There is enough evidence to support these attributes as explained by Michael Porter.
Switzerland was for instance the first country that started to expense labor shortages. On realizing that the production of watches was adversely affected by labor unrests, Switzerland opted to concentrate on highly innovative and very high-end watches that were not labor intensive and thus gained comparative advantage over the others
Despite having very high priced land, Japan still manages to be a global leader even with little capacity to hold stock. Japan has therefore invented the Just In time inventory system that ensures that stock is only available when its needed. This has propelled the country to global leadership in manufacturing (Dunning, 1993)
Demand factors
Japan is arguably the largest wine producer in the world. This is because its wine industry is very sophisticated and developed. This is usually because the French are ardent consumers of wine according to global statistics. These consumers have therefore helped to force the French wineries to produce the very best quality wine.
The very high Chinese population has been a great boost for domestic demand for the locally produced goods for the Peoples Republic of China. With a population of over 1 billion people, Chinese industries have sufficient domestic market, and even have surplus to export to other parts of Asia, Europe and Africa (Dunning, 1993)
Related and Supporting Industries
A good example of synergetic operations of companies leading to comparative national advantage is the Silicon Valley in the US for the auto manufacturing industries where a number of related companies operate in the Detroit area. In Italy, the leather industries is located in a region with other leather goods industries and this has helped grow the industry to a large extend (Davies & Ellis ,2000).
The Wall Street in the US is also a major example where people are able to find stocks of almost any company in the US and also access banking services from all major leading banks at close proximity. This has made Wall Street to become the largest single stock market in the globe.
Strategy, rivalry and structure
The capital markets of a country determine the countries business strategy. A short run outlook of the capital markets as is the case in the US, has affected the nature of competition (Baldwin, 1991). For instance, the US is more competitive in industries with short term investments such as the computer industry while countries with long run capital markets outlook such as Switzerland will tend to be competitive in the industries where investment is also long run such as the pharmaceutical industry.
The world has become one large global village, literally. The recent years have witnessed the transformation of the world from independent territories to one large global market where people buy and sell, work, and even interact as though they were in one large village. This has been made possible by globalization, as a result of advancements in technology.
In order to survive in this dynamic global environment, multinationals have been forced to find means of ensuring that they expand their market to more nations in the world. More importantly, multinationals have been forced to come up with strategies on whether to customize their products in each of the markets that they operate, or to standardize their product offering for all the markets. This issue has attracted a lot of debate, with many people proposing that customization is the best way, considering the dynamic nature of individual markets while others believe that standardization is the way to go.
Standardization
So powerful is this element of standardization that it’s often argued that globally standardized companies just cannot ‘die’. A good example is the United Steel and General Motors. These companies have grown to become global leaders in their markets. Workers in the US have over the years realized that industrial unrests cannot cripple these companies as supply will go on in the other parts of the world. This is because standardization enables for the transfer of production technology thus enabling the company to be able to produce from any quarter.
In a nutshell, Levitt identifies two factors as being the parents of global convergence. These are technology, and globalization. Technology helps in the determination of human preferences while globalization explains the related global realities. Regardless of how diverse our preferences are, they all converge at the point where innovation and economies of large scale lead to the reduction in prices of commodities as is the case with Coca Cola and Pepsi cola.
- Brand identity and presence- As a result of standardization of products, the company’s brand becomes visible. Coca cola, for instance is the most recognized brand in the world. This is because the company adopts a global marketing mix, has standardized products the entire world over, and has always thrived on reduced costs (Brei, et al, 2011).
- Climatic conditions
According to Demetris, As long as a company would benefit immensely from standardization, sometimes, the specific conditions of a particular country could significantly influence the consumer preferences. For instance, a clothing company would benefit significantly by making very warm clothes for the colder countries and especially in the tropics than standardizing its products since in some countries, it would just not sell. This is because the climatic conditions influence preferences too (Demetris & Alkis, 2007)
- Secondly, the internationalization of the global technology platforms, communication systems, transport systems etc has been at the forefront in reducing the territorial gap that existed between and among nations. Today, goods produced in the US or China find their way into Africa and Europe with a lot of ease.
Levitt however cautions that even though the benefits of standardization are enormous, the strategy should be given a lot of thought. He goes on to explain that a number of companies have failed in this strategy as a result of not performing a proper market research on what a customer wants in life, as opposed to what a customer wanted in the different models of a washing machine that was produced and marketed by Hoover.
