Management Theories and Philosophies - Literature review Example

MANAGEMENT THEORIES AND PHILOSOPHIES By Name Course Instructor Institution City/State Date Management Theories and Philosophies Introduction Recently, because of the production processes as well as globalization of markets, progressively more entrepreneur and marketers together with business manager have to manage social responsibility and ethics issues in cross-cultural environments. According to Yücel and Dağdelen (2010, p.62), ethics on international marketing, social responsibility as well as globalization have an effect on each another. Increased globalization as per Yücel and Dağdelen (2010, p.62) resulted to lots of problems, which includes social and ethical responsibility both locally and overseas. In the previous five decades, world trade and commerce grew by almost twenty times, thus, exceeding the world industrial production that grew by almost seven folds. Both foreign direct investments and exports in this expansion, acted a crucial part in the global trade and economy (Yücel & Dağdelen, 2010, p.62). Besides the expansion of large-scaled firms, Reif (1997, p.69) posits that small businesses are as well growing their investments across borders. Currently, with technology, communication, interdependence between countries, Levitt (1983) holds the view that the demand is turning out to be homogenised while the world has become globalised borderless, and have shrink. As mentioned by Levitt, multinational companies can just survive through development of global strategies like manufacturing of goods that are standardised so as to meet homogenised global demand in an international market. Give that the globalisation’s driving forces, meant that, consumers, markets, were turning out to be more 'homogenised, consequently necessitating organisations to create corporate and international marketing production strategies that cross borders of the country (O'Curry, 2006, p.38). Levitt asserts that novel travel communication, and transportation technologies have generated a world market that is more homogenous (Kapferer, 2008, p.458). Scores of scholars concur with Levitt about the existence of a more homogenous world market; for instance, Saee (2007, p.30) posits that increasing internationalisation of buying patterns as well as tastes has resulted to feasible development of global as well as regional brands. The essay seeks critically to evaluate Levitt's view of global strategy with reference to relevant literature and theories. Critical Analysis For Levitt, globalisation of markets is signalled by globalisation, in that changes in production technology, communications, and transport together with trade liberalisation have steered the world towards a converging commonality or global village, a unified, homogenised global market based on product preferences in addition to consumer tastes (Levitt, 1983). Because of this convergence, multinational companies are manufacturing internationally standardised products so as to attain world economies of scale. This interpretation seems to be backed by growth of global products and brands such as Coca Cola, McDonald's, IKEA, and so forth (Stonehouse & Fraser, 1999). As pointed out by Stonehouse and Fraser (1999), this form of globalisation presupposes heightening connection of regional and national markets globally. Yet again, there is substantial proof of this interrelatedness; for instance, the stock exchange prices movements progressively take place in a globalised way. Besides, the rise of transnational corporations (TNC) as well as decline in multinational companies indicates that 'markets are turning out to be more globalised and demand the demand is becoming more homogenised (Head, 2007, p.48). Debatably such changes together with the subsistence of standardised products like Nike offer backing to the argument presented by Levitt that homogenised demand indicates a desire for corporations to produce products that are standardised. Still, in spite of the fact that standardised products like Big Macs and Coca Cola are turning out to be a reputable part of life globally, a number of critics have questioned the statement by Levitt; that it denotes demand turning out to be homogenised and cultural convergence. As indicated by (Howes, 2002, p.8), there exists no assurance that such goods, when they enter into a culture, will certainly communicate and retain the values, which have been bestowed by their original culture. The context through which they are gotten in the nation and used up may be exceedingly dissimilar, and lead to distinct benefits for the customer. For instance, McDonald can be considered to be reliable fast food source only for an average citizen in America, but for those with lower income, it is viewed as something rather different. Debatably, diverse views of differing nations on similar goods challenge Levitt’s perception of standardised goods (Murray & Schlacter, 1990, p.53). Levitt supports his assertion by claiming that opinion difference has never and will never stop standardised goods production (Levitt, 1983). In spite of standardised goods production, scores of global brands are frequently coerced to become accustomed to their marketing mix elements so as to achieve approval in diverse nations (Akgün et al., 2014, p.609). Examples include the marketing of Georgian Coffee by Coca Cola in Japan rather than in Georgia itself, as well as the changing of PepsiCo in Chinese market to 7-up. Besides that, McDonald in Israel is expected to abide by the kashrut laws in food preparation that prohibit a mix of milk and meat foodstuffs in kosher meal. Also, in India beef is replaced by Mutton in burgers made by McDonald, whereas in Japan food is accompanied by alternative teriyaki sauce. Therefore, challenging Levitt’s interpretation that products are turning out to be more standardised, his argument that success of corporate in the modern market relies on the standardised goods production so as to meet global homogenised demand in an international market when palpably there exists no such thing like complete standardisation (Parsons, 2007, p.95). Besides the weaknesses found in the argument presented by Levitt other scholars such as Shareef (2009, p.225) are sceptical concerning the arguments of his globalisation theory. For instance, Hirst and Thompson's in their work ‘globalisation in question’ utilises statistics that challenge Levitt’s assertion of globalisation of markets (Jones, 2010, p.108). Their statistical evidence actually exhibit the world is far from being global, instead financial flows and trade investment are concentrated in North America, Japan, and Europe, and so developing nations play almost no role in globalisation; thus, disputing the belief of globalised markets. Furthermore, statistical data show that TNCs that are genuine are somewhat uncommon, majority are based nationally and trade across the borders on the forte of national location of sales, production and assets. Moreover, flows of international capital are not as substantial as previously believed since graphs and statistics exhibit that capital flows were exceedingly higher in past eras (Griffith-Jones et al., 2002, p.41). A number of studies such as Carroll and Atasoy (2003, p.95) propose that the present global economy in some respects is to a smaller extent open and internationally cohesive as compared to the past global economy. Generally, in spite of a number of evidence supporting the globalisation notion together with Levitt’s perceptions on homogenised demand as well as the necessity for corporations to manufacture standardised products, critical analysis exhibits that the economy is yet to be completely globalised and trade (homogenised demand) is mainly concentrated in the North America, Japan, and Europe (Fotopoulos, 2001). Even if demand is turning out to be homogenised as claimed by Levitt, Stonehouse and Fraser (1999) posits that it does not certainly connect with the companies’ need to produce products that are standardised. Actually, analysis from previous studies such as Segal-Horn and Faulkner (1999, p.61) exhibit the complete reverse, that is to say, in spite of the homogenised demand, most companies output are not generally made of one standardised product; thus, opposing Levitt’s assertion that success of any company in the current international market relies on the standardised goods' production. Given that if that was the case, the current world would not largely be concentrated with corporations producing goods that are standardised. Standardisation vs. Adaptation of multinational companies According to Vrontis et al. (2009, p.478), in the past four decades academic research has broadly grown in the field of global marketing standardisation. All through this epoch, academics utilised statistical approach that were more complex. Still, they describe that competitive and economic conditions have transformed over the last four decades. In the past as stated by Vrontis et al. (2009, p.478), economic development was focussed on the surplus of exports, and not of imports. Companies concentrated only on increasing exports as well as reducing cost. Still, because of alterations in economic conditions, companies established that minimisation of cost was insufficient. Through evolution, companies turned out to be more oriented towards the consumer and more complex tools were produced and used so as to determine and fulfil the needs of the customers. Standardisation advocates such as a Levitt viewed markets as progressively more global and homogeneous in scale and scope and alleged that the key for growth as well as survival is the ability of the multinational company to standardise their products and services (Levitt, 1983). Standardisation advocates argue that the requirements, wants and needs of customers do not differ considerably across nations or markets (Vrontis & Thrassou, 2013, p.295). The general theoretical argument is that the world is turning out to be more and similar based on customer requirements as well as environmental factors and regardless of topographical locations, the demands of the customers are the same. For instance, Levitt claimed that the marketing mix standardisation together with the formation of one strategy for the whole international market provides economies of scale in marketing and production and also is in line with mobile consumer (Levitt, 1983). Adaptation proponents, on the other hand, like Kashani (1989) pointed out complications in applying a standardised approach and for that reason support adaptation and tailoring of the market so as to fit the distinctive dimensions of various global markets, writes Thrassou and Vrontis (2006, p.184). Precisely, factions of the global adaptation doctrine assert that there are overwhelming variances between nations and even between regions of a country. In this case, as posited by Thrassou and Vrontis (2006, p.185) marketers are dependent on numerous macro-environmental factors, like topography, race, society, technology and culture. Global standardisation proponents posit that consumers stay in a globalized world wherein countries or regions within a country are not the key factors of marketing processes; and wherein cultures and tastes of the customers are homogenised as well as satisfied by means of standardised global products produced by multinational companies (Vrontis et al., 2009, p.479). According to Levitt, companies that are well-managed shifted its focus from tailoring items, to providing internationally standardised products that were cheap, reliable, functional, and advanced. Levitt further notes that MNC that focus on particular preferences of the consumer become confused and powerless to understand the forestry owing to the distinctive attribute of individual environment (Levitt, 1983). In echoing Levitt assertion, Papavassiliou and Stathakopoulos (1997, p.505) posits that MNCs will realize lasting success by focusing on what everybody needs instead of concentrating on the particulars of what everybody likes. The reasons why Levitt’s assertion is appealing according to Papavassiliou and Stathakopoulos (1997, p.505) is because; first, it permits MNCs to keep a consistent brand identity and image globally and it also reduces misperception amongst consumers that travel. Another reason is that it enables MNCs to create one tactical approach and also allows the companies to capitalise on the economies of scale in experience and production as well as learning curve effects. As pointed out by Levitt, tactical utilisation of global standardisation is of vital significance given that globalisation of markets is still at hand. As stated by Vrontis et al. (2009, p.482), MNC functioning with firm constancy, at relatively low cost, may treat the whole world as one entity and trade same products similarly in all places. With the growth as well as emergence of such novel astute global entities, Vrontis et al. (2009, p.482) posit that traditional global adaptive strategies, which regulate practices and products in all markets across the globe, are almost extinct. According to Lambin and Schuiling (2012, p.210), standardised global marketing is akin to undifferentiated target marketing (mass marketing) in one country and it entails the generation of the similar marketing mix for a wider mass market of promising consumers. MNC and Regional Strategy Basically, the conceptualisation as well as simplification of standardisation is challenged by proponents of the global adaptation approach, who respond openly to the far-reaching polemic assertion of Levitt (Vrontis & Thrassou, 2007, p.8). Adaptation proponents explain that the presumption emphasizing philosophy of global standardisation is gainsaid by the evidences. At best standardisation is challenging and at worst is unfeasible, says Vrontis and Thrassou, (2007, p.8). Globalisation as per Vrontis and Thrassou (2007, p.8) appears to be as much exaggeration as it is a philosophy. Vrontis and Thrassou (2007) further argue that it is not possible to effectively market through utilisation of the similar marketing mix approaches as well as strategies ubiquitously. Besides that, the basic standardisation approach supposition by Levitt is challenged by Franklin (2010) who argue that same purchasing intentions for consumers globally may, at best, be one-dimensional and at worst, risky. Therefore, international adaptation proponents argue that tailoring elements of marketing mix is vital and essential in meeting the target markets’ wants as well as needs. In their view, elements of marketing mix are hard to standardise, since global markets are bound by differential micro- and macro-environmental conflicts, limitations and factors. This regional theory development has recently achieved momentum in the MNC research field and different new theoretical concepts and findings have surfaced challenging Levitt assertion. This MNC theory polarization generates the present theoretical condition, which is out-of-focus and lots of novel concepts have materialized. Considering the overall recognition of globalization together with its possible benefits, scores of studies on organizational structures as well as strategies as pointed out in Vrontis and Thrassou (2007, p.9,) particularly that of MNCs, have utilised global strategies in explaining various organizational structures and strategies debatably offering larger competitive advantage by providing economies of scale by means of standardization so as to use the advantage of a globalising market (Mintzberg & Lampel, 1999; Segal-Horn, 2004). The past prevailing theoretical certainty of the world as a progressively more global market has recently been confronted by scholars claiming they have empirical proof that the global markets are actually internationalizing in an opposing direction. In theory, known as regionalization, this theory point out that multinational companies are actually focusing on region and global. Scholars, in support of regionalization for this reason talk about the importance and need for regional strategy as an improved fit for the regional environmental nature. As stated by Vrontis and Thrassou (2007, p.10) this necessity for different regional strategies is a crucial remark as scores of distinguished strategy as well as IB scholars continue creating normative models, which support simple strategies of globalization as a cluster of purposive actions as well as decisions influential in deepening and broadening foreign markets penetration. Besides the two differentiated streams of the trends in the internationalized environment there are scholars supporting a third construct. Developing as an agreement between regionalization as well as globalization theory, according to semi-globalization theory, the markets of the world are actually regional, but different from stable regionalization nature, semi-globalization according to Head (2007) is predictably shifting towards globalization. Basically this theory recognizes the present regionalization state as well as the trend towards globalization, even though not as aggressive and fast which support globalization theory. The erstwhile fruitful and strong theoretical debates concerning semi-global, global, or regional, global constructs have in the previous years, had noteworthy effect on the research about MNC as construct of regional structure and strategy have achieved significance and is advocated to be a fruitful method of optimally performing on an international level. Therefore looking for the correct structural as well as strategic fit in terms of products, industry and environment has turned out to be more and more important. Multinational companies have grown to be analysis subject given that over fifty thousand companies have majority of the world’s investment as well as trade. Due to the dissimilarities in legal and cultural environments, for example, in Germany, it is prohibited to utilize any comparative advertising, and television advertisement is strictly regulated in scores of countries. For example, in the evening, Kuwaiti government allows just 32 minutes of advertising every day in controlled TV network. In order to compete in a global market, Vrontis and Thrassou, (2007, p.9) posit that MNCs may utilize numerous fundamental entry strategies: a transnational strategy, a global strategy, a multi-domestic strategy, and an international strategy. MNCs pursuing international strategy transfer knowledge together with products produced from idiosyncratic know-hows to foreign markets, whereas performing restricted local customization. Besides that, MNCs using a multi-domestic strategy tailor their marketing strategy, product offering, as well as business strategy to conditions at national level. MNCs applying a global strategy concentrate on earning reductions in cost that emerge from location economies as well as experience curve effects. Lastly, MNCs using a transnational strategy embroil a coinciding concentration on cutting costs, transferring knowledge and products, as well as improving local approachability. But as mentioned by Segal-Horn (2004) putting this strategy into practice is exceedingly hard due to concurrent pressures surfacing from local responsiveness and cost reductions. Conclusion In conclusion, it has been argued that globalisation has developed into a widespread phenomenon in the last two decades to an extent than nobody is astounded at all to find global brands such as Coca Cola in remote places across the globe. Thanks to the exposure that large MNCs have experienced, product portfolios have turn into routine realism for majority of persons across the globe. Besides that, strategizing globally as mentioned by Levitt has recently been the catchphrase for MNCs so as to capitalise on arbitrage and synergies around the regions and get international success. Still, global strategies in the past years have been theoretically criticised by scholars who hold the view that in spite of the globalization trend there are less MNCs that are actually global, but instead appear to structure and strategize at regional level. 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