[Word Count 1499]
Introduction3
Technology as a key driver of globalization3
Standardization..3
Trends in globalization..4
Adaptation and standardization..5
Scholarly criticisms5
Theoretical framework7
Conclusion8
Works cited9
Introduction
Globalization has emerged as one of the greatest themes associated with international marketing strategy. Professor Theodore Levitt of Harvard University happens to be one of the people supporting the idea of “global” brands as well as products. Globalization is the new marketing model for reaching more markets and exploiting competitive advantages. The problem that Levitt discussed in the book is the challenge that corporations undergo while expanding to international markets. The purpose of this essay is to offer a critical review of Theodore Levitt’s book Globalization of Markets.
Technology as a key driver of globalization
The major technological developments that have taken place over the recent years have made internet accessible to almost every part of the world. This combined with the boosted opportunities for e-business have made it possible for companies worldwide to lay great emphasis on local, national and global markets. Globalization procedures need to observe the simplest of details in terms of the research and analysis (Theodore, 1983, p.197).
Standardization
Standardization is derived from the concepts of standardizing products, their manufacture, commerce and related institutions. The writer believes standardization is an important step towards the overall success of globalization (Theodore, 1983, p.147).
Levitt’s study on Model T forms basis for the relationship that exists between dependability, augmented quality and the competitive producer’s lower global costs. That according to Levitt helps pave way for entry into the far-off markets, and it is also one of the ways customers’ preferences in this market are catered for (Levitt, 1993, p.142). Levitt when writing covers the outcome of hedgehog and in that regard he states “The fox knows a lot about most of the matters. However, hedgehog knows everything about one great thing.”
The standardization approach apart from its quick response to the homogenized global markets also helps create conditions that facilitate lower pricing. The deeply held principle behind the whole concept lies in the move to make the person’s money go as far as possible.
Trends in globalization
Levitt goes down to books of world history as one of the iconic figures that first identified the trends in globalization. “Companies need to conduct business with the view that the globe was a humongous market-assuming superficial national and regional difference (Mattsson, 2003, p.416).” He argues that those organizations that are slow or fail to show a quick response to the new global realities could end up becoming victims of those that show quick responses and adaptability (Mattsson, 2003, p.417).
The renowned author says that the trend of globalization and speed it is coming requires companies to get ready to accept that the marketing for certain commodities might be done without considering the difference in the market depth and the local culture. He was a firm believer in the principle that technology was becoming one of the most powerful forces towards driving the world towards a converging commonality (Warner, 2002, p.387).
Adaptation and standardization
Yoram Wind, a close supporter of adaptation, gave warning that businesspersons would face problems if they ignored the dynamics of the various markets they traded in as well as adapting to the associated conditions of such markets. He purported that a large number of the international blunders culminated from case of cultural insensitivity. Cultural insensitivity entails negative attitudes and the lack of awareness (Jain, 2009, p.75).
Philip Kotler, one of the researchers of the time was in favor of the “mixed approach “and thought that it was a working strategy towards globalization. Considering that the strategy varied in regards to situations, it earned itself the name contingency approach. In order to appreciate and comprehend the complexity associated with adapted versus standardized commodities, it is essential that one learns how cultural influences relate with the perceived value and the advantages that come with identifying market places for commodities (Kotler, 1986, p.14).
Scholarly criticisms
A significant number of critics arose in opposition to Levitt’s point of view. Many of them thought that Levitt needed to have considered that bluntly implementing any given strategy of standardization bore high chances of failure and produced undesirable results for the company.
In this era, telecommunication has done much towards helping boost the transfer of information around the globe, and that is important towards taking globalization to the next level. However, this has been marred by numerous challenges one of them being the cross-cultural gap (Theodore, 1983, p.104). The cross-cultural gap refers to the way in which people from different backgrounds vary in terms of norms of behavior and values imparted on them by their respective societies (Williamson, 1998, P.40). The different beliefs and the communication patterns that result from this people emerging from different cultures create barriers in communication and the general understanding of each other. It is important to detach one’s cultural background when coming up with a theory to promote the understanding of human behavior (Cochoy, 2002, p.85).
Levitt notes that a number of inheritances prosper and expand while; others die off with time due to business challenges and action-reaction forces. Those that survive, extend into the mainstream global preferences. One perfect example may be the ethnic markets. The ethnic markets may be selling pita bread, Chinese food, pizza, country and western music as well as jazz. The examples can be found in the global market, and one thing about them is the fact that they conform to homogenization contrary to the others, which deny or contradict it (Baalbaki & Malhotra, 2003, p.200).
Top executives in the multinational co-operations are getting it all wrong. They thoughtlessly assume that marketing is about providing customers with what they ask for rather than making efforts to establish what those clients would like (Govil & Rashmi 2013,p.29). This is the reason as to why they insist on providing customers with expensive, customized multinational commodities and exercises as opposed to pressing properly and strongly for global standardization. Hindrances to globalization include financial and legal bottlenecks, which are apparent during data transfer and exchange of technologies (Theodore, 1983, p.126).
However, by looking at the past, different organizations, one can be able to formulate plans for the future. Barriers against superior technological advancements and economics may pose no problem if organizations employ appropriate means in doing things and become persistent. It is important to recognize that effort and time are major factors towards attaining immense success in any particular field (Medina & Duffy, 2008, p.224).
A significant number of organizations in standardizations moves have tried exporting domestic processes and products without change or accommodation. What has followed for such companies is sudden failure or loss of major profits (Theodore, 1983, p.199).
Theoretical framework
Levitt’s idea of globalized markets can be related with the Porter’s theory of competitive advantage. Porter in the theory endeavors to explain why some corporations or business entities succeed in international markets despite the global competition and market imperfections. Porter argues that global enterprises draw competitive advantage due to the nature of competition in the marketplace (Aswathappa, 2008, p.81). Additionally, for corporations to succeed in global competitiveness, they need to edify their competitive advantage by utilizing their value chain in the marketplace. However, Porter notes that corporations must be adept in innovation, research and development in order to shield and sustain their competitiveness (Boyer & Drache, 2006, p.18). The proponents of this theory suggests that multinational companies that intend to maintain their competitive advantages need to conduct aggressive product promotions and adopt new technologies in order to stay ahead of competition (Aswathappa, 2008,p.82). According to Porter, competitiveness of corporations is driven by factor conditions, demand conditions, auxiliary industries and structure, rivalry and strategy (Aswathappa, 2008, p.83).
Hoover illustrated that poor practices of the marketing concepts combined with the absence of the right kind of marketing imagination culminated into the thriving of the multinational attitudes when in the real sense what customers needed were to reap the benefits that come with global standardization. It is quite clear that this was taking off on the wrong foot. Copernicus and hedgehog were of a similar opinion. Both of them firmly believed in the fact that for data to provide the needed information, the mind must intervene. For information to be meaningful, imagination must step in (Theodore, 1983, p.100).
Conclusion
Globalization of markets is a fundamental development of the 21st century whose economic impact on business processes, transactions, and corporate competitiveness is immeasurable. Levitt challenged the status quo and behavioral approach of corporate managers and triggered a discourse towards improving comparative advantages of corporate entities as they expand globally. Nevertheless, his critics argue that most of his predictions did not happen, and some of his arguments were flawed. Despite all the critics, it is important to note that the publication gives a worldview understanding of globalization and an analytical perspective of customer preferences. Instead of managers adopting customers preferences most of them view them as outcomes; however, the marketplace becomes what firms model it. The Porter’s theory of competitive advantage merged with Levitt’s ideas can help managers overcome some of the hurdles for venturing globally.
Works Cited
Aswathappa, K. (2008). International business. New Delhi, Tata McGraw Hill Education.
Baalbaki, I.B. and Malhotra, N.K., 2003. Marketing management bases for international market segmentation: an alternate look at the standardization/customization debate. International Marketing Review, 10(1).
Boyer, R. and Drache, D. 2006. States against markets: The limits of globalization. London: Routledge.
Cochoy, F., 2002. The Work of Globalization: How Standardization May Impact the Globalization of Work. Globalization and the world of work. A French South African perspective, pp.83-96.
Govil, S.K., and Rashmi, J., 2013. Globalization of markets. Advances in Management.
Jain, S.C., 2009. Standardization of international marketing strategy: some research hypotheses. The Journal of Marketing, pp.70-79.
Kotler, P., 2016. Global standardization-courting danger. Journal of Consumer Marketing, 3(2), pp.13-15.
Levitt, T., 1993. The globalization of markets. Readings in international business: a decision approach, 249.
Mattsson, L.G., 2003. Reorganization of distribution in globalization of markets: the dynamic context of supply chain management. Supply Chain Management: An International Journal, 8(5), pp.416-426.
Medina, J.F. and Duffy, M.F., 2008. Standardization vs. globalization: A new perspective of brand strategies. Journal of Product & Brand Management,7(3), pp.223-243.
Warner, M., 2002. Globalization, labour markets and human resources in Asia-Pacific economies: an overview. International Journal of Human Resource Management, 13(3), pp.384-398.
Williamson, J.G., 1998. Globalization, labor markets and policy backlash in the past. The Journal of Economic Perspectives, 12(4), pp.51-72.
