Globalization

Standardization vs Adaptation
Globalization vs International
business

Globalization International business

A domestic company sets A domestic company
up /operates its business treats each country as a
around the world with an unique marketplace and
universal approach. adjust its operations in
Standardization order to fit the country.
Adaptation
Advantages from
Globalization
Encourages producers and consumers to benefit from
division of labor and economies of scale
Competitive markets reduce profits for monopoly/olygoply
based industries, e.g. businesses tend to seek for cost-
reducing innovations
Create or increase awareness among customers with regards
to challenges from climate change and inequality
(wealth/income)
Disruption due to
globalization
Globalization has disruptive effects on establishes industries and
organization
Uber, the worlds largest taxi company does not own 1 vehicle.
Facebook, worlds popular media owner does not create
content itself.
Alibaba, the most valuable retailer has no inventory
Airbnb, worlds largest accommodation provider does not own
real estate.

Going from economies of scale to sharing economy

Standardization vs
Adaptation

Standardization Adaptation
Offering the same The company adapts to
product/service in all the needs, wants and
markets a company demands of various
operates. cultures or governs.

Example: Microsoft Example: Heinz in

Office India and BWM MINI
Standardization vs
Adaptation
FACTORS ENCOURAGING FACTORS ENCOURAGING
STANDARDIZATION ADAPTATION
Economies of scale in Differing use conditions
production
Government and
Economies in product R&D regulatory influences
Economies in marketing Differing consumer
behavior patterns
Shrinking of the world
marketplace/economic Local competition
integration
True to the marketing
Global competitions concept
Method of operation

The product that is operable in in the domestic market may

not be operable in the foreign market.
Power sockets: Electrical voltages and connectors vary
around the world. English and metric standards are not
comparable. In this, the core product is the same as the
product solves the same needs/wants yet the tangible
product differs per market
Software may have to be translated into the local
language. The software itself is the same in every
market. A supplier only has to write the codes for a
software once.
Country-of-origin effect

The origin of a product may have a strong effect on consumer

perceptions and biases about foreign products.

Swiss watches

French champagne

German cars
Glocalization

Think Global, Act Local

Most important is to decide which strategic elements
should or must be standardized or adapted and to what
extent, under what conditions and when
Standardization or Adaption?

Reality is that pure standardization and pure adaption dont

really exist, and they shouldnt
Global marketing is too complex for simplistic answers

Most important is to decide which strategic elements should

or must be standardized or adapted and to what extent, under
what conditions and when
Strategy and execution are equally important
Case study 1 Heinz
ketchup
Kraft Heinz has a special production plan in India

Many people in India do not eat garlic and/or onion

Kraft Heinz produces a special type of Ketchup which is

suitable to the Indian market only

No economies of scales but vertical integration in order to

create an establishes brand in India
Case study 2 Oreo

Oreo was underperforming so badly in China, Kraft was on

the verge of pulling it
Reformulated cookie to be less sweet and added
flavors/wafer options and used Yao Ming in ads
Today, China is the second largest consumer of Oreo products
after the U.S.
Reference

Global Marketing :Contemporary Theory, Practices and Cases, Ilan Alon

and Eugene Jaffe, 2013, McGraw Hill
Global Standardization-Courting Danger, Journal of Consumer
Marketing, Vol 3, No 2, Spring 1986
The Glocal Strategy of Global Brands, Dumitrescu and Vinerean, Studies
in Business and Economics, 2010, vol. 5, issue 3, pages 147-155
Guidelines for Developing International Marketing Strategies, Wind,
Douglas, Perlmutter, Journal of Marketing, vol. 37 (April 1973, pp 14-23
Strategic Insights: to Standardize or Localize
www.globalizationexecutive.com/articles/Chapter3.pdf
To Standardize or Not to Standardize: Marketing Mix Effectiveness in
Europe, Marketing Science Institute, www.msi.org