Global indicator: marketing strategies of multinational companies
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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
www.justincalderon.worldpress.com
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.
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.
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
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
This is a very interesting article. I like those three concepts which are localize, globalize, and glocalize. I strongly agree with the glocalize because I have seen so many companies are using this strategy to operate globally . In your article, you really explain each strategy with information and your own opinion, however, I feel that you guys might use too much quote or sentences from the experts. And I also find one thing really interesting which you guys should concern, there are some words that I think it might be the typing error, it makes me difficult to read it and it will confuse other readers. (just for a suggestion lol) The most wonderful job you guys did is the picture which clearly shows how those three strategies are different and how it affects in a different way. For me, I am really a fan of the crossover with the global and the local because I truly believe that is the best strategy for the fast food industry. Actually, my dream is to have my own restaurant, so I think if I have a chance to open globally, I will use you guys article to remind myself how three strategies will help me to succeed. I might use all three and make a new one that calls "glocal revolution". All in all this is a good second blog and also the presentation.
ReplyDelete51834239
ReplyDeleteYour blog is really interesting and it makes me more familiar with what localize, globalize, and glocalize are. Actually, glocalization affects our daily life very much and it is signicant to a multinational companies success or not in a particular geographic market segment. Therefore, companies need to spend much time and money to figure out some useful strategies for doing business, find out and satisfy the needs of its customers as well. Your example of McDonald's reminds me that they do very well in this part because when I go travel, I always recognize that the menu in other places must be something different from the menu in Hong Kong.
I like your blog because you give many different examples to support your ideas so that you article is perssuasive and fruitful. By the way, there are some small typing mistake as I found there is no spacing between some words. But it is just a small problem!
I think this article is informative and quite interesting. I agree with your team that companies have to use different marketing strategies depending on their countries' level of globalization and attachment to the local culture. However, I think that nowadays most of the companies are using glocalization strategy rather than purely using globalization or localization. The strategy differences are depending on the degree of localization and globalization used. Some may have larger extent in localization while some may have larger extent in globalization.
ReplyDeleteFor example, your team mentioned high technology intensive products like electronic devices are using globalization strategy. In fact, I think they are using glocalization strategy in marketing. Though their products selling to different countries are the same, there is some degree of localization there. Let me take I pad2 marketing on TV as an example. There are both components of globalization and localization in its marketing strategy. In terms of globalization, their background music, content in the TV advertisement in different countries are the same. However, in terms of localization, there are some tiny changes in different countries advertisement. For instance, in Japan, the advertisement is in Japanese. Also, the newspaper showing in the advertisement is ”朝日新聞. (a Japanese newspaper) You can watch the advertisement in (http://www.youtube.com/watch?v=NbJnT5RXjlw&feature=related). For the same advertisement in US, they use English and the newspaper showing in the advertisement is “The Wall Street Journal”. You can watch it in (http://www.youtube.com/watch?v=TFFkK2SmPg4&feature=related). Moreover, for the website of Apple, there are 216 languages for different countries’ customers to choose so that different nationalities can understand Apple products more. It shows that there are both localization and globalization in its marketing strategy. ( http://www.apple.com/choose-your-country/)
In short, I think that most of the companies are using glocalization marketing strategy.
I really enjoyed reading your blog. The new words were interesting, and I think they are very catchy. It is amazing to me that even though we are all so different in the world, culture, life styles, ect., that there can be commonalities between us. Like the examples you presented an Apple iPhone or McDonald’s cheese burger. But I think that what makes these companies successful enough to tap into other markets around the globe, is brand awareness and hype. Because these companies are so famous with in there certain markets, this allows them to go global. If the company were only represented in one area and tries to move to others without any indication or hype of going there, it would fail. This is why awareness and advertising through globalization is so important.
ReplyDeleteI also like the ideas you brought up in localization. It’s very true, you could have the same lotion across the world but it could look and be marketed totally different region to region. There is a basic concept and then it is altered to fit the environment in the best way.
Hello Omega!
ReplyDeleteVery nice idea to pick the marketing strategies as an indicator!
I definitely agree with 40041209electrifying when he/she says that the kind of strategy chosen depends on the company and brand we are talking about.
But don't you think that trends are a possible reason why companies opt for globalization or localization?
I mean, if I am a company strong enought to set plants in foreign countries and expand, which is the main thing i have to focus on, in order to see my business flourishing? Customers!
Of course they are deeply influenced by their culture as you have already said, but trends must be kept in consideration.
If a product become a trend, everybody will want that specific product, with no different features. For example when there has been the Alexander McQueen foulard boom, I could see everywhere only foulard with skulls, with slightly different colours but always the same pattern! that's the same for many other goods, like the Apple products as you said.
If there is not a specific product that appeals all the consumers, but it's the brand in general that the clients are looking for, the solution would be to try to conciliate the company's values and goals with the customer's preferences. This means or localization or glocalization (like McDonald's case).
Anyway there is not a best solution. Every case is different from the other and whether to choose for strategy or not depends on the surrounding environment.
Again, I do find that it is generally true that most of the time, MNCs do have to customise their marketing strategies in order to appeal to the local market. But then again, at the end of the day, it still boils down to the nature of the products. Some marketing strategies would still work across borders, due to the uniqueness of the product offering. Take for instance, the visa credit card commercials would work across different countries because it features a universal theme. Everyone, around the globe, would be able to understand the message every Visa advertisement is trying to convey.
ReplyDeleteAnd even for the iconic Apple Iphones, the marketing campaign would still work even in different countries or regions. There would always be a demand for Apple products, even if the marketing strategy is not particularly impactful or appealing to the local audience. But to maximise total revenues and capture market shares, Apple, for instance, would not use Siri as the unique selling point for their Iphone 4S because it would not appeal to the majority of the Hong Kongers. Instead, the posters and advertisments here would be focusing on the improved specifications of the phone, which would appeal to the local market here.
Hence, I feel that sometimes it might not be a bad thing to use a global marketing strategy across nations. This would cut down on unnecessary advertising and production costs, and also, strangely speaking, this might create an illusion of exclusivity and unique appeal.
I think this article is informative and quite interesting. I agree with your team that companies have to use different marketing strategies depending on their countries' level of globalization and attachment to the local culture. However, I think that nowadays most of the companies are using glocalization strategy rather than purely using globalization or localization. The strategy differences are depending on the degree of localization and globalization used. Some may have larger extent in localization while some may have larger extent in globalization.
ReplyDeleteFor example, your team mentioned high technology intensive products like electronic devices are using globalization strategy. In fact, I think they are using glocalization strategy in marketing. Though their products selling to different countries are the same, there is some degree of localization there. Let me take I pad2 marketing on TV as an example. There are both components of globalization and localization in its marketing strategy. In terms of globalization, their background music, content in the TV advertisement in different countries are the same. However, in terms of localization, there are some tiny changes in different countries advertisement. For instance, in Japan, the advertisement is in Japanese. Also, the newspaper showing in the advertisement is ”朝日新聞. (a Japanese newspaper). For the same advertisement in US, they use English and the newspaper showing in the advertisement is “The Wall Street Journal”. Moreover, for the website of Apple, there are 216 languages for different countries’ customers to choose so that different nationalities can understand Apple products more. It shows that there are both localization and globalization in its marketing strategy.
In short, I think that most of the companies are using glocalization marketing strategy.
Hi Omega,
ReplyDeleteThank you for the insightful article about how MNCs apply their marketing strategies as they go global, become localize and also glocalize. If we draw ourselves back to the earlier 19 century, where colony masters like the British moved out of their land and begin looking for other lands to conquer they too would have to be sure how to formulate strategies to occupy foreign lands. The most awkward situation of occupying a foreign land is for the local people to gain acceptance and eventually familiarity. Now if we take this two words, ‘acceptance’ and ‘familiarity’ and put into the topic of discussion, it is without a doubt that when a product or service is introduce to a market whether local or abroad it is important for the consumers to gain acceptance and familiarity.
The induction period where the period is first launch into the market is rather crucial, this is also where we see glocalization coming into place. Though the product may be foreign, it is usually market in such a way the local consumers could identify with the products. This marketing strategy in turn breeds familiarity among the local which adopts the product. A particular industry which has been enjoying such marketing strategies is the cosmetic & skincare industry. For a long time history man has never been associated with skincare products so closely unlike today. We see brands like Nivea, Gasby and Olay coming out with skin care products for man and it is marketed extensively in commercials. The used of masculine male celebrities signals the “green light” for males to gain acceptance using skin care products. (http://www.youtube.com/watch?v=vUEkTGbpI6A). This has open a whole new market segment for MNCs locally, globally and glocally.
The food industry has adapted this strategy of going local, global and glocal. As seen in the article, as much as the menu is being tuned to suit the local crowd and yet maintain its identity, it is important to observe local cultures and their practices on food. For Muslim countries it is important on what you use to present your food. The used of pork is a strict no-no in these countries, therefore food preparation must be done halal style. We see Burger King offering Redang(beef) burger on their menu, and also mentioned in the article; McDonalds serving McArabia but with the variation on the menus, is it worth sacrificing the corporation’s identity with the implementation of such marketing strategies?
Hello=]
ReplyDeleteI enjoy reading the blog since it is very clear and understandable to me.
In the blog, your group have mentioned some corporations practiced the business strategy of offering the standardized products across country markets as their global strategy. And these corporations enjoy the economies of scale (cost saving) and to better apply the innovations developed at the corporate or country level to other markets. I agree with this idea since there are some business examples in the reality.
Like the IKEA, a privately owned international home products retailer which sells and designs Scandinavian-style furniture & furnishings such as sofa and dining tables. This company is well known for its efficiency in cost control and enjoys scale economies because of the mass production of the standardized products. Although IKEA household products and furniture are designed in Sweden, they are largely manufactured in developing countries to keep costs down. With suppliers in 50 countries, roughly 2/3 of purchasing is from Europe with about 1/3 from Asia. The bulk production of the products can let IKEA have a higher bargaining power against the supplier, thus, they are willing to offer a lower price to IKEA. In general, the companies which can enjoy a lower cost of production tend to offer a lower price to the consumers. That’s why IKEA products can be affordable to target customers.
At the same time, IKEA enjoys the efficiencies of replication i.e. the application of the business strategies to all stores over the world such as the cost saving strategy and standard design of the stores. Rather than selling the pre-assembled furniture, much of IKEA's furniture is designed to be self-assembled. And this business strategy is applied in every single IKEA stores which is different from other furniture retailer. The size of the IKEA item has been compressed into a luggage-sized; it can be easier transport with the flat-pack methods and thus helps to reduce cost of transportation, package and storage.
In general, IKEA stores are designed in a "one-way" layout, leading customers to walk along the way designed to encourage the customer to pass through all the showrooms before they come to the warehouse and finally the cashiers. This can ensure that every IKEA item exposed to the customers’ sight. This is one of IKEA‘s business strategies as well. And all of the above the reasons contribute to its differentiation from other home-products retailers and the success of IKEA.
Also, your group have mentioned the McDonald‘s case as the example of glocalization . I did agree that it has done a great job in expanding the business by glocalization and it is now well known all around the world. In fact, besides McDonald, there are some companies used the same approach to expand their business all over the globe. Like, the Whirlpool Corporation which is the world's leading manufacturer and marketer of major home appliances, with annual sales of approximately $17 billion in 2009 (www.whirlpoolcorp.com/). When Whirlpool entered the Indian market, it formed a joined venture with a local partner to produce the redesigned washing machine to suit local taste and culture. Thus, Whirlpool has specially designed a washing machine to help Indian women to wash saris without the five-foot long sari getting tangled. In fact, a sari or saree is a strip of unstitched cloth, worn by females, ranging from four to nine yards in length that is draped over the body in various styles. It is popular in India, Malaysia and Singapore etc. (http://en.wikipedia.org/wiki/Sari)
Because of the effort of Whirlpool Corporation in suiting the taste of the Indian taste, Sales in the region grew 30.6% driven by its India listed subsidiary which posted $550 million in sales.( Sarah Jacob, The correspondent was in Michigan at the invitation of Whirlpool Corporation http://articles.economictimes.indiatimes.com/2011-06-24/news/29699141_1_whirlpool-plans-whirlpool-corporation-appliances)
Hi Omega, I feel your blog was very insightful and made me understand some theory on globalisation which I had noticed throuh travelling but had never actually thought about. I would have to agree with IM_student_51814580 that most companies these days are using a glocalization strategy, even in my time in Hong Kong so far this year I see advertisements from many companies I know well from back home however all the adverts have slight differences to them which just make them more accessible for the Asian market.
ReplyDeleteHowever I do disagree when you state that companies need to adapt their online websites by changing for example colour schemes and page layouts. A companies website is an extension of the company and lookin at the page layout and colour scheme should tell you alot about the company, Apple for example has a very minimalist website never displaying to much text and being very easy to use and only changing the language for different countries. The same is true with Facebook who change nothing but the language when operating in different countries. I feel this consistency across their site has been one of the great driving forces behind their success, since no matter who you want to connect with and in what country they live everything looks the same.
Hi Omega !
ReplyDeleteIt was really pleasant to read your blog. Your global indicator is very interesting and judicious. I totally agree that companies have to adapt themselves to the local culture. It seems normal and companies need to adapt in order to attract more and more customers ! When I am travelling, I always want to go once in McDonald’s just to see the different meal they offer according to the different country ! In all muslim country, you could not find pork. Also, when I went to India, there were notice board “No beef. No pork” and they also sell the MaharajaMac or the McSpicy, which is really, really spicy… Also, in France they will sell you hamburgers with French cheese and French bread…
You took the example of the perfume Chanel n. 5 which is the same all around the world ! In fact, it is really interesting to notice that some products do not need to adapt. I think that it is the same for all the luxury perfumes. By selling the no.5, Chanel offers elegance, glamour, luxury, and French subtlety. This perfume was released in Christmas 1921 ! The French government reports that a bottle of Chanel No. 5 is sold every thirty seconds and generates sales of $100 million a year ! If people buy it, it is because they want this product for what it represents ! I think they will not buy it if it was adapted to their country.
On the other hand, all the luxurious brand have to adapt their make-up product (eye shadow, lipstick, …). For example, these brands will offer different eye shadow or lipstick colors according to the country. If you have seen a beautiful lipstick in an European country, you will certainly not find it in North America or in Asia !
http://en.wikipedia.org/wiki/Chanel_No._5
http://www.scribd.com/doc/18752702/Le-Marketing-Au-Sein-de-Mcdonalds
http://tpe-macdonalds.pagesperso-orange.fr/page02.html
Hello Omega,
ReplyDeleteYour blog is well structure and very formative despite the displaying error that occurs (the words are stick together; therefore it is difficult for the reader to follow). I was aware of these 3 marketing strategies in general, but your blog really help me to understand the reasoning behind each strategy.
I agree with Omega when you mentioned that the level of localization depends highly on the nature of the industry, and I think that this statement applies to all the three strategy. To find the most efficient strategy, the nature of the industry is the most important factor that the marketing team needs to take in to consideration. For example, in the technology industry, there are not a lot of cultural differences to take in to consideration compared to the food industry. Therefore, it is efficient to use a global marketing strategy for the same product, but it is very risky if we apply the same strategy in the food industry. I disagree with IM_student_51814580, because in my opinion, adapting its own website to the language of the aimed market is the basic transformation of the MNE when going global; therefore I don’t consider it as a glocalization strategy.
In addition, I would like to suggest Omega to have more quantitative supporting evidence. For example statistics about MNE in the same industry and point out how many of them is using the same category of strategy?
Hi Omega,
ReplyDeleteThank for providing us with such a well-structured and well-organized blog to demonstrate three marketing strategies in terms of degree of adaptation which really helps me a lot. (a little suggestion: you should improve your typesetting, some words are stick together and the fonts of paragraphs are also different)
I totally agree with you that companies should think carefully to choose the level of adaptation. First of all, the nature of industry will decide whether the company should choose globalization, localization or glocalization strategy. For example, high-tech products are usually fit globalization strategy such as iPhone or iPad because basically the demands of all customers are similar for those high-tech products and the companies also segment their target market in terms of lifestyle, not geographic. And of course, those companies which adopt globalization strategy are able to enjoy economies of scale. Another industry you mentioned is luxury industry, especially those luxury accessories that do not differ from countries to countries because customers pay higher price for its country of origin and its "high-status" image. On contrary, usually, service industry does need more localization to meet different needs of customers. For example, banks should localize its services since different districts have different laws and policy and people from different regions also have different demands.
In previous comments, someone argued that companies should not localize its official websites and proposed Apple as an example. In this case, I would say that it depends. Since Apple use globalization strategy for all its products, obviously, it can use the exactly same layout of official website. But for Amazon or eBay, since people from different countries have different online purchase behaviors, they do need to localize its website to make it more suitable for local customers.
This was facsinating topic since we are living in globalized world. I would totally agree with your idea of glocalization. People like new foreign products but it is not always preferable. Glocalized products give not only fresh feeling of foreigne product but also the familiarilty of local product. As you indicated, food is great example of glocalization product. For example,the Crystal Jade, the chinese resturant in Hong Kong has a branch in Korea involving 4 individual resturants. The Crystal Jade in Korea sells same menu, but flavor of menu has been modified to adopt the Korean spiciness. Also, the price among 4 resturants are totally different because of location and proportion of food. It was pretty interesting to thinkg of how they are so many other examples that are around us to represent the glocalized world. It is natural process of changing strategies as the world changes.
ReplyDeleteThe topic is very interesting. Your group uses many appropriate examples to prove the global indictor and I impressed with the McDonald example the most.
ReplyDeleteTheoretically, before saying which marketing strategy those MNCs should adopt, we must first think of two criteria, whether the company have high pressure for local responsiveness and pressure for cost reduction. If company produces a product which has various consumers’ tastes and preferences among different countries, such as food industry and clothing and fashion industry, it is required to adopt localization marketing strategy. If there is a large competition among industry, it is necessary to use standardization strategy such as Dell, the computer production industry in order to enjoy the economy of scale.
However, in the long run, transnational strategy, which your group mentioned: the combination between globalization and localization, is required for MNCs in order to optimize local responsiveness and flexibility. IKEA could be an example since company use different advertisings with different language but the products are similar. Also, the design of Hong Kong Coca-Cola cans and China’s one is different, but the ingredient is almost less the same.
Hi Omega,
ReplyDeleteVery nice blog entry! I like how easy your entry is to read and well-structured, very helpful in understanding the concepts you have presented.
In general, I think that in order for a corporation to attain a multinational status, glocalization is the best strategy to follow. This will cater to differences in consumer tastes and preferences, differences in distribution strategies, differences in infrastructure and traditional processes, and differences in host-government demands.
Unlike some of the other replies, I agree with your opinion that corporations should change brand websites in order to suit the country it is in. I say this because, especially for glocalization strategies, some companies will have different products and promotions released in different markets, and it wouldn’t be very consistent with the marketing if a website were to present information that is not available in that given country. A good example of this is Whirlpool Corp. Whirlpool.com and WhirlpoolAppliances.ca cater directly to the American and Canadian markets, respectfully, in the product releases and promotions (e.g. specific ones for Independence Day and Canada Day).
I think an expansion of your topic can be seen in not the products and marketing strategies being released, but the organizational structure and staffing policies. Multinational organizations can follow a global standardization, transnational, multidomestic, or international organizational structure. In turn, they can incorporate polycentric, geocentric, regiocentric, or ethnocentric staffing policies. Both of these global indicators analyze the globalization of an organization similarly to your entry in that it is a corporation’s internal indicator as to how international it has become.
I hope I have provided some more insight on your topic! Good job!
Very interesting blog Omega! I am myself right now very far from my home country and I have ever since I came here been fascinated about how many of the companies here still are the same as at home even though the culture is so different, and also fascinated about what the things that differ are, it is not always the thing that you expect. So very interesting reading! I appreaciate that your text is very easy to follow and that you also give lots of examples to further explain what you mean.
ReplyDeleteYou talk a lot about McDonald’s which indeed is a good example of a company that gains the benefits of global large scale but still to some extent has to adapt to their local markets. I would also like to mention IKEA as a company that uses the same strategy. Their core strategy, just like McDonald’s is to offer cheap products and their way of doing this is mass production. However, IKEA has faced problems in some of the countries they have expanded to. For example, they couldn’t understand why they didn’t sell any beds in the US until they realized that people in the US didn’t feel comfortable or understood the measure system of the beds that IKEA used, so they had to rename them to “king size” and so on, names that were understood there. This is an example of how something so banal can force a company to be local!
I find the term “glocal” very interesting and believe that this is something that will be more and more common in the future in order for companies to succeed. Something you could further develop in your text is the negative aspects of this if there are any. For example, it costs a lot to be local, how would a company know where to draw the line between being global and local in a way that is financially best for them?
Hi, Omega!
ReplyDeleteIt is an interesting topic of choosing marketing strategies of MNCs as a global indicator and it is really a logical and well-structured blog to read. You have mentioned different strategies used by different companies in going global, such as localization, standardization and globalization.
I agree with you that companies should carefully choose their own strategy based on internal and external situations when they are expanding into the global market. KFC in China can be considered as a positive example. KFC has won a huge success in China and it nearly opens a store a day. According to a study conducted by AC Nielsen in 30 cities of China, KFC was recognized by Chinese consumer as “the most frequently dining place”. KFC is using a more localization strategy in China. The Chinese KFC menu may include fried dough sticks, egg tarts, shrimp burgers, and soymilk drinks, as well as foods tailored to the tastes of specific regions within China.
However, I am wondering which strategy is mostly used by MNCs, localization, standardization or globalization. Do you have any statistics on this question?
I like your structure of the blog, but I have one suggestion for you. Some words stick together in the article and they confuse me sometimes.
Anyway, thank you for sharing such a meaningful and interesting blog.
Dear Omega
ReplyDeleteI really like your group chosen global indicator since it is really interesting to know the marketing strategy of different MNC.
To begin with, I appreciated your group very much for finding so much useful quote and citations. However, it seems that it would be better to have more examples to support the quote.
Therefore, I would like to illustrate more examples to support your argument.
Louis Vuitton (LV), which is a famous French luxurious brand, actually is using the global strategy that sells standardize products all around the world. It is because they are succeed in building up their images, giving a sense and feeling that if one owns a LV, it signify wealth and power. Therefore, people pursing senses of high status and wealth would definitely turn to this brand to reflect their power. Thus, this strong image helps LV to apply the global strategy to get into different markets.
On the other hand, 7-11 stores illustrates the local strategy. 7-11is, the world's largest operator, franchisor and licensor of convenience stores, with more than 39,000 outlets among the world, have different services provided in stores to cater the need of people in different countries.
Therefore, to sum up, whether to apply localization and globalization strategy very much depends on the brand nature. This is very interesting to look at different strategy used by different MNCs.
Nice work!
ReplyDeleteVery interesting Omega. This was quite insightful. While I agree that global product standardisation is hard to come across in its purest form nowadays, there are still however, some industries which operate on standardised products. Your paper seems to primarily focus on consumer products, understandably, but the appeal of these consumer products is, on one level, the product itself, and on the second level, the marketing and brand image associated with the product. The two aforementioned concepts are what firms tend to glocalize or adapt for consumers.
If we look at the market for production capital and industrial machinery, we find that the product adaptation because of cultural values and norms is far far less than in consumer durables and fast food, as per your example. It is unlikely that a Nigerian oil producing firm would not buy a Chinese produced deep sea oil rig because the product has not been tailored to Nigerian culture and expectations. Let us look at AutoCAD; a 3D computer-aided design software used by designers and architects all over the globe. While there are different versions of the products depending on the requirements of the users, it is hard to say that AutoCAD globally adapted to the different markets it is sold in.
So while products are becoming increasingly adapted to markets, there are still entire segments and markets which do not rely on adapted products in the same way that consumer-driven commercial goods do. Ross Brenand, Louis Canning and Raymond McDowell highlight in their textbook "Business-to-Business marketing" all the intricacies and elements of marketing for BUsiness to Business transactions. It is interesting to note the difference in the elements of what attract businesses to purchase from one another as opposed to what attracts consumers to businesses, such as strategic benefit and relationship management.
All in all a good job! Just wanted to provide another viewpoint!
Hi Omega,
ReplyDeleteYou had a good idea for your blog and using examples related to actuality certainly help illustrate your point. It is true that the marketing tools used by companies, MNC's and MNE's, have evolved over time and that some old timer like McDonalds have changed their strategies to adapt to different county conditions, but I think there is also a great deal of self-determination from the consumers part. So although companies can influence consumer behaviour, the last word and decision process is still on the buyers side.
Your reference to glocalization was good and easily understandable, but I feel that your set it out in a too short manner and with too few examples, you could have elaborated more on that.
I disagree with your analysis on online shopping, as I think the freedom in purchasing and the range at which a customer can access goods from all over the world definitely offsets for example the lack of ease of having the opportunity to shop in their native language. Buyers nowadays enjoy this flexibility and translation websites are mostly accessable for free, if that would really be the problem.
My constructive critical point is the layout of your page and the few typos your made, try to be more consistent with the citations you use and rather than putting up some advertisement picture with no meaning, rather get some statistics to back up your arguments, this would certainly help.
I hope that will help in your next blog.
Well done.
Hello Omega,
ReplyDeleteI like your blog about Global vs. Glocal and your examples that you gave to provide further understanding of your blog. It wasn’t that interesting since we have covered this so many times in class. Basically this blog is exactly what this class has been talking about from the very first day of class. So everything thing that you mentioned is basically common knowledge for all of the International Management students at CityU. Also you need to begin to start proof reading your own work or go to the English language lab to receive assistance on your spelling and grammatical errors because it was difficult for me to read your blog. But other than lack of originality, and extreme grammatical errors, the blog was ok. I don’t mean to be rude or disrespectful; I am just trying to give you a few tips to improve your writing skills in the near future.
40041781HighlyAdaptable
51804745
ReplyDeleteVery clear structure and well organized.
I agree that whether or not to localize the products should depend on the nature of the products. As you mentioned, electronic products are worldly absorbed, so MNC do not need to localize its products. On the other hand, McDonald's is a good example to illustrate some MNCs chooses to localize their products. Something the whole world can share equally, but something cannot just like culture tradition, people's taste...Some countries prefer spicy food, strong taste but some prefer mild taste.
Besides, Nigel Hollis (2009) suggested that " is there a difference between global and local brands in terms of what motivates people to buy them?" This is important for MNC to choose if or not to modify its products to motivate people to buy them. Also, it is interesting to say that not every country thinks local is better. Is that true? What are the underneath reasons or causes? These may add some more information to your blog.
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ReplyDeleteHi, Omega!
I like your topic! It is very interesting. In my opinion, whether a company adopts globalization strategy or not should depend on the products' nature and the positioning strategy of the company. For some products, becoming more localized is a good way to attract consumers and increase sales, such as the example in your blog, McDonald. However, in some other industries, companies should consider the degree of localization seriously. Take fashion industry for example, when western fashion brands entered into Asian market. They still put western models in their advertisements like H&M. Although some clothing styles are not suitable for Asian consumers, they still launched same products in markets all over the world. The needs of consumers regarding clothing and fashion are not the same, but very few fashion companies adopt glocalization strategies. This may because that these fashion companies seek to sell western style fashion worldwide. If they go too localized, it will influence their brand image. In fashion industry, western style means high-end. There is a very interesting case in China. A Chinese local fashion brand, Me&City, only invite Hollywood stars and western models to make advertisements. The company believe these ads can help build up a high-end fashion brand, so consumers will be more likely to pay more to buy their products. This case is also a result of globalization but on the contrary, the company avoids being too localized. So we can see that whether a company adopt globalization strategy or not depends on the products' nature and the positioning strategy of the company.