Importance of Localization to a Business - Essay Example

Encouraging sales in the local market is an goal of every business, which also assists for good competition in the market across the world. There is need for every business organization to develop a good structure that considers local factors in its operation for it to be more productive. In addition, for a business to increase the number of sales in the market, it is important to use a localization plan in which, the social, economic and political factors are considered in the day-to-day activities that a business engages in such as branding of the product, advertising and even the pricing as noted by Dunne (2006, p. 196). This essay looks at examples of successful localization, importance of localization to a business and makes recommendations of carrying out proper localization.

Localization is the act of making a product or content to fit to a specific foreign market, and can include organizing a business organization in such a way that its activities happen in a local area rather than in an international area (Dunne, 2006, p. 196). This involves making changes on the product’s characteristics and basic features so as to allow for cultural, language, legal and political differences in a particular market as stated by Dunne (2006, p. 196). According to Pym (2004, p. 29), the process of localization is mainly done to make the product and the industry able to look like it was mainly created for a certain people and market regardless of their culture, language and location. As a process, it can include looking at the local regulations and legal requirements, promoting the use of specific local formats for phone numbers, dates and addresses, coming up with a product or content that suites consumption of the product andto the tastes of other markets (Pym, 2004, p. 29).

Examples of Successful Localization

It is obvious that firms that advance localization strategy either fail or succeed on the process. This is because; localization is linked with both positive and negative consequences. Discussed in this essay as successful localization examples, is the Starbuck’s design strategy of acting local and KFC’s Explosive Growth in China.

KFC’s Explosive Growth in China

According to Maggie (2011), the Chinese market is the most populated in the world. Through localization, the Yum! Brands, the parent company of Pizza Hut and KFC, were able to outdo McDonald's and emerged as strong companies in the Chinese mainland market. In this case, Yum! China was able to expand through remaining local in the market levels. The company kept ties to the Chinese government as an important way to include the political legal structures of China and hires local management to run the industry (Maggie, 2011). Additionally, coming up with menu changes to meet the Chinese styles of eating in addition to tastes and preferences are important ways the company shows the localization strategy.

China is a huge and regionally different country. To coup with this feature of the local Chinese market, both Pizza Hut and KFC differ markedly compared to their western counterparts (Maggie, 2011). The companies have made a number of changes to cater for the quick changes in Chinese diets as income increases. It is due to this fact that these western companies have promoted their performance in the local Chinese market. Through employing local management who have information on the local cultural and economic activities the company has improved rapidly. For instance, KFC’s China division chairperson and CEO Sam Su understand that the Chinese market needs no individualism culture present in most western markets. This has been the reason for his continuous success in the market (Maggie, 2011).

Moreover, the company has made changes on its food products to meet the Chinese tastes and preferences. This is reflected in the CEO’s efforts to make the company not to be seen as a foreign company but part of the local community. To attain this, the company uses the USA fast food model and makes them serve the needs and interests of the Chinese consumers in the local market (Maggie, 2011). KFC employs Chinese managers, who understand the Chinese consumers, and the restaurant business in China which involves the traditional market. This team promotes cooperation as it undergoes less diversity due to having similar cultural Chinese background thus forming a family.

Maggie (2011) claims that, other than training and retaining most qualified staff, the sourcing of food from within the country has greatly promoted to KFC’s success in the Chinese market. The promotion of an easy supply chain and encouragement of food safety is an important issue for Chinese customers. Furthermore, this decision of building a supply chain from the ground promotes food quality, which is also a major concern for Chinese consumers. Therefore, in order to promote the company’s performance in China, the company only makes small products familiar to western products for instance corn on the cop and mashed potatoes. On the other hand, the company deals mostly with products that are Chinese based. Most menu styles are designed in relation to Chinese eating styles making the company to easily adapt to the Chinese market as indicated by Maggie (2011).

Starbucks’ Design Strategy of Acting Local

Starbucks is an international coffee shop that have positively benefited from their localization strategy. Their design strategy takes into considers the characteristics of consumers in the local markets that it operates form an important strategy for an improved performance in the company as stated by Liz (2014). The company regularly operates in markets with busy customers and this has promoted greater than before number of customers of its stores to account for the needs and interests of customers in a specific local market. In order to promote consumer interests in there stores, Starbucks has utilized good designing strategy to make the largest world coffee houses feel like a neighbourhood home (Liz, 2014). The company has also gotten more than 18000 shops across the world and branches to new places worldwide. According to Liz (2014), the company’s success is due to effective designing team that promotes consideration of cultural and social factors in the foreign markets. Although in recent past the company did not localize its brands to cater for the tastes and needs of different consumers, in 2008, the company closed some of its shops to promote change in senior leadership and design of both the products and shops (Liz, 2014).

In order to be seen local, Starbucks developed a localization strategy on their shop design. The designers are more familiar with their surrounding market and include the communities’ design stores into the designs as stated by Liz (2014). This includes making cultural observations and including them into the design as shown by the company’s thought on furniture made from the regained basketball court wood at the Barclay’s Center in Brooklyn. Through localization, local people notice things that change on their values and the aesthetics, in addition to how customers in a specific place want to experience the shop. For instance, in urban areas of the USA people tend to come in pairs or alone to the shops, they can also sit in a long community table next to strangers without any concern. On the other hand, this is different in places like China and Mexico City where customers want to do things as a group. This makes the designers to come up with different designing strategies to accommodate different consumer values and behavior (Liz, 2014).

Liz (2014) also directs that the Company creates a localized design through effective use of colours and materials to promote localization. For example, in Los Angeles and Miami the company designers utilizes a lighter palette of colours to reflect the abundance of sunlight while in the southern cities, there is use of cool furniture to sit on. These efforts of innovation have greatly promoted the success of the company in many world areas. The Starbucks management and design team has used the localization strategy effectively, more especially on their design to promote their goods and the general performance of the business (Liz, 2014).Effects of Localization on Business

Following the cases discussed in this essay, it is true that localization plays an important role in the performance and proper functioning of businesses in the local market. However, it is important to note that, a localization strategy that is not well planned can promote negative performance leading to business failure (Falck, 2007, p. 105). Among the positive effects of globalization, is the ability of an organization to meet the needs and interests of consumers in the market. Consumers are supposed to be treated as “kings”, and their tastes and preferences are important on the marketing of a company’s product. For instance, KFC’s growth and proper performance in Chinese markets is due to applying changes to their menu to meet the Chinese tastes and styles of eating (Aydogan-Dud & Chen, 2008, p. 4).

Through localization, the business organization is able to promote the creation of an effective learning organization as noted by Aydogan-Duda & Chen (2008, p. 4). Using local managers in the company’s day-to-day activities its ability to gather important information on culture and social values of consumers in the localized market is facilitated. This promotes sales since it facilitates proper customer analysis and positioning in the market. In relation to the KFC case study, the company has utilized the use its local managers as they provide crucial information in relation concerning the highly populated Chinese market. On the other side, Starbucks has accommodated a number of cultural and beauty values in the design of its shops in its localization strategy. This has made it to succeed in its foreign and local markets, as consumers do not view it as a foreign company especially in the Chinese and Mexican markets.

Furthermore, through localization business organizations have the ability to enlarge their markets thus making more profit as stated by Singh (2012, p. 148). Therefore, businesses promote customized interactions especially in their local advertising strategies as noted by Feldman & Santangelo (2008, p. 250). In relation to KFC case study, the company has benefited positively by paying attention to the language, culture and business practices in the market.

Recommendations

For businesses to carry out successful localization there are a number of factors that needs to be considered. Otherwise, poor localization strategy can promote business failure by lowering profits and a company’s sales in most cases. The following recommendations can promote an effective strategy that can lead to positive growth and performance in businesses. First, localization strategy should take into consideration the cost of implementation (Singh, 2012, p. 149). For instance, the designing of Starbucks shops largely balances the level of their design and the estimated income. Therefore, it is important for a localization strategy to be cost effective for proper performance of a business (Wang & He, 2014, p. 146). Second, a successful localization plan should consider good pricing of its products in the market. This entails changing market prices to meet the market needs (Singh, 2012, p. 148), since consumers in the market have different ability to purchase products due to various changes in the level of development. Third, for proper localization strategy, goods and content language should be utilized effectively. For instance, the advertising pictures and language should be related to the local market. Additionally, changing names of the brand to local languages can promote effective localization and branding of organizational goods.

Conclusion

In conclusion, localization is an important business strategy as it makes a business to adapt in the changing global market. This strategy holds the view that individuals are “cultural beings” whose behaviour and values are shaped with the unique and diverse culture in which they live. This strategy is aimed at understanding the local consumer tastes and other specific local requirements. Proper localization is able to save a company millions of money and assist to higher sales thus promoting profits in a business (Singh, 2012, p. 149). Esselink (2000, p. 4) notes that, localization is very important as it caters for the local consumers, for instance, in the KFC case analysed in this paper, the company aims at adapting its products in the local Chinese markets through considering the needs and interests of consumers. Trough localization, companies are able to diversify their goods and analyse the socio-cultural factors in a market, making it easy to operate easily.