Relationship of Regionalism and Globalism - Essay Example

Business of Introduction There is a growing debate whether firms should use globalism or regionalism as their chosen approach. Globalism of a business indicates their international integration through the interchange of products, world views, cultural aspects and ideas (Hambleton, Savitch & Stewart, 2002). International marketing principle influence companies to have a consistent global strategy when they are operating internationally but they also need to adapt different tactical approaches to successfully operate in their targeted local market. On the other hand regionalisation of a business explains the process of dividing the large market into small regional segments and formulating the product and ideas as per the difference in regional demand and cultural aspects (Coleman, Jacek, Schmitter & Cawson, 1989. A very well known approach by multinational companies for their global strategy is to think globally and act locally. This view has been adapted by a large number of Multinational organisations and it has been proven as a successful theory. Various researches have proven that a debate over the usage of adaptation and standardisation in any organisation commenced in the year of 1961. After half a century the debate is still on (De Martino, Mc Hardy Reid & Zygliodopoulos, 2006). Various arguments have shown that regionalism of any organisation can be better than the globalism strategies. This report expands on the existing theories and works on this subject to understand the complex relationship of these two approaches and it also supports the view that businesses are more inclined towards the regionalism of their operation than globalism. Globalism of business operation Globalism promotes communication across the borders and helps organisation to successfully satisfy the requirement of consumers and market. This process involves changes of political and economic spheres of any organisation. It also helps in bringing the world together. Researchers argue that the basis of the globalisation of any organisation is to compare the market operation in the home market with the operations in the foreign market. They also have mentioned that global standardization helps organisations to operate at a low production cost. It also helps them to treat the entire world as a single market and sell similar product in a same way everywhere (Parnell, 2006). Several factors help an organisation in the selection of their globalism strategies and tactics. These factors involve company-wide commitment, proper business plan for the access of the global market, investment decision for international expansion and proper product and pricing selection to take over the foreign market (Cohendet, Kern, Mehmanpazir & Munier, 1999). The supporters of globalisation have commented that needs, wants and demands of consumers in different market across the world are not very different and the world is becoming increasingly similar in terms of customer requirements. They also explained that irrespective of the difference in geographical location; most of the customers have similar demands of products (Parnell, 2006). Researchers have argued that standardisation of various elements of marketing mix and creating a single strategy for the market influence an organisation to achieve economies of scale for their production and product marketing. They have also mentioned that standardization will only be successful if there is homogeneity in the responses of customers and similarity in the economic freedom (Cohendet, Kern, Mehmanpazir & Munier, 1999. Globalism of organisation provides them economical benefits. An MNC when operating in the larger market, it needs to increase its production level which helps them in fostering standardization and their economies of scale. Another advantage is related to the change in cultural backgrounds of the consumers. Global media has created a global culture among the consumers and it promotes the demand of a higher quality and lower priced standardised product in comparison to distinctive localized product or services. This helps organisations to address the requirements of customers from different markets with a common product or service. This benefit of globalism is completely opposed by researchers of international regionalism approach. They have explained that globalism helps an organisation to create a brand value but it narrows down the targeted customers as well (Parnell, 2006). Various researchers have contradicted the theories of globalism and they have explained that globalism theories are very difficult and impractical in terms of application in the different locations of global market. The supporters of regionalism have also explained that rather than standardisation of marketing mix, tailoring those elements is essential to meet the needs and wants of different targeted market (Cohendet, Kern, Mehmanpazir & Munier, 1999). When any organisation focuses on international marketing, it goes beyond the procedure of only exporting their products to the targeted market and become more involved in understanding the needs and demands of local marketing environment (Parnell, 2006). Global standardisation of organisation and products has some other disadvantages as well. The degree of market penetration of a standardized company is very low in countries or regions with special needs. Uniform product may fail to attract few local markets those have a demand of customized products. In those markets they can face a fierce competition with the local customized products and they may face loss as well. Standardisation of products may stifle the creativity and particularity of product design of that company (Parnell, 2006). Technological processes in the production sectors are becoming more homogeneous which make the product standardization procedure more cost effective. As per example, the taste of drinks offered by Coca-Cola Company is similar for all the market they serve. The international market operation of Coca-Cola Company can be described as one of the examples for organisation globalism. Their market strategies play a vital role in successful globalization of the company. Their advertising slogan and jingles are very catchy and they are popular within the consumers around the world. Uniform product offering of Coca-Cola Company for all the locations around the globe supports their globalization vision. They offer similar kind of product in similar packaging for all the global location they are operating. Technological advancement helps Coca-Cola to globalize rapidly. Product transportation across borders becomes easier by the use of cargo ships, jet aircraft, trucks and trains. This brand is not following the taste and health preferences of different local markets. This rigidness is prohibiting them to target the customers who do not like the taste of cola and soda. On the other hand various local juice brands such as Tropicana and Dabur real are capturing the local market by providing products which supports local taste preferences (The Saylor Foundation, 2012). The publicity procedures adapted by Nestle are similar for all their products in every part of the world. The competitors of Nestle such as Britannia, Heritage foods, Hatsun Argo is capturing the local markets of different regions very quickly. These companies are giving a very tough competition in the current market with their customized products and promotional activities (The Saylor Foundation, 2012). The famous worker class beer of Corona has eight manufacturing plants across Mexico and their product is very famous in the Mexican market. They do not customise their products as per the preference of different parts of the market. This production strategy has adversely affected their business ventures in various parts of US (Filippaios & Rama, 2008). The case of regionalism of business operations Various researchers have defined regionalism as a state-led project which is designed to understand the unique features and requirements of particular locations. Some other researchers have also described regionalism as a project whose aim is to recognise particular geo-economic places (Summers, 1991). Localizing or regionalism of any business process implies that the firm customizes their product or services as per the different needs of the various regions of their market. Strict localisation of the products and services of any firm is necessary to attract a huge number of customers outside its host country. Adaptation with the local market demand also helps them to properly penetrate each of the market they are operating. As per researchers there are invincible differences between countries and regions of those countries. They also argued that organisations need to face a number of macro-environmental factors such as, occupation, law, climate, topography, race, taste, technology and society. These differences between countries and their macro-economic factors do not allow any organisation with uniform product to gain desired success in the market (Mansfield & Milner, 1999). Various business activities of large firms take place in regional locations. Homogenised strategies may not succeed in those regional locations. Apart from few industries such as consumer electronics industry, most organisations and manufacturers are adapting regionalism in their business approach. Most of the automobile industries are regionalized as they are producing different vehicles for different location of the world (De Martino, Mc Hardy Reid & Zygliodopoulos, 2006). Few instances have shown that global strategies are not that easy to implement. Various multinational organisations have faced issues related to the implementation of their well designed global strategies (Parnell, 2006). Vitamin fortified Cornflakes is a very popular brand of Kellogg Company. This product is very famous in their host country, USA, but people of Denmark and Netherlands are totally against the composition of that product. Consumers of these locations are unwilling to buy any breakfast products with vitamin supplements as they are afraid of the adverse effect of wrong vitamin dosage. As a result, Kellogg plants in Germany and England have introduced four different types of Cornflakes to satisfy the demand of this region (Filippaios & Rama, 2008). Regionalism helps organisations to set a price range as per the economic condition of the region and the income ratio of the people. This helps them to broaden the customer database in a particular location (Mansfield & Milner, 1999). Economic regionalism has been adopted by companies like Nokia. They offer affordable mobile phones with basic features in various economically challenged areas of Africa and advanced and expensive handsets for developed parts of North America and Europe (De Martino, Mc Hardy Reid & Zygliodopoulos, 2006). Various researchers have considered regionalism as the stepping stone in the process of successful globalism. Various analyses have shown that regionalism challenges the procedure of globalism. Regionalism can serve as a resistance for the success of globalism (De Martino, Mc Hardy Reid & Zygliodopoulos, 2006). The cost of regionalism business approach is quite high than globalism but this approach confirms a huge gain from various parts of the world. A number of states in various regions always make an effort to form regional organisations. They tend to set rules and regulations for these organisations as per the norms of their values and cultures. Globalisation of products will not be suitable for these locations. Organisations need to customize the products and services as per the norm of these regions to gain competitive advantage in these markets (Mansfield & Milner, 1999). Business strategies of McDonalds are an important example of the regionalism of products. Their burger stuffing varies from region to region as per the food habit of the location. They provide pork and ham burgers in their US business division but they totally prohibit these stuffing for their Indian business hubs due to the differences in the food habits (IMS Marketing, 2013). The cultural beliefs of different locations also promote regionalism of businesses. Various signs, colours and slogans used in packaging can be interpreted differently by different cultures. Globalisation of any particular symbol or colour for product promotion can hurt the cultural beliefs of various regions. Therefore, it can adversely affect the business of that product in that region. Redbull energy drink has introduced different packaging for North America and China. The silver background of the can offered in North America is a symbol of courage where the golden background for China symbolizes wealth and happiness (IMS Marketing, 2013). Understanding the requirement of targeted consumers is extremely essential for marketers. In case of standardisation of products, it is very difficult to consider the entire requirement from different parts of globe. Standardisation of products and services may discourage a huge number of customers. For an example it can be said that the shaving experience is different for different regions. Rural regions do not prefer to use electronic shaving machines; they favour to use as less water as possible. P&G has introduced a new feature of easy rinse for these particular regions to minimize their water usage for shaving. They also have introduced easy grip razors for the ease of shaving (De Martino, Mc Hardy Reid & Zygliodopoulos, 2006). Various organisations which are successful in their host countries have faced failure in different geographical location due to lack of adaptation. Holland and Barrett (H&B) is a well-known food retailer in UK. Their business venture in China was a failure as they did not adjust with the local cost and price as per the economic condition of China. They were also not a widely known global market outside Europe and they did not adapt any customized promotional method for various parts of China. Therefore, a huge portion of consumers over China was unaware about the brand. Almost all the products offered by this brand are following the needs of European taste and cultures and they did not modify their offerings according to the needs and demands of Chinese cultures. This has caused them to meet the requirement of a huge portion of Chinese market (Reardon, Timmer, Barrett & Berdegué, 2003). During the international expansion of IKEA, Japan was the first Asian country which they chose to do business with. Before entering the market they have not customised their product and services as per the culture, lifestyle and behaviour of that particular location. Therefore, IKEA had faced a huge failure in the Japanese market and they needed to withdraw their stores from Japan (Jonsson, 2008). Conclusion The study of various researchers’ views, arguments and organisational examples of globalism and regionalism has established the importance of organisation’s regionalism approach. It helps them to create a strong position in different segment of global market. The discussion has also explained that it is irrelevant for any business to attempt a complete homogenisation of the elements of marketing mix. Cultural, economical and environmental differences of different location influence organisations to modify the marketing mix elements as per the requirement. The global standardization approach helps an organisation to reduce its production cost. It also helps the organisation maintain the standard and quality of their products across the globe. Due to globalisation of business process organisations can also face failure in business. On the other hand cultural, economical and life style differences can divert consumers from global brand to local customized brands. Regionalism approach of any organisation causes high production cost for them as organisations needs to invest in different types of production procedures and promotion for various locations. These businesses can generate a high profit by attracting more customers from their targeted regions and this will help them to generate investment for the different production procedures. All the major global companies need to follow the regionalism approaches for the successful placement of their product in different market. Therefore, it can be concluded that the business operations are following regionalism for success rather than globalism. References Cohendet, P., Kern, F., Mehmanpazir, B., & Munier, F. (1999). Knowledge coordination, competence creation and integrated networks in globalised firms. Cambridge Journal of Economics, 23(2), 225-241. Coleman, W. D., Jacek, H. J., Schmitter, P. C., & Cawson, A. (1989). Regionalism, business interests and public policy. New York: Sage. De Martino, R., Mc Hardy Reid, D., & Zygliodopoulos, S. C. (2006). Balancing localization and globalization: exploring the impact of firm internationalization on a regional cluster. Entrepreneurship and Regional Development, 18(1), 1-24. Filippaios, F., & Rama, R. (2008). Globalisation or regionalisation? The strategies of the world’s largest food and beverage MNEs. 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H. (1991).Regionalism and the World Trading System. Retrieved from http://testing.kc.frb.org/publicat/sympos/1991/S91summe.pdf The Saylor Foundation. (2012). Globalization and the Coca-Cola Company. Retrieved from http://www.saylor.org/site/wp-content/uploads/2013/02/BUS208-2.5.6-Globalization-and-The-Coca-Cola-Company-FINAL.pdf Read More