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STANDARDIZATION AND ADAPTATION OF PRODUCTS IN GERMANY

Submitted by; Akshay Gadkari Roll No. 17 PGDAM KCCMS

Introduction to Standardization and Adaptation:


The core of a firm's international operations is a product or service. This can be defined as the complex of tangible and intangible elements that distinguishes it from the other entities in the marketplace (Czinkota, Rinkainen, 1995: 262). Product can be defined as: "it's a bundle of satisfactions (or utilities) the buyer receives. This includes its form, taste, colour, odour and texture; how it functions in use; the package; the label; the warranty; manufacturer's and retailer's servicing; the confidence or prestige enjoyed by the brand; the manufacturer's reputation; the country of origin; and any other symbolic utility received from the possession or use of the goods" (Cateora, Graham, 1999: 355356). The success of the firm depends on how it's possible to differentiate from other competitors. But the key factors of success can vary from one country to another country. Therefore for the firm it is important to choose the right strategy between the product adaptation and product standardisation. Product adaptation means that the firm adapts the product to the local markets. It is the process of modifying products for different countries and regions or designing new products for foreign markets. Product standardisation means that the firm sells and advertises a standardized product in the international context. But which strategy is the better one? In the following the author wants to explain the different advantages and disadvantages and work out, which strategy is the best for certain situations because it depends on the situation which strategy is better

THE GERMAN MARKET

In 1950 Getinge AB entered the German market with the assistance of agents and distributors. They as in most other cases offered standardized medical equipment to the German hospitals and institutions. With the passing of years Getinge AB had managed to establish own subsidiaries on the German market and had therefore more access to the market specific information and could identify the needs and demands. In year 2000 the company decided tocome across the existing needs of custom-made products and started adapting their offers to the local market. The main driving forces were a willingness to expand further on the local market and not at least increase their profit. This strategy has been very successful for them, due to the fact that they have risen from their placement as number four on the market to number two. Not at least have their sales increased from 30 MSEK in year 2000 to 150 MSEK in 2007

Product Acquiring a company called Maquet in year 2000 provided Getinge AB with a small manufacturing unit, which turned out to be a great benefit when deciding to adapt their products to local needs. Without this acquisition it is certainly doubtful if the adaptation strategy would have been applied in Germany at the moment that it actually was. The actual process of producing products for the German market used to take place in different countries. The products were at that time manually produced in Sweden, and the attempts to adapt the design to the German requirements were made before transmitting them to Germany. However, changing the design in Sweden to fit the German

requirements was not a success. There was a big mental distance between these two cultures which made it difficult to apply the German requirements to the product in Sweden. It happened instead to be thanks to the previous acquisition of Maquet, that Getinge AB had the resources to start adapting their products to the German requirements. The core product remained the same with its standard functions, but the final touch was added in Germany to satisfy the German customers. Changing the surface added another dimension of quality for these customers. Since Germany is a part of the European Union, there are no additional requests that limit Getinge Abs actions when it comes to the product. Due to all this, Getinge AB has managed to achieve 15% of the market shares in Germany, compared to the 3% that they had before starting to adapt their product.

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