The benefits of global products can be achieved by standardizing the core product or large parts of it, while customizing peripheral or other parts of the product. E.g., most of Sony’s consumer electronic products are primarily standardized except those parts that depend on national electrical standards. Honda has gone to a system of limited, standardized platforms for its production activities worldwide. Accordingly, some have described global product strategy as a process of standardizing wherever you can, and customizing where you must.
(1) (What are the factors that are driving more and more firms to pursue a global product policy? Please briefly describe these. Which of these factors (two or three) do you feel are most important in terms of their potential to drive a firm, of your choosing, in the industry that interests you most (e.g., automobiles, banking, aviation) to offer increasingly global products? Why? Please elaborate your answer.
Since the advent of globalization in the last two decades, market oriented companies has intensified competition to pursue internalization strategy for their supply management, human resources, and product policy. Because of the cutthroat competition at the global stage, aspiring companies must make decisions where their companies can attain competitive advantage over other corporations in the country that they want to explore. Several factors determine the choice of location. First, the company must have an edge over its rivals in terms of technology, distribution system, market base, and efficiency. Companies must have efficient organization skills and distribution skills to realize competitive advantage. Most importantly, a company pursues formidable product policy as it engages in a highly globalized market environment. Several factors determine why a company requires a global product policy. The following paragraph lists some of the reasons.
Product policy represents a key component of the global marketing strategy for a firm. However, the complexity of international marketing accrues from the diversity of environmental factors in different countries. Companies must ponder whether to develop new products for different markets or to sell the same products across the nations. Because of this reason, a product policy is thus a helpful tool in determining when, where, and how to practice standardization. In addition, a global product policy is required in order for companies to exploit the synergies across countries that accrue due to the location of manufacturing facilities or sources of materials for the development of the said product.
In addition, product policy is a helpful tool for companies to determine the timing of launching of a different product. Companies realize that the key to growth is constantly developing new products. A product policy is thus a helpful tool in developing time. Because of an efficient product policy, firms can introduce products in different markets at hierarchical order to maximize buying potential. In my view, the three most important aspects include product-positioning, degree of standardization, and management responsibilities. These three applies for every industry that a firm may be engaged in
. (ii) In developing global products, what strategy(s) should the firm follow, for maximal effectiveness? Please elaborate.
The best product policy for international businesses willing to operate at a global stage involves the following aspects. First, the company must determine a global brand. The brand is an instrumental tool in creating identity for the product. A wildly accepted brand means that the product will be recognized as unique. Moreover, the brand will create a leveling position for the company in respect to its competitors. The second aspect of product policy involves choosing a brand name and locating areas where the company aims to operate. Because of the costs, a product cannot be available all over the world at the same time. Some level of hierarchy must be honored while introducing the product in new markets. The third aspect involves intensive marketing of the product by use of several methods such as trade shows, TV ads, social media and all other methods.
iii) It is a mistake to assume that global product strategy simply implies offering the same product, using the same marketing and other approaches, worldwide. Based on your understanding of chapter 4, please describe the circumstances under which it is appropriate (or even necessary) to customize products to buyer needs abroad.
In view of George and Hult (2002), the most efficient forms of product, strategy is premised in the following rules:
Adapt when necessary
Standardize when feasible
Companies must realize that their customers may be attracted to distinctive features of the product and the process that derive these unique features. Adaptations and standardization must be carried in a manner that follows the rules and the requirements of the needs. Legal reasons, economic differences, geography, and education can be some of the mandatory reasons for adaption. However, firms can also adapt in response to cultural needs, customer preferences and as a need to respond to the competitors styles.
Leadership Challenge Assignment: Essay
The world is almost integrated as a global economy. In this integrated world, the United States plays a central role as the largest economy in the world as well as a member of the G-8. In that sense, wherever happens throughout the world does affects the United States of America. There are two main reasons for this. First, the phenomena of globalization mean that many parts of the world are vital to the United States both economically and strategically. Second, the rest of the world looks towards the United States as a leading business destination for leadership. A plethora of reasons weighs for a company’s choice of location and to a large extends operation. While many of these factors such as the presence of resources, capabilities, and knowledge are internally driven, other factors, however, arise outside of the entity. In international business, these aspects are classified into five broad categories: political, economic, social, technological, and competitive forces. American businesses are not exceptions to these rules. Still, what is the significance of the transformation to highly globalized market for businesses in the United States?
Three reasons are functional in this respect. The first opportunity is the abundance that accrues from the availability of a variety of choices for consumers and the continued lack of scarcity on common goods. The United States managers must ensure that they create a niche that makes them attractive in an extremely competitive global arena. The second reason is the potential of Asia and Latin America as emerging markets and the ability of the new workers to get work done in efficient and quick ways. Because of the Asian efficiency, companies are now looking towards out sourcing as an alternative way of making a profit. While outsourcing is a question of political discourse, it is one way that many firms in the United States have responded to the increasingly expensive labor. The presence of cheap labor overseas enhances profit maximization for firms because the sole goal of companies is making a profit.
The third aspect is automation and refers to the computerization and the use of technology instead of people to get work down. In view of Pink, these three new approaches bring the challenge of deciding whether computers can replace human kind in terms of efficiency and cost. Companies also need to ask if what they offer is demanded in the market or if it is abundance and third if out- sourcing would be ideal for the business. Pink’s argues that in order for companies to solve these problems, they will need to adopt approaches that are comprehensive instead of rigid. Flexibility in approach would be required for the success of any business in the global system. The need for flexibility in carrying out business leads the development of what is normally referred to as global mindset.
As the global economy grows, managers of firms have to learn to function effectively in other contexts and cultures just as they do in the United States. This requires that managers must be culturally aware of impeccable ability to adapt to different situations and environments. Globalization requires that managers reorganize the way they conceptualize management to incorporate different ideas that may be unconventional. In order to this, managers must learn to think globally. In the words of Lane et al, (2012), thinking globally means extending concepts and models from one to another relationship, which requires dynamism in the conceptualization of reality. A successful understanding of this concept is termed having “global mindset”.
Lane et al (2012) adds that a global mindset is the aptitude to see and comprehend the world another way than one has been habituated. A global mindset has the meta-capability that permits the individual to function in multiple situations. Globally minded leaders must understand cultural, political, socioeconomic conditions that domestic managers do not need. In addition to understanding different cultures, the managers need to develop a broadest of repertoire with behaviors that reflect respect for the people and the government of the new territory. This is possible only if the global managers acquire the skills and knowledge akin to those required of domestic leaders. Qualities required of global minded leaders include self-awareness, open-mindedness, non-judgmental, tolerance, and trust even in the most untrustworthy situations.
The United States managers must embrace the qualities of global mindset to be able to stay competitive with the rest of the global leaders in the world market. Closed-minds do not provide opportunities anymore because jobs are moving abroad. Pink proposes a radically different approach to business people and workers. Because of the nature of the new business environment, business should realize that traditional consumers and workers do not operate the same way; this requires an altogether different approach. This approach calls for an approach that takes advantage of the laxity in the business environment. The new strategy should embrace a strategy that honors the worker by promoting quality, creativity, innovation, and talent. In addition, businesses must demonstrate empathy and desire for genuine pursuit of meaning for workers. In a word, a global mindset requires a redefinition of what some scholars have described as a corporate culture.
According to Schein (2009), corporate culture refers to shared beliefs, values, and behaviors that a firm subscribes. These beliefs, values, and expected behavior provide a foundation upon which a firm is managed. The organizations executives articulate cultural statements to the workers. Usually, firms with a strong corporate culture outperform those without a strong corporate culture. Because culture is relative, organizations have the power to create a culture that fits organizations objectives.
Corporate culture plays out in various ways. Company’s culture can be distinct in ways such as the way they handle communication, feedback, project coordination, or customer relations (Kotter, 1992). In some cases, corporate culture is visible in the way an organization is structured. Some companies emphasize servant leadership while others focus on teamwork; others promote basing on appraisals while others promote basing on future objectives. In many cases, the nature of competition and the desire of the company to be like the rest or to form a unique identity define corporate values for many companies (Schein, 2009).
Weinstein & Johnson (1999) write that successful companies do not only satisfy customer they work hard to please them too. Superior customer values mean continually creating a business experience that exceeds the ordinary expectations (p.4). In their view, value is the strategic driver that most multinational corporations utilize to differentiate themselves from the rest in view of customers. In the abstract form, values mean the excellence usually based on the desirability or usefulness (Weinstein & Johnson, 1999, p.5). An effective customer value system makes an enormous difference between a successful firm and an average firm. It is every company’s benefit to have a clear strategy on developing customer values.
The world offers a uncommonly sizeable market for companies to exploit. Because of globalization, firms are given unlimited opportunities across the globe that they can effectively exploit for their own benefits. The global market, when effectively used, provides a room of expansion. However, for companies to reap the benefits of globalization, they must be ready to play with the rules of the games. First, the company must be ready to meet the needs of all its customers across the world. Coca- Cola Beverage Company is perhaps a classical example of a company that has used the global market to expand its operations unrivalled with any beverage company. Establishment of the global market brand and customer base is thus one of the biggest advantages of global marketing. Coca-Cola has achieved this status by tactful advertisements and promotions aimed at luring consumers to feel that Coca-Cola represents their own taste. Coca-Cola sells the same product worldwide but standardizes the product to meet the needs of its customers based on cultural preference. If American companies want’s to be successful in the world, there will be a need to standardize their products to meet the demands of the world market.
While planning to operations abroad, companies but strive to position well for the business climate overseas. Apart from responding to external forces, companies should also attempt to influence them. According to Fred .R. (2011), in his book Strategic management: Concepts and Cases companies ought to innovative enough not to be susceptible to influence but unable to change the environment for the positive. He writes that external factors in business “are largely beyond the control of a single organization.” However, how can a firm influence the external factors that affect it? Fred David argues that, for the political and legal forces, a company must become law abiding by relating to changes in laws and regulations. Keeping within the law allows a business to find ways that the new law affect how they must behave. Businesses can make use of new economic forces by ensuring that they use the bulging economy as an opportunity to make profits. This way, they welcome rising living standards among their customers. Socially, a business ought to welcome changes in the nature of the population, as well as in shaping consumer culture and analyzing how the change affects buying patterns.
References
David, F. (2010). Strategic Management: Concepts and Cases. New York: Prentice Hall.
Kotter, J. (1992). Corporate Culture and Performance. London, UK: Simon and Schuster.
Lane, H., Maznevski, M., DiStefano, J., & Deetz, J. (2012). International Management Behavior: Leading with a Global Mindset. New York: John Wiley & Sons,
Pink, D. H. (2006). A Whole New Mind: Why Right-Brainers Will Rule the Future. New York: Penguin Publishers.
Prahalad, C. K. (2006). The Fortune at the Bottom of the Pyramid. New York: Pearson Prentice Hall.
Schein, E. (2009). The Corporate Culture Survival Guide. Chicago: John Wiley & Sons.
Weinstein, A., & Johnson, W. (1999). Designing and Delivering Superior Customer Value: Concepts, Cases, and Applications. Miami, FL: CRC Press.
Yip, G., & Hult, T. (2011). Total Global Strategy. New York: Pearson Education.
