The firms use the term glocal as a part of their marketing and branding strategies. The aim of this paper is to analyse the importance and concept of glocalization. The reasons why glocalization is important in the current business scenario and contributes to success is explained in this paper. The arguments are supported by evidence and examples (Chinomona and SibandaVaal 2012).
The term glocalization was derived from a Japanese word dochakuka that originally meant adaptation to the local farming techniques. Therefore, the idea of word means creation of products or services intended for the global market, but customized to suit the local cultures. The companies of all fields such as technology, food and beverage, finance, manufacturing, clothing or supermarkets are hunting to capture new geographic markets. However, strong technology and strong financial resources are not enough as it does not guarantee success into the new markets. Every business expansion requires localized and strategic marketing to enter into new markets successfully. The multinationals discover that their experiences and assumptions may fail in a new and unfamiliar market. The hurdles go beyond the language and cultural hurdles. The companies need to tailor strategies, adapt sales and distribution approaches, modify pricing strategies, product offerings and redefine the marketing programs. It is also defined as the interconnection between global issues and local context and vice versa (Coe and Lee 2013).
The one-size-fits all strategy in the modern world is an unsuitable approach. The successful multinationals encourage local knowledge and value individuality. Not all the people in the world have same tastes and preference. To exploit the emerging opportunities, the adaptability and agility is needed (Drori, Ho?llerer and Walgenbach 2013). With the increasing globalization in the last decade, the businesses have been divided into two extremes. While discussing the movement towards globalization, the businesses had to consider that the world is a marketplace. There was increase in standardization of products and greater access in international markets. As a part of reiterating localization, the regions try to protect and maintain local culture without being drained away by the forces of globalization. The concept of glocalization tries to balance the approaches in terms to adapting to the local tastes and preferences (Martinsons 2015).
The concept of glocalization has some substances as it makes the social, economic and political interdependencies more global. The multinationals are looking forward to indulge in unique idiosyncrasies of local cultures. The glocal employees are making differences beyond domestic borders and achieving the main goal of global strategy. The term standardization is more susceptible to globalization, but is not a synonym (Drori, Ho?llerer and Walgenbach 2013). There are three different perspectives of international business- organizational structure, competitive process and standardization of marketing mix elements. The first global companies have built their vast empire based on these three perspectives. Standardization of products is the most cost-effective way to export a successful domestic product to deliver consistent quality to the multiple countries. The overhead costs can be well distributed if the companies are least adapting. A multinational corporation avoids direct competition with the local groups to know the market better (Matusitz and Lord 2013).
The concept revolves around unacceptability of standardized products. The successful corporations need to develop a glocal strategy by utilizing their customization and experiences in a manner that attracts the local markets. Not only for product design and communications, the glocal strategy needs to be applied to the seven variables of the marketing mix, namely product, price, place, promotion, people, physical evidence and process (Edgington and Hayter 2012). According to the glocal strategy, certain core elements are standardized while other elements are localized. Glocalization can also be termed as a compromise between domestic and global marketing strategies (Drori, Ho?llerer and Walgenbach 2013). The concept describes that in order to be successful in the global markets, the marketing managers need to act locally to enter and capture any new market. The local units focus on the customer difference and the corporate level provides strategic direction in the global strategy (Coe and Lee 2013).
For better understanding of the concepts, the differences between globalization, localization and glocalization is determined. In case of globalization, there is a tendency of international integration of products, services, technology, labour, information and capital. The products are standardized thereby saving cost. Localization involves adapting products and service to satisfy local needs and developing local appeal. The local brands face competition from both domestic and international brands. Glocalization takes local issues and provides a global offer regarding product service, brand or idea. In glocalization, global experience is used to differentiate in the local markets (Drori, Höllerer and Walgenbach 2014).
Many companies are incorporating glocal that means going global retaining a local flavour of the business into the strategies. For example, McDonald’s, one of the biggest fast food chains has established its operations in 119 countries (Edgington and Hayter 2012). The company has conformed to the product offerings and promotional strategies according to different countries and its respective culture. To meet the Middle Eastern local taste, the company introduced McArabia as the dish is to be loved by the Arab countries. Other than that, the company sells EBI Filet-O Shrimp Burger in Japan as it is a popular choice in the country. Not only products, the promotional techniques also differ on the basis of countries and cultures (Indartono and Chen 2015). In Muslim countries, McDonald’s does not advertise during Ramadan as the people are fasting and do not consume food and drinks from sunrise to sunset. In the United States, the primary target audience for the brand are the children as they watch advertisements the most (Osman, Johns and Lugosi 2014). Therefore, it is seen that McDonald’s adjusts according to the popularity and consumer trends. McDonald’s global success is credited to its ability to distinguish its brands. The company listens to the local customers, observes their habits and behaviours so that they can come up with innovative product offerings (Crawford 2015).
Glocalization is the key to future business success as there has been a dramatic shift from global to glocal. In the past century, the multinationals have benefitted from globalization thereby bringing about significant behavioural changes among the consumers. However, glocalization is the newer trend promising a brighter future for the businesses. It is important for the companies to realize the importance of target consumer market to make the product and service offering more appealing. The key to success in today’s business world lies in finding the correct balance between global and glocal requirements. Glocalization is an interactive process that helps multinationals developing core competencies (Gond and Boxenbaum 2013).
Glocalization means adapting, blending or mixing of one or more processes that must be local. In case of globalization, the costs are eliminated by duplicated effort thereby allowing companies to take advantage of economies of scale. However, standardized products have certain disadvantages. The multinationals tend to lose their uniqueness in globalization as the customer base values its niche products. Moreover, if the company serves a particular market, through standardization they may lose former customers. Taking a simple example, a restaurant may build up its good will and reputation on exotic and varied menu and changes it to a standardized menu while predicting customer experience. However, the competitors providing variety in their menu shall make it tougher for the multinational (Kansara 2016).
While expanding across borders, standardization of products may work against the company. It may be cheaper to make standardized products, but the needs and cultures vary in different markets. Therefore, standardization measures respond slowly to the market condition and end up costing more. Standardization of products may be advantageous in certain areas of business like production. However, there are some aspects of a business that must be tailored to customers’ needs. Therefore, there shall be loss of responsiveness. In local market conditions, standardized customer service, distribution, advertising and pricing strategies may be unsuccessful. Standardization has the potential to get a business into a rut. Market experiences changes and companies change it quickly so that they can take advantage of it (Küster 2016).
It is further argued that standardization hampers or stifles creativity, especially the product design. Every business needs to understand the role of culture in international business. The cultural differences impacts profitability, regardless of the sector a business operates in. The multinationals need to be aware of the cultural differences in different countries as one need to be aware of the organizational culture of country it enters. Therefore, one needs to be aware of the key factors impacting the business directly. Language barrier is the most common obstacle in the success of any international business. Communication is the key to successful business as it is necessary in conducting international business. It is important to be aware of the basic customer needs as it is advantageous in conveying the message. If the multinationals are aware of the customer’s cultural background, they will be able to adopt better and use more suitable methods. Before launching a marketing campaign, research must be conducted so that the companies become aware of the target audience (Liu et al. 2014).
In the international scope, trade is improving due to technological advancements, transportation and communication opportunities. This in turn has increased access of consumers and businesses to access best products from different countries. Another example that can be stated supporting the importance and benefit of glocalization is Tesco. Tesco is one of the top three retailers with more than 440,000 staffs serving 30 million customers weekly (Zhou et al. 2017). The company operates in more than 12 countries other than UK serving retailing, food and non-food services (Coe and Lee 2013). The focus of the company is to listen and respond to the needs of customers. The research states that Tesco provides unique experiences to the customers in different countries. Tesco has been serving the British since 1920s, but in the outskirts of London it sells dozens types of sausages and salami. Based on the needs of Polish shoppers, Tesco sells its products as Polish consider deli food important. Moreover, Tesco aims to deliver local tastes and flavours from Asia to Eastern Europe. The shoppers in Thailand and Hungary have different tastes and Tesco has managed to meet the needs of people successfully and boosted sales (Coe and Lee 2013). Tesco has grown house brands for indulgent and value-conscious shoppers. It is not enough to have local merchandising. Tesco acknowledges the fact that shopping at hypermarket cannot be too exotic and it needs to become a part of the regular routine. Therefore, Tesco has taken understanding and responsiveness to the habits of its foreign consumers (Martinsons 2015).
From the data gathered from shoppers, the consumers gave common responses such as better service, more variety, lower prices and non-food product options. Therefore, the company began to accelerate the construction of superstores that was bigger than the traditional supermarkets. Glocalization can be related with customization (Vorhauser-Smith 2012). As it is a new approach in the business scenario, the companies need to take efforts and adapt wherever necessary. Glocalization is important as it adds to customer satisfaction by adapting the product to local needs. The equipment available at the local area reduces capital expenses that may have occurred. The customers or potential clients in high-income countries have a tendency to buy more sophisticated products. Therefore, glocalization is advantageous to them as differentiated products with extra elements for this group of consumers. The time needed to adjust to the local needs and wants is also reduced. The multinationals can take advantage of subsidies or benefits as offered by the local government (Trapp 2016).
Glocalization reduces final cost of the product as it need not be imported from foreign countries. The potential logistics cost can also be reduced as the products need not be imported. The local competition and local marketing can be facilitated as there is cultural difference in the consumers of international market. The businesses wanting to enter new markets need to have significant and thorough understanding of the local needs of consumers. The people are finding success by investing in a marketing program. The global marketplace is better connected due to the advancement in digital marketing and information technology. It is easier for businesses to make an online presence and the customers tend to find their favourite brands across the globe. However, they may not find the same experience at all places. As glocalization involves conducting of business according to local and global considerations and is important tactic for managers to consider if they want to increase the chances of international success. It is seen that SMEs and multinationals that have used brand names or slogans in one country had a questionable translation in the other country (Roudometof 2014).
As the consumers are more informed and aware of their choices, the global content strategy shall help in making the brand successful. The local audiences must be targeted and solutions must be provided to cater to their needs. Every marketplace needs to adopt diversity mandatorily. There is more opportunity to grow and offering must be sought after adequate development. The marketing opportunities and strategies must be devised in a manner that is critical to long-term success. This shall help in capturing revenue opportunities in the coplex marketplace (Robertson 2014).
Conclusively, the multinationals discover that their experiences and assumptions may fail in a new and unfamiliar market. The glocal employees are making differences beyond domestic borders and achieving the main goal of global strategy. A multinational corporation avoids direct competition with the local groups to know the market better. Not only for product design and communications, the glocal strategy needs to be applied to the seven variables of the marketing mix, namely product, price, place, promotion, people, physical evidence and process. In case of globalization, there is a tendency of international integration of products, services, technology, labour, information and capital. The products are standardized thereby saving cost. The company has conformed to the product offerings and promotional strategies according to different countries and its respective culture. Glocalization is an interactive process that helps multinationals developing core competencies. In case of globalization, the costs are eliminated by duplicated effort thereby allowing companies to take advantage of economies of scale. Standardization of products may be advantageous in certain areas of business like production. If the multinationals are aware of the customer’s cultural background, they will be able to adopt better and use more suitable methods (Sun et al. 2017).
The global strategies have several advantages to the world. The trend shall continue benefitting the world in the coming time. Glocalization can also be termed as a compromise between domestic and global marketing strategies. With the differences in regional and national level of business, the companies cannot achieve the pursuit of oneness without addressing these differences. The companies adapt standardization as a significant part of globalization that now needs to be adapted based on local tastes and preferences, work culture and customs. This shall help the multinationals in sustaining in the long-term. The businesses need to realize that going glocal is more important than going global in the current scenario. However, the main question is to what extent the companies must go local or global. The answer to this question shall help in discussing and deciding the future course of business.
References
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