The Globalization of Markets - Essay Example

Globalization of Market Globalization of Markets Question The climate of conducting business today has been characterized by homogeneity of consumers irrespective of the demographic alienated backgrounds. Technology has been the driving factor in this trend. It has contributed hugely to globalization as people from both high end society and isolated places are able to connect. Interestingly, it has created a new commercial reality that standardizing consumer’s products in the global market and companies can use the concept to have leverage over their rivals (Theodore, 1984). Globalization in the market has created homogeneity of consumers as regional differences play little role on either the profits realized by companies or prices pegged to products. Consequently multinational commercial and corporation approaching exit. Thus,Multinational Corporations are commonly known as that have their operations based in more than one country and it’s characterized by accruing relatively high costs to its products. On the other hand, global corporation operates by standardizing its products at relatively low cost. The broad worldwide markets under which these companies operate are viewed as an entity (Theodore, 1984). In reference to the contrast between globalization and multinational, communication is the major tool that has contributed to modernity. In addition, the homogeneity of needs and desires world over has rendered multinational corporation redundant while the global corporation the ideal strategy to competitively survive. Global communality due to technology is attributed to the success of global companies such as Mc Donald, Coca-Cola, Pepsi Cola et cetera. Their products are sold everywhere and embraced by everybody. However, it is perceived that trade barriers have been the greatest impediments to greater success of these companies. They have a commonality in financing, distributing, and pricing of products across the market dynamics. Their strategy is the application of the right values which entail how they price their products, the quality of products offered, reliability and efficient delivery of these products in a manner that resonates with the global community. Japanese Companies have been using the global corporation strategy differently, though the quality of their products is debated as it is perceived that their products are of low quality hence low prices. However, quality of products does not always commensurate with cost (Theodore, 1984). Theodore’s model vindicates that companies lowering cost and prices, and elevating quality and reliability besides ensuring that the products are suitable to consumers, is key to standardization of products in the global corporation strategy. It’s a strategy Japanese have highly embraced. Mostly, big companies that operate within a country or a section of that country don’t standardize their operations. Interestingly, some thrive due to the uniqueness of the market segment of the demographic operations. In situations where global companies are facing stiff competition from such companies, they tend to readjust to conform after exhausting all the possible alternatives. These companies find it difficult to expand globally as global competition is likely to end territorial domination. When global companies offer quality products at lower prices, their consumer support expand. Multinational corporations adapt to differences among countries of operation while global corporations knows the need to be competitive in the business arena by standardizing sales and operations with the aim of converging their market globally. They are driven by the notion of scarcity (Theodore, 1984). Modern production of goods on wide scale is relatively cheaper. Some of the differences on nations that multinational corporations capitalize on fade with time due to modernization accrued to increase in technological knowhow. Despite, all these vindications, there is a line of argument that illuminate that economies of scope will play to the hands of multinational companies due to computer-aided design and manufacturing. This is a delusion since these techniques will be available to all. The other perceived barrier to globalization of markets is barrier to superior technology which is normally bound to failure. Witnessed failure of globalization, though, has been due to standardization through domestication of products without change and poor creative analysis. Global companies acknowledge that is the sole driver of consumers towards similar goals. The concept of the T model challenges tradition since business realities indicate that divergence happen all the time. Levitt’s vindications should not go unchallenged without filtering them filtered in the screens of truth and reality. Technology has indeed revolutionized business arena by globalizing the world. The advancement of communication channels has consequently resulted into people connecting from all parts of the world thus providing a platform for homogeneity (commonality of needs). For instant, the emergence of the use of social media such as facebook and blogs has really consumed the entire globe. The influence of these developments when examined using high definition quality glasses has contributed significantly to the homogeneity of consumers of certain products such as the Coca-Cola brands. The Coca-Cola Company has initiated promotion of their brands by circulating a provision in the social media where consumers can have their names embedded on the packaging of the brand coke. In addition, the company profited hugely through share the coke campaign on social media. However, that should not provide us with the guts to disregard multinational corporations on their strategy of incorporating regional, cultural or national differences as farfetched in the society today. Several multinational companies have and are still succeeding in their marketing strategy as they are conscious to the customers’ difference and tastes (Target Company in US serves as an example). Moreover, there are some parts of the world where people are so much glued to their culture that if products offered do not coincide with the vindications of that culture then they are bound to fail (for instant in the Middle east). Question 2 Marketing managers can use Levitt’s theory in determining the kind of products that when standardized in terms of products can resonate well with consumers across the divides that exist in the entire globe. Ideally, this is possible since one of the key elements of the theory on pricing is that the provision of products at lower prices but of high quality. The theory postulates that technology and communication have unified consumers across the world hence their needs analysis apparently can closely be monitored. Moreover, the principle behind global corporations is provision of quality goods and services at low prices since large scale production is relatively cheap. The other theories and strategies are the Maslow’s theory, Hofstedes cultural dimension, BCG analysis, PESTLE, SWOT, product life cycle, and marketing mix. They can be incorporated by managers to determine the product decisions, marketing of the products and business services, promotion and advertising, and personal selling and negotiations in the international market (Stephanie, 2015). Abraham Maslow’s theory of human motivation asserts that humans have five sets of needs. These needs are presented in a particular order and interestingly when one is satisfied, a compelling intuitive force causes the desire to fulfill the next (William &Claudia, 2013). The order is in hierarchical structure such that the physiological needs like food are considered as the most fundamental need followed by the safety needs. After the safety needs are the social needs, esteem, and self actualization needs. The application of these needs in business suggests that salary and good working environment are considered physiological needs and safe working environment as well as job security is considered safety. On the other hand, social needs encompass teams work and rational supervision while esteem needs involves job titles and recognition of one’s achievements. Lastly on self actualization, capitalizes on the need for personal growth, promotions et cetera. The concept of the theories can also be applied by global/ multinational corporations as these needs tend to be universal. More importantly, the theory is significant in the determination of the need analysis of consumers globally. This not only aids in determination of possible products that business managers can launch into the market but also the appropriated business services needed in the global market arena (William & Claudia, 2013). Hofstede’s cultural dimension can be an effective tool in evaluation on the best promotional and advertising technique since it is sensitive to the dynamics of cultural differences that need to be fused in these techniques used. Management skills in the international level can be culturally specific such that a technique applicable in one nation may not hold in another nation. Cultures are the values inculcated in the mind that differentiate one group form the other in a society (Sousa, 2006).The five dimensions of culture are power/distance (PD), individualism (IDV), masculinity (MAS), uncertainty/avoidance index (UAI), and long term orientation (LTO). PD refers to the difference between people with power and those without and accepted by the society. A high PD is characterized by a centralized company system and compact hierarchies while low PD is characterized by organizations that are flat where employers and supervisor are equal. Individualism is the degree of how individuals relate to each other in a community (Soares, Minoo &Aviv, 2007).Low IDV focuses on personal achievements and rights while high IDV focuses individuals act as a collective group/organization. Apparently, Uncertainty avoidance denotes the level at which tolerance to uncertainty/ anxiety. High UAI is characterized by formalized operation of business with rules and policies while low UAI approaches business informally. Masculinity refers to traditional convictions on the role of men and women. Some societies such as Japan have high MAS where the professional field is majorly male dominated. For this reason, it will be prudent to employ males while setting up an organization in such a society. In Sweden, the converse is true. Finally, long term orientation is the orientation to the time span within the society. High LTO values family, work ethics and education while low LTO values equality among the members of the society (Soares, Minoo &Aviv, 2007). Boston Consulting Group (BCG) model developed a strategy of approaching and analyzing marketing and business growth. The principle of the model capitalizes on experience of the market likelihood of minimizing costs and optimizing profits. This can be a vital technique in the international market since managers are normally driven by the urge to heighten the value of the shareholders. It involves mathematical projections to determine growth and returns. Growth matrix categorizes products as cash cows, star, dog or problem child. Cash cows are product lines with higher income at cheaper cost while star are those that require more investment to maintain. On the other hand, problem child is product lines that do not generate cash but have the potential to grow and translate into either cash cow or star. Companies categorize their products using the technique in order to develop a marketing strategy. Although the model may not be applicable in some scenarios, when combined with other marketing models, it helps in the analysis of how the product affects cash flow for the company. However, its key importance to managers opting to global marketing option is that they are able to project likely growth of investments and readjust appropriately (Stephanie, 2015). The use of PESTLE analysis is prudent during before launching products internationally since it creates awareness on the political, economic, social-cultural, technological, legal and environmental challenges likely to be encountered by the global corporations (Bowman & Gatignon, 2010). The economic factor may includes rate of unemployment and employment, growth rate, inflation among other and this varies from one country to the other. Companies are influenced by the socio-cultural (demography, age, educational level, social status et cetera) surrounding within which they operate. Technological innovation and invention also influences business operations. Lastly, the environmental factors may entail issues such as sustainability of natural resources and waste disposal among others (Stephanie, 2015). The other essential tool that managers have not option to investigate is the implementation of the appropriate marketing mix. It’s used by companies with the aim of brand promotion and associated with the four Ps (price, product, promotion, and place). Pricing of products can either be competitive or by skimming. Pricing by competive method applies when one company is in stiff competition with other companies offering similar products (Bowman & Gatignon, 2010). Pricing by skimming is involves pricing products at a high prices and consumers thoughts are manipulated psychologically that expensive products are of high quality. Placing of the products entail the distribution channels for companies and avenues used for the products to reach out to the customers which in the case of global corporation is international. Products quality and branding determines the perception of customers. However, various promotional techniques such as the use of media adverts, shows and exhibitions can be effectively employed as promotional techniques (Bowman & Gatignon, 2010). Besides the above models, managers can also fuse the product life cycle technique which can be essential in personal selling as well as negotiation in the international market. Introduction is the initial stage of product life cycle. It is normally the most expensive stage as it entails launching new products in the market, research, and development. Marketing new products are usually costly. The growth stage follows the introduction stage and it is characterized by increase in sales as well as profits (Stark, 2011). After that stage is the maturity stage where the product has found stability in the market. The only focus at this stage is maintaining the established market share. The final stage of the cycle is the decline stage. At this stage, the market of the product starts to diminish due to saturation of similar products or consumers opting for alternative products. It provides corporate managers with the ammunitions of understanding the likely stages the products launched internationally may undergo (Stark, 2011). Finally, the SWOT analysis of the international corporation is vital for managers to be acquinted with the strength, weakness, opportunity, and threats of their companies. It helps not only in maintaining a sustainable business niche in the market but also for organizations to distinguish themselves from other from other competitors (Böhm, 2009). Reference List Alden, Steenkamp and Batra (2006). Consumer Attitudes Toward Marketplace Globalization: Structure, Antecedents and Consequences.International Journal of Research in Marketing, pp. 227-239. Böhm, A. (2009). The SWOT Analysis. München: GRIN Verlag. Bowman, D., & Gatignon, H. (2010). Market response and marketing mix models: Trends and research opportunities. Boston: now. Soares, A.M., Minoo, F &Aviv, S. (2007). Hofstedes Dimensions of Culture in International Marketing Studies. Journal of Business Research, 60, 3: 277–284 Sousa, B. (2006).Cultural Distance and Psychic Distance: Two Peas in a Pod?Journal of International Marketing, 14, 1, pp.49-70. Stark, J. (2011). Product lifecycle management: 21st century paradigm for product realisation. London: Springer. Stephanie,S. (2015). International Marketing. Lecture notes. Theodore, L. (1984). The Globalization of Markets. The McKinsey Quarterly, 1-20. William, K and Claudia, H. (2013). Abraham Maslow and the pyramid that beguiled business. Retrieved on 2nd Feb 2015 from: http://www.bbc.com/news/magazine-23902918 Read More