Globalization Parker Pen Company - Case Study Example

Globalization: A Case study of Parker Pen Company of Presenter Presented Introduction The word globalization can be interpreted variously. It is whereby societies in the world move into a one, merged entity. There is an integration of ideas and movement of goods too. The aim of this phenomenon is to produce seamless societies. As the world becomes more homogenous, differences between societies are set to fade away (Sheil, 2001). In the world of economics, markets become the same with no or little distinguishing attributes. As a result, companies try to produce homogenous products to serve this emerging market. It brings together forces of economy, technology and politics of the world (Kay, 2007). When the word globalization is mentioned, what comes to the mind of many people is the economic aspect of it (Milward, 2003). This is whereby the national economies are absorbed into the international economy. This occurs in many forms. It can be through trade and foreign direct investment. This is whereby businesses produce goods for the world market and trade takes place between countries as opposed to within the country. Investors from one country have the freedom of investing in countries outside their homeland (Sheil, 2001). Another aspect of economic globalization is whereby there is flowing of capital and migration of people from one country to the other (Kay, 2007). There is also the spreading of technological innovations between countries. At the end of the day, the borders between countries of the world are merged. The world becomes one big village (Gerry, 2006). For this to take place, it is important to take away the barriers to trade between different countries. These are the hindrances that act as stumbling blocks to globalization. For globalization to take place, many adjustments have to be made (Crook, 2008). This is both by the government of the country and also the individual businesses. These changes has to reflect the reality of the world in which the concerned desired to play in. as these adjustments are made, some individuals succeeds while others fall by the way side (Crook, 2008). This presentation aims at putting the globalisation process in the context of business adjustment. It has taken as its case sample the experiences of the Parker Pen Company and how globalisation affected it. Globalisation at Parker Pen Company This company opened business in the year 1891. It was named after its starter, George Safford Parker. It is located in Janesville, Wisconsin. This is in the United States of America. Safford was a sales agent for another pen company before he started his own business. This company was called John Holland Gold Pen. Parker got a patent for his initial pen in the year 1889. It was a fountain pen. He became one of the best known players in the world of writing instruments. The products of his company were sold in more than one hundred and fifty countries in the world. Within thirty years, Parker had subsidiaries in more than ten countries. These included Canada, France, and Mexico amongst others. Problems started to plague Parker in the 1980's. The previous two decades had been marked by huge profits and increased revenue in general. The change in the world markets in the 1980's was the undoing of this company (Giddens, 2003). Japan has started selling cheap disposable pens. This was done en masse. Pens like Bic were introduced around this time. It is important to keep in mind the fact that Parkers pen were top of the range. Its marketing strategy was done using departmental and stationery stores. This meant that the common man had no access to these pens (Giddens, 2003). Its profits started going down. More than eighty percent of this company sale was done abroad. This meant that it was exposed to the fluctuations of the dollar. This is what happened in the 1980's. The dollar strengthened. There was the risk of losing the market niche that it hitherto enjoyed. Something had to be done quickly to salvage the situation (Crook, 2008). One of the things that were done was to hire a new president for the company. This was done in the January of 1982. A guy named James R. Peterson was selected to fill this post. He was from another company that was called R.J. Reynolds. At his old company, he has seen the wonders of globalisation (Milward, 2003). He was the one who introduced globalisation to Parker Pens. These are some of the changes that Peterson introduced to the company. He was of the view hat the company could only be salvaged by introducing global marketing. He launched his campaign in 1984. Peterson realised that for the company to play effectively in the global market, it had to cut down on its costs. One of the cuts should be done in the production process. That is why he slashed the pay of the existing employees (Kay, 2007). This reduced the amount of wages that the company was paying to its employees thus saving it some overhead costs. The employees were bound to become disillusioned but this has to be done. It was what was done everywhere for a company to remain relevant in the market. Initially, the production line for the company was large. It was 500 in total. Peterson reduced it to 100, a reduction of eighty percent. He harmonised the production operations in the company. He realised that the main plant of the company was old. So, new state of the art technology was brought in. This was in the spirit of one of the requirements of globalisation that calls for the adoption of new technology to put the company on the edge (Sheil, 2001). Another change that Peterson brought was in the advertising of the company's products. Initially, every subsidiary had its own mode of advertising techniques depending on the uniqueness of the market that it was serving. This is because every subsidiary was semi-autonomous before the era of Peterson. Milward (2003) says that in the regional economy, as opposed to the global one, every market is taken to be unique in its own way. That was why the Parker subsidiaries were advertising in a unique way to their market. Peterson hired a single advertising firm to do the marketing world wide. This was Ogilvy and Mather. Many agencies that were doing marketing for the subsidiaries had their contracts cancelled. This included Lowe Howard-Spink that was in Europe. The pens of this company were to be marketed uniformly in the whole world. The make was the same, just like how products for a global market are made (Sheil, 2001). The products will be placed uniformly in the market. The creative strategy for advertising will be uniform, regardless of the model of the pen. The graphics and pictures will be the same. The company in fact introduced a logo that was to be applied universally. The materials to produce the adverts will be the same everywhere in the world. To drive this point home, the company launched a slogan that was to be used in the global marketing. The slogan called for people to make a mark with the pen of this company. The campaigned kicked off in October of 1984. The epicentre was to be the London headquarters. The only thing that set these adverts apart throughout the world was only the language. This had to go with the regions. Peterson made efforts to infiltrate the clients at the bottom of the market. This is a market segment that had been neglected by the company before. This was in line with one of the tenets of globalisation of producing for everyone (Gerry, 2006). To capture this market, the company had to produce cheap and disposable pens that had never been produced in this company. The aim was to sell cheaply but in large numbers. Btu the company did not abandon their top of the range clients. They just expanded their coverage to include the hitherto abandoned market of low income earners. Peterson also introduced change in the management of the company. This was especially so in the management of the firms' marketing processes. Three new men were hired and given the title of group Marketing. They had experiences in world markets. They were Richard Swart. He became the group's deputy president for marketing the writing instruments. The other was Jack Marks. He was heading the advertisement of writing instruments. The third was Carlos Del Nero. He was to manage the market plan for the global operations. All these people were experienced in their field and the plan was to tap their creativity to move the company products to new heights in the world market. Swart was the one overseeing the implementation of the uniform advertisement strategy. He said that these plans were only been taken as a launching pad. Eventually, they will take regional adaptation into consideration. They were to be flexible. But this was just an empty promise. It was never to be. Problems that Faced Globalisation Efforts at Parker Pen Company A lot of unforeseen problems were encountered in this process. Crook (2008) says that not all efforts carried out in the name of globalisation do succeed. Some are total failures. Parker encountered several challenges in its adjustment to the world market efforts. The first problem arose in the production line. Peterson had erected a state of the art plant that had cost more than 10 million dollars. Unfortunately, this kept breaking down now and then. The result was that production cost went up. This was aggravated by the repairs and maintenance expenses for this plant. The number of defective pens coming out of the assembly line rose. This was a blow in competing with other products in the world market. It is well known that when a business enters the world market, it has to contend with many players than when it was regional (Giddens, 2003). A defective product cannot compete since people will opt for the best always. The marketing strategy experienced some problems too. The one product for one world dictum especially encountered some strong opposition. Sheil (2001) says that a company adjusting for the world market faces opposition even from within. This was the case with Parker Pens. Many branches of the company were opposed to the unification of the product and marketing technique. They believed that even though the product was the same, people should realise that the markets were not the same. Some markets could only go for the top of the range pens while others were for the cheap ones. Marketing strategy could not be the same in different markets (Milward, 2003). Some could be captured by sophisticated adverts while for others, only dirty marketing could do. In the United States of America, their products suffered a dent in its image. This was because of the mass distribution technique. The availability of cheap and disposable Parker Pens did not do the products any good. It lost its appeal as the pen for the top of the range individuals. Since it was now cheaply available, it did not act as a distinguishing factor for the well endowed in the society. It was shunned by the elite as pen of the masses. This is what happens when a product is readily available, the market is diluted (Kay, 2007). The company recorded a loss of more than twenty million dollars as a result of this. This was in the year 1985, the first year of the globalisation campaign. This culminated in conflicts amongst the top organs of the company. People started being disillusioned by this globalisation thing. It is a fact every change encounters opposition from the conservatives. This is especially so for globalisation (Giddens, 2003). But perhaps for Parkers Pen, the conservatives were justified. Globalisation brought nothing but losses and loss of markets. Then board of directors were especially irked by this turn of events. They started opposing globalisation. They were especially angered by the proponents of this strategy. This included Peterson and his three managers. Peterson called it quits in January of 1985. This was after just three years as the president, and one year to the globalisation campaign. One of his lieutenants, Carlos, exited three months after Peterson. The other two, Richard and Jack, were fired. The former in May and the latter in June of the same year. Miscalculations of Peterson and his Team The mistakes made by this president and his team can be broadly categorised into two. This was especially in the marketing aspect of the globalisation effort: First, decisions affecting the marketing technique were made in the headquarters. This was important decisions that were to affect the worldwide market of the products. Even where it had subsidiaries, it took expatriates there. This is opposed to hiring locals who know the dynamics of the specific market. The expatriates were not conversant with the global market aspect of the local market. Gerry (2006) says that they are prone to making decisions based on their self experience which does not apply to the local situation. The name selected and technique used to market their products was not effective. This is because in some markets, people did not identify with the ideas and they were foreign to them. As a result, people (local consumers), did not own the products. They felt alienated (Milward, 2003). The other miscalculation was in the production of the low priced pen. It tried to get into the market using the new products as a launching pad. They were also concerned so much with cutting down the costs of production. Instead, Peterson should have concentrated on infiltrating the market using the already existing product. In seeking to widen the profit margin, Peterson abandoned the one brand strategy aimed for the top market. He went for mass production. The selling of cheap pens contradicted the image that the company has cultivated all along. They forgot that it was not only a pen they were selling, but a status symbol. They also cut down on advertisements. This was another miscalculation. This is because they did not take into consideration the response of their competitors to this. Is Globalisation Strategy Viable for Their Kind of Products' It is true that globalisation can be sound for this industry. It is applicable for writing instruments. The only problem why the plan failed was how they went about implementing it. They made some mistakes that they paid for dearly. Parker concentrated power in one place. That was in the London headquarters. The office wielded a lot of influence on how the products were marketed. A mistake made in such a situation will have a far reaching effect. This is opposed to a mistake made in one branch in a devolved power and influence scenario (Milward, 2003). If an autonomous out station makes a mistake, it will have little or no effect in the operations of the others. There was little or no communication between the outstations. This was because every correspondence had to be passed through London. Thus, rarely did one subsidiary know what the other was up to. They were only controlled through London, all of them. This is not the spirit of globalisation since every sub station should ideally know what the other is doing (Crook, 2008). The subsidiaries were alienated. All decisions concerning the operation of the local branch came from London. Decision making should be shared and all inclusive (Giddens, 2003). Strategies made by the elite in London did not have the desired effect. This considering the fact that they were meant to be global in application. The morale of the staff at the subsidiary was eroded. This is because they were controlled by a foreigner and had no say in the running of the company. Another implementation blunder was in the way they marketed their products. It was centralised. Everything was made the same and marketed the same way. Peterson forgot that even in a global market, all markets are not the same (Sheil, 2001). Variations would be found from one market to the other. Products for global market are made the same way generally. But what differs is how they are handled in different markets (Gerry, 2006). There should be adaptations in tastes and name. This will ensure that every product resonates with the targeted consumer. Parker did none of this. As a result, their products were taken as alien in some markets. Should Parker Pen be the Criteria for Judging Globalisation' Peterson's experiment should not be used to judge this phenomenon. Giddens (2003) says that the reasons why many businesses fall in the process of adjusting to this phenomenon are varied. And these are the same reasons that made Parker Pen to fall. Some myths and interpretations about this concept have led to the collapse of many businesses. Parker took these myths blindly. It did not question them. As a result, it did not benefit from globalisation. It thought that by simply establishing itself in the international market, it has globalised. This is not true. There must be connection in the dynamics of the markets across the countries (Milward, 2003). Parker thought that globalisation means acting the same way in every situation. This is like selling one product to every market. There must be adaptation to the local scenario (Crook, 2008). Parker did not take the local communities into consideration when getting into new markets. It thought that it should be without borders and ties with the locals are not important. Another reason that we should not take this experience as the judge for globalisation is the following. When we globalise, it does not mean that we forget about our values (Gerry, 2006). This is what parker did. It discarded the national image of their target market. It also abandoned the country values of the target market. This it did by failing to adopt their products to the situation in the local environment. People could not buy things that were foreign to them. It is against their national pride. We are citizens of our country before we become citizens of the world. Conclusion When businesses aspire to globalise, they should take several things into consideration. They should integrate every aspect of their product. This includes the production and distribution of their product. This is as opposed into introducing the same product to every market (Kay, 2007). The culture of the target market should not be ignored together with its uniqueness. Communication between subsidiaries should be encouraged to avoid the Parker debacle. When applied correctly, globalisation has a lot of benefits. It leads to the expansion of the market available for one's product (Milward, 2003). As a result, there is growth and development in those economies that are globalised. This in turn leads to improved living standards for the citizenry. Poverty level in these economies is drastically reduced. It fosters peace in the world. No two countries that depend on each other economically will engage in war (Giddens, 2007). This is because both of them will suffer. But it also comes with problems. These include exploitation of the weaker economies who cannot handle competition amongst others. References Crook,H., (2008). Parker pen in deep ink. John Willy and Company. Boston. Gerry,W., (2006). Expert analysis of globalisation. Irwin. New York. Giddens,B., (2003). How lives have been redefined by globalisation. Prentice Publishers. New York. Kay,D., (2007). Threat of globalisation to man. Free Publishers. London. Milward,B., (2003). How societies have adopted to globalisation. John Willy and Company. Boston. Sheil,H., (2001). Impacts of globalisation. Irwin. New York. Read More