The Globalization of Markets

The globalization of markets
Theodore Levitt
Harvard Business Review, 1983 * Background
The powerful force booms the modernity and stimulates the people’s attraction for the high-tech products and high-touch products, and that force is technology. It results in the fresh reality-global markets. The isolated market and multinational corporations tend to be the global markets for the standardized consumption and price. Although it experienced the challengeable process, the influences of development of technology is far amazing, it enhances the trade among global nations and raises the living standards, work conditions. The most advanced consequences that global markets contribute to are the goods of the best quality reliability at the lowest price. The world’s needs and desires have been irrevocably homogenized and the competitors take strategic measures to adapt to the global market. * Living in the Republic of technology
The development of technology emerged the tendency for everything to become more like everything else. The tendency has pushed the markets toward global commonality and produced the standardized products with reasonable price. Apparently, the high-touch products exists every in the world, like Coca-Cola, Revlon cosmetics, Sony TV and McDonalds are all globally standardized and successfully dominate the markets. The products and methods from these worldwide operating companies play a single tune for the entire world and the entire world eagerly dances to it. Success in world competition focuses on the efficiency in production, marketing, and management, and the definitely price, no matter how large the market scale. From the surging success of the Japanese companies, we can clarify that high quality and low costs are not opposing postures, they are compatible, twin identities of superior practice. * Vindication of the Model T
The theory mentions that if a company forces costs and prices down and pushes quality and reliability up, customers will prefer its world-standardized products. Besides, the Model T holds the evolution of globalization. For the keep the pace of the globalization, companies know that success in a world with homogenized demand requires a search for sales opportunities in similar segments across the globe in order to achieve the economics of scale necessary to compete. The strategy of standardization not only responds to worldwide-homogenized markets but also expands those markets with aggressive low pricing. This is universal, not simply a motivation but actually a need to the companies who want to compete and dominate the global market. * The hedgehog knows
In this section, the author takes the fox and hedgehog to explain the differences between multinational corporations and global corporation. The multinational corporation knows a lot about a great many countries and congenially adapts to supposed differences, while the global corporation knows everything about one great thing-scarcity. It means the global corporation knows about the absolute need to be competitive on a worldwide basis as well as nationally and seeks constantly to drive down prices by standardizing what it sells and how it operates. In order to satisfy the people’s requirements accurately, companies need to analyze the highly standardized world market and keep the balance between price and cost. * Why Remaining Differences?
With the different cultures and nations, their needs and acceptances are different. Many of today’s differences among nations as to products and their features actually reflect the respectful accommodation of multinational corporations to what they believe is fixed local preferences. However, most executives persist with high-cost, customized multinational products and practices instead of pressing hard and pressing properly for global standardization. * Economies of scope
The economies of scope-the ability of either large or small plants to produce great varieties of relatively customized products at remarkably low costs will not dominate, but if it happens, customers will have no need to abandon special preferences. * A failure in global imagination
Many companies have tried to standardize world practice by exporting domestic products and processes without accommodation or change, but have failed miserably. Global standardization treats them as failures in execution. In fact, the failure of imagination is more imagination. Hence, when the companies enter the global market, they are supposed to analyze trade conditions and make a “proper” marketing orientation. * How to make a creative analysis
When the customers actually want the benefits of global standardization, the company should analyze what features people wants instead of what they want out of life. With no additional data but a more searching mind, interpreted a more compelling and accurate reality and supported the strategic management to adapt to the global standardization. * Accepting the inevitable
The global corporation accepts for better or for worse that technology drives consumers relentlessly toward the same common goals-alleviation of life’s burdens and the expansion of discretionary time and spending power. Its role is profoundly different from what it has been for the ordinary corporation during its brief, turbulent, and remarkably protean history. It orchestrates the twin vectors of technology and globalization for the world’s benefit. * Cracking the code of western markets
We can see that the more managerially advanced corporations have been eager to offer what customers clearly wanted rather that what was merely convenient. They have created marketing departments supported by professional market researchers of awesome and often costly proportions. In addition, the wider a company’s global reach, the greater the number of regional and national preferences it will encounter for certain product features, distribution systems, or promotional media. There will always need to be some accommodation to differences. As to what works well for one company or one place may fail for another in precisely the same place, depending on the capabilities, histories, reputations, resources, and even the cultures of both. * The earth is flat
Reality is not a fixed paradigm, dominated by immemorial customs and derived attitudes, heedless of powerful and abundant new forms. The world is becoming increasingly informed about the liberating and enhancing possibilities of modernity. The persistence of the inherited varieties of national preferences rests uneasily on increasing evidence of, and restlessness regarding, their inefficiency, costliness, and confinement. Companies that adapt to and capitalize on economic convergence can still make distinctions and adjustments in different markets. Persistent differences in the world are consistent with fundamental underlying commonalities. * Brief summary
The Text from 1983 tries to see in the future of worldwide economies, companies and trade by focusing on different aspects as history of different companies and their decisions or new worldwide “trends” (each in it’s “own chapter”). But every of these points seem to lead to the only way the future could look like:
A globalized world, in which every customer can buy the best technology, for the cheapest price by losing individuality.
Int. Marketing Group 1 / Monday 19.30-21.00