Global indicator: marketing strategies of multinational companies

Since the globalization is spreading very fast on more and more countries, multinationals and other big companies have to count with it while going international. Firms that sell their products abroad now have to use different strategies according to the countries' level of globalization and attachment to the local culture.

If we have a close look on the past, we will see that companies selling their production abroad did not have to adapt their production to the local needs. The perfume Chanel #5 remained the same even if it was sold to many countries.

Nowadays, companies cannot use this strategy for every country or for every type of product. In our opinion, we can divide the firms'strategies to three types according to the level of country's globalization and the product type. The first type is so called "global" strategy which means that the product remains unchanged even for the export (e.g. iPhone).Another strategy is "local" which implies the adaption of the product to a particular country in order to succeed (e.g. private banking). The last strategy we have picked up is so called "glocal" that represents the fusion of local and global strategy. The most famous example is MacDonald's which remains the concept but slightly changes the meals according to the tastes of different countries.

We consider that nowadays there are countries that are more used to standardized products than others. That is why the multinationals have to jungle with these three strategies in order to meet in the best way the customers' need.

Therefore, the global indicator we have chosen is thistype of marketing strategy.

Going global – What does it mean for enterprises?

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In formulating business strategies to better operate in the internationalized markets under globalization, companies may struggle in choosing “going global” or “adapting local” (Vrontis & Thrassou, 2007;Alimienơ & Kuvykaitơ, 2008). One may believe that giving standardized products or services are the key strategy for companies to enter and survive in the more global and homogenized markets. 

As defined by Hitt, Ireland and Hoskisson (2007), the international business strategy of offering the standardized products across country markets is the global strategy. Apart from providing highly standardized products, a global strategy should be executed with the competitive strategy dictated by the company’s home office. It is believed that firms are benefited from adopting a global strategy to enjoy the economies of scale (cost saving)and to better apply the innovations developed at the corporate or country levelto other markets. Vrontis et al. (2007) summarized the reasons of UK MNEs standardizing their products as followed:

Why does not every enterprise only mold their products?

In spite of the potential benefits brought by the global strategy, you may notice that not every MNE chooses this strategy.Scholars argued that product standardization is an extreme business strategy which is rarely feasible and convincible in reality, the degree of standardization should be dependent on both the internal (e.g. organizational structure) and external (e.g. target market) factors (O’Donnell, 2000).

For example, the demands for those high-tech ortechnology-intensive products like electronic devices are universal across the markets (Cavusgil, Zou & Naidu, 1993), with the addition of the possibility in mass production, firms in high-tech industry are favored in adopting the global strategy to provide standardized products across markets. The Japanese MNE Canon, Inc. illustrates how the suitable organizational structure and product nature supports the use of global strategy. The MNE divides its product groups into 4 categories – consumer products (cameras, printers etc.), office products (large copier), industrial products (broadcasting equipment) and Canon product groups (document scanners, personal information products etc.). Canon then integrates all the product operations worldwide and archives the lower production costs through economies of scale (Hitt et al, 2007).

However, for some industries, global strategy is notalways the best way to do business. The study done by Li (2005) showed that the home triad-based regional strategy is more effective than global strategy for the US service industries. It can be understood that services are highly customized to cater individuals’ needs, which is difficult to be standardized.

Product Localization

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As multinational companies expand their business to different part of the world, they will always come to the questions: What canwe do to obtain the market share? What level of modification do we need to doto adapt to the need of customers? According to the Localization IndustryStandards Association (LISA) in the year 2007, $25 dollars was returned for every $1 invested in localization. (Amir Helzer, 2011) Localization is needed for most of the companies going internationally, but the level differs according to various nature of the industry. There are many industries need high level of localization such as online games, website design, advertisement, mobile apps and so on.

Take website design for example. Companies like eBay,Dell and Amazon expand globally to reach global online consumers by setting uplocal websites. (Singh et al. 2004) When doing e-business globally, the major obstacle companies facing is to understand their customers, overcome cultural barriers and language barriers. (Violino, 2001) For example, consumers will concern more when buying online because they cannot see the real products and they would like to know more about the details of the products, delivery,maintenance and so on. They will feel more comfortable if the website and buying processes are in their native languages. Furthermore, it will be moreeasily for customers to accept the marketing which make use of a proper content, familiar dialects and rhetorical styles. Hence companies should localize their websites in order to attract more customers in specific markets.According to Singh (2004), “Companies also need to consider adapting colors, icons, signs, web page layout, number format, date format, postal codes,measurements, titles, character fonts, and most of all cultural values and symbols of the foreign country.”

As management of MNCs, the first thing they should consider is to what extent the modification of their products should be made.The level of localization depends highly on the nature of the industry.According to the article Rethinking Globalization by Hollis (2009), “How much a brand needs to blend into local culture is dictated by the nature of the product category, the country and the competitive context.” If an industry is very susceptible to the demands of local tastes and habits, the company should consider localize its brand to a large extent.

What is glocalization?

Glocalization is a combined idea of globalization with that of local considerations.

To sustain in this ever-changing and dynamic world, the companies can not only go global, but also adopt certain degree of localization so that they can attract more customers from all over the world. That's why glocalization is getting more and more popular. As our group mentioned in the first blog, even though the world is globalized, local markets like flea market are still very popular in developed countries. That reflects standardized products under solely globalization strategy cannot really work. Thus, many companies adopt glocalization strategy instead.Apart from this reason, realistically, it will be very costly for multinational companies to translate everything from its home countries without any beforehand analysis of the local market, culture or society values. Therefore, companies should promote some standardized products or services in general while create localized ones based on geographic markets at the same time. Companies should do some market research to understand the expectations of the targeted customers and provide products or services that satisfy their expectations and needs.Overall, glocalization can help companies save some cost from economies of scale by producing standardized products in globalization prospective while more easily to target, attract and retain local customers in localization perspective. Moreover, it can build up and maintain the same and consistent company image throughout the world but at the same time easier to enter the local markets as well. To be able to adopt glocalization marketing strategy, the companies' operation should be flexible enough to handle different localizations strategies so that those local branches can be ran effectively in the world. That’s the matter of the nature of the industry. Just like McDonald's, since it is in the food industry, it is easier to adopt the glocalization strategy based on the following reasons.First, all branches over the world mostly use the same ingredients such as vegetables, beef, chicken or potatoes to make the meals even they are located in different countries and adopt some localized meals. For example, chicken and vegetables are also needed to make the McArabia in Arabic and McChicken in Hong Kong. Thus, ingredients can be bought in bulk and delivered to different places and thus enjoys the economies of scale.Second, as McDonald's is in food industry, actually it is essential and necessary to localize its meals to satisfy the local people's preference and tastes according to the countries. Then, McDonald’s can gain as many customers as it can and maximize the profits with the localization strategy. Meanwhile, McDonald's still maintains its global strategy to provide standardized meals in every country to keep its global company’s image as the world's biggest fast food company.Reasons mentioned above explain the nature of industry of McDonald's is favorable to adopt glocalization strategy.
McDonald's localization strategy is providing specialized meals that are differing from country to country. McDonald's does not offer a standardized menu but almost each country hasa special meal to the countries' culture or people's preference instead. For example, thereare McMolletes, or English muffins topped with bean, cheese, and salsa sauce inMexico. The McArabia features a chicken patty with garlic mayonnaise,vegetables,and Arabic bread.
On the other hand, McDonald's also creates the Vegetable McCurry Pan to fit the Indian tasteand it is very famous and popular dish in India. ChickenPorridge with onions, ginger, and chili peppers in Malaysia is created to fit their preference of spice.
On the other hand, McDonald's also creates the Vegetable McCurry Pan to fit the Indian tasteand it is very famous and popular dish in India. ChickenPorridge with onions, ginger, and chili peppers in Malaysia is created to fit their preference of spice.
Another example is Disneyland. Although it has opened five theme parks around the world, Disney has successfully created aconsistent and remarkable brand image of the parks, which is "world ofmagic and imagination" which is well known in the world. In every themepark, there are the same Disney cartoon characters with games and rides and sections like Tomorrowland, Main Street USA. All of these are the standardized and consistent elementsin all Disneyland. Once people think of it, they will associate with a theme park characterized by magic and wonder. That's the globalization strategy.

As for the localization part, like Shanghai Disneyland, it will feature aMagic-Kingdom style, in keeping with its cousins in Asia, the U.S. and Franceas well as creating some Chinese characteristics to relieve the worry of cultural invasion into china by
As for the localization part, like Shanghai Disneyland, it will feature a Magic-Kingdom style, in keeping with its cousins in Asia, the U.S. and Franceas well as creating some Chinese characteristics to relieve the worry of cultural invasion into china by instilling strong American values and culture. (Brand Disneyland comes to Shanghai, 2009) That's the Brand Localization. As a whole, Disneyland delivers core values’ happiness, friendliness and adventure” which are accepted by people all over the world but also create specific and local features to every single theme park in different places.

McMolletes - www.neogaf.com

To satisfy customers or conform to religious beliefs worldwide, McDonald's also offers a regionalized version of its menu. This makes the food specific and localized to particular regions that those menus are only seen in the local operation but not every country.For instance, In India, McDonald’s does not offer beef and pork products because of Indian religious sensitivities. Jhatka certified chicken and fish are the only meat products used in India.

McCurry Pan - www.perezsolomon.com

Extension and Responses to Comments:

We appreciate all the comments the readers gave to us, which help us extend our blog to re-clarify our points. There are many comments regarding whether companies’ websites should adopt the strategy of localization. Some agree and some disagree. One of the readers pointed out that websites do not need to adjust their color and page layout, what they only need to do is to change the language. The reader also gave examples like Facebook and Apple. However, Facebook and Apple are both using the strategy of globalization rather than localization. Brands implementing globalization strategy do not need to adapt to the local culture in a high level, so they just need to change the language on their websites. However, there are still some companies implementing localization strategies. They need to adapt to the local culture on a much higher level than other companies. For example, the websites for online auctions need to adjust the signs, icons, page layouts etc. according to different culture and habits. They need to study their customers’ preferences and online shopping habits. For instance, if the company is designing the webpage for Chinese version, they should be aware of Chinese preferences and do some adaptations: Chinese like to open many windows rather than go back to the previous page; they have special feelings for the color red; they like seeing fashionable words in the advertisements etc. Knowing these preferences and adjust the webpage accordingly will contribute to the attractiveness of the company and lead to their success.

We also want to thank heartily for other readers who gave recommendations on how we could do better in organizing our blog. We want to apologize for the typos that we made in the blog and we have revised the whole blog for improvement. We learnt that it is crucial for a blogger to make his/her blog comprehensive to the readers before s/he could convey the ideas. We will stay open-minded to the critics and hope for further improvement in our writing.

Last but not least, we would like to response to the comments that the indicator we chose is not that original. We understand that the issue of Globalization vs. Localization may not be a new topic to many of us, through giving out the real business cases, we hope that we can have a deepen discussion over the topic; by introducing the concept of “Glocalizaiton”, we expect that both of the writers and the readers could have a new insight about the business practices that are currently adopting by the MNCs. Globalization is a complex set of processes but not a single event, over the next few decades, we may still discussing the similar concept over and over again. But the point is that, if we could learn and improve through the repeated discussion, it worth spending time to dig into the matter.

References

Alimienơ , M. & Kuvykaitơ, R. (2008).Standardization/adaptation of marketing solutions in companies operating inforeign markets: an integrated approach. Engineering Economics, 1(56), 37-47.

Cavusgil, S. T., Zou. S., & Naidu, G. M. (1993).Product and promotion adaptation in export ventures: an empirical investigation.Journal of International Business Studies, 24(3), 479-506.

Helzer, A. (2011). Localizing for software, websites and global apps. Multilingual, 22(3), 34-37.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E.(2007). Strategic management: competitiveness and globalization. Masion, OH:Thomson Corporation.


Hollis, N. (2009). Rethinking Globalization. Marketing Research, 21(1), 12-18.

Li, L. (2005). Is regional strategy more effectivethan global strategy in the US service industries. Management InternationalReview, 45(1), 37-57.

O’Donnell, S. (2000). Marketing standardization withinglobal industries: an empirical study of performance implications.International Marketing Review, 17(1), 19-33.


Singh, N., Furrer, O., & Ostinelli, M. (2004). To Localize or to Standardize on the Web: Empirical Evidence from Italy, India, Netherlands, Spain, and Switzerland. Multinational Business Review (St. Louis University), 12(1), 69-87.


Xiaochun Zhang. China localizes online games for global players, MultiLingual, Oct/Nov2009, Vol. 20 Issue 7, p40-45, 6p, 4 Color Photographs

Vrontis, D. & Thrassou , A. (2007). Adaptation vs.standardization in international marketing – the country-of-origin effect.Innovative Marketing, 3(4), 7-20.

Violino, Bob (2001). E-Business Lurches Abroad.Internet Week, March 19th, Available: www.internetweek.com

Myth of Globalization

The term “Globalization” is not a new idea to us. It can be traced back to the 60s in the last century when it was first introduced to the world (Steger, 2010). Under the effect of globalization, different nations have shared a more standardized and similar system in terms of economy, education, society and politics etc. Globalization narrows the gaps among different countries and allows the entire world and people in different nations to get closer.

www;topnews.in

It is believed that globalization encouraged the international trading among different nations. Companies can manufacture and sell products globally more efficiently and cheaply. For example, the increasing trend in adopting outsourcing services reduces the production cost. Therefore, globalization is supposed to lead to higher consumption in global products and empower the growth of global companies. However, the flourish of local flea markets, farmer’s markets, swap-markets etc in the highly globalized and developed countries, like the European countries and the USA, does show the opposite: people like buying local products. So is it true that globalization promotes global products and lead to greater powers for global companies?

Though globalization benefits companies by reducing the production cost, it does not guarantee consumers a cheaper price. In addition, studies show that globalization sharpens the income inequality and poverty problems to a certain extent (Wade, 2004). Many global products are still unaffordable to the poor. Therefore, the small-scale markets like flea markets are still prevalent that people can buy the necessities at a low price. Globalization may not always bring the advantages to the global companies.

There is another point. It is a common view that nowadays global brands take a big part in the everyday consumption. One can find a great variety of foreign products in a supermarket next-door. One can say that sometimes our choices are conditioned by the multinationals that might impose their products to the consumers. Big brands are widely spread all over the world. We can easily find French shops in Asia and they benefit from a wide popularity.

www.hot-news.blogspot.com

However, flea markets and other type of local fair still exist in every European country and in the USA. They take a large part in people's daily life. It is usual to see weekend markets full of customers buying local production like fruits, vegetables or even object from artisans. People would buy in the flea markets may imply that they can find the suitable products only in the local market. Despite of formulating the global strategies to tackle the business challenges in the global market, the highly standardized nature of the global products still makes it difficult to fulfill the local individual’s needs unless the companies can figure out the strategies to manage market-by-market needs (Sinclair & Wilken, 2009).

We can look at the problem from the behavioral point of you. Globalization brought standardization of consumption so people may have the feeling their choices are done for them. Therefore, they are more and more willing to buy authentic, local products in order to prove themselves they make their own choices while consuming.

Even if the global processes facilitate the consumption as more foreign products are brought to the market, people realize they are more attached to their local production. We can say that it may be a sort of resistance. They may not want to follow the global trend and consume in the way they want to.

www.saddlebackbuzz.com

It is easy to fall into the trap that globalization empowers the multinationals to make more profits by selling their global products. However, the situation is not always true that other factors should be taken into account like the abilities of the consumers to purchase the products and how well does the products can meet the consumers’ needs. 

Nowadays, local markets such as flea markets, farmer’s markets, swap-markets are still in high demand mainly because the products they provide can meet people’s needs with lower prices. However, international companies are trying to reduce the gap in order to expand in the local market. For example, in order to reduce cost, large international companies are using the new logistics and specializing the production. When going to the local markets, many companies do researches and make modifications on their products in order to adapt to the specific markets. In addition, these companies can make use of their competitive advantages such as economies of scale, good brand images and so on. Even though the demanding of flea markets, farmer’s markets, and swap-markets remains very high, will it shrink smaller and smaller as the technology developing and the globalization going on in the future? Are there some factors that cannot be replaced by international companies so that these markets will always be valued by consumers? What will be the globalized market like in the future? The “invisible hand” – market will give us the answer.

Extension Section and Responses to Comments

Reply to 51440005daydreamer

Hi daydreamer, thanks for your comment. It is true that to some extent local markets cannot compete with the global markets dominated by the international companies because of the limit of products variety. With the huge capital and large market share from all over the world, MNCs really can control the global markets against local market. For example, many people in Hong Kong will buy Coca cola once they want to buy soft drink no matter how many local or mainland china brands are there. This can reflect the truth that MNCs really can totally go into the local markets to influence local people’s buying choice.

The development of globalization has reached the high level already. There must be some global brands in every country every city. We think that the progress of globalization will not stop in the future. The local markets still can survive due to their customization of consumers, familiarity with the local market demand and cheaper prices. Yet, as you said, they can never compete with the MNCs and global markets.

Reply to 40041603_IBstudent

Dear IBstudent

Thank you for your comment and your point of view is very relevant and clear. However, we would like to explain that it not exactly what we were trying to say in our blog. It is not only about the resistance to big multinational companies but mostly about the fact that some consumers get frustrated about the products and the y quality they can have in big supermarkets. 

Our point is to say that somehow global companies like Wal-Mart cannot respond to all the consumers’ demand that is why people decide to return to the “basics” and shop in small markets next to their house. I agree with you on the fact that people will always go to local markets but not because of some principles, they do it in order to experience something more authentic than things they can get in huge supermarkets. 

Reference

Steger, M. (2010). Globalization. NY: Sterling Publishing Company.

Wade, R. H. (2004). Is globalization reducing poverty and inequality. World Development, 32(4), 567-589. doi:10.1016/j.worlddev.2003.10.007

Sinclair, S., & Wilken, R. (2009). Strategic regionalization in marketing campaigns: Beyond the standardization/glocalization debate. Journal of Media & Cultural Studies, 23(2), 147-157. doi: 10.1080/10304310802710496

Nigel Hollis (2009), Rethinking Globalization

Introduction: about us

Hello, everyone!
Our team, Omega, has the pleasure to introduce you the blog we created for the International management course. Our team is an international one as it consists of members from different countries. We decided to call it Omega because it represents multiple things, so that globalization. So for us this name symboizes the fact that the globalization has different aspects.

Our logo

Our logo is the merger of the globe and the last letter of the Greek alphabet - Omega (Ω). We use the Greek alphabet surrounds the globe to represent that our group would like to understand and accommodate to the ever-changing globalized world. The fusion of the globe and omega also shows the interdependence of the globe and us. 

Our team

Yana:
Hi! My name is Yana and I am Russian. I always lived there but now I study in Toulouse, in the south of France. My passions are foreign languages and travelling. My goal is to create my own innovative company in Moscow after I finish my studies.

Stephanie:
Hey, my name is Stephanie and I'm a local Hong Kong student. I'm an out-going girl who love sports and travelling. Having been an outbound exchange student in last semester, I found that it is really enjoyable to share my thoughts with and listen to people who share different cultures and backgrounds. Let's have fun and feel free to share your view here =)

Hi everyone!!I'm Kathryn from Human Resources Management. I'm a talkative girl who likes smiling (but if only she finds its interesting :P).
I like singing karaoke, hang out with friends, watching movies and listening to music etc.
By taking this course, I hope I can know more about the world and widen my thinking about the globe.

Hi! My name is Linma and I’m a year 3 student majoring in Accountancy. My hometown is Hunan Province in mainland China. I enjoy playing the violin, singing, watching movies and TV series, and chatting with friends. I like communicate with people from different culture background because it opens my mind and helps me see things from different aspects. Hope we can make use of the blog and communicate our ideas and thoughts.

Our goals

By taking this course, our group is willing to understand in more details the mechanism of managing a company in the international context. Nowadays, it is hard to deny the impact of globalization on almost every company, so we think that this course will help us to be better prepared not only for our future careers but also for the daily life as we study in a very international university. We also hope that through the class discussions and activities, we can have more chances to have thought exchanges with our international classmates to make the in-class learning even more enjoyable and fruitful.


Our interests about this course

We consider that the topics we discuss every week are important and relevant for better understanding of international management. Therefore, the topics in which we are really interested are the politcal and legal environment of globalizarion, business ethics and motivating workers in the international context.
However, we would like to learn more about the process of preparing a company to go international because nowadays almost every company has to deal with it due to the interdependance of the world.