Globalization has transformed markets, creating a complex, interconnected world economy. This shift has profound implications for businesses and consumers alike. Let's delve into the dynamics of globalized markets and their far-reaching impact.
The globalization of markets is at hand
Well-managed companies have moved from emphasis on customizing items to offering globally standardized products that are advanced, functional, reliable, and low priced
- Only global companies will achieve long-term success by concentrating on what everyone wants rather than worrying about the details of what everyone thinks they might like
- A powerful force drives the world toward a converging commonality, and that force is technology
- Almost everyone everywhere wants all the things they have heard about, seen, or experienced via the new technologies
- The result is a new commercial reality-the emergence of global markets for standardized consumer products
- Corporations geared to this new reality benefit from enormous economies of scale in production, distribution, marketing, and management
- By translating these benefits into reduced world prices, they can decimate competitors that still live in the disabling grip of old assumptions about how the world works
How to Make a Creative Analysis
An imaginative analysis of automatic washing machine sales in each country would have revealed that
- Italian automatics, small in capacity and size, low-powered, without built-in heaters, with porcelain enamel tubs, were priced aggressively low and were gaining large market shares in all countries, including West Germany.
- Under prevailing conditions, people preferred a low-priced automatic over any kind of manual or semiautomatic machine. People were profoundly influenced by promotions of automatic washers; in West Germany, the most heavily promoted ideal machine also had the largest market share despite its high price.
Cracking the Code of Western Markets
Since the theory of the marketing concept emerged a quarter of a century ago, more managerially advanced corporations have been eager to offer what customers clearly wanted rather than what was merely convenient
- The wider a company’s global reach, the greater the number of regional and national preferences it will encounter for certain product features, distribution systems, or promotional media
- In cases of successful challenge to prevailing institutions and practices, a combination of product reliability and quality, strong and sustained support systems, aggressively low prices, and sales-compensation packages circumvented, shattered, and transformed very different distribution systems.
The Earth Is Flat
The differences that persist throughout the world despite its globalization affirm an ancient dictum of economics-that things are driven by what happens at the margin, not at the core.
- What is most striking today is the underlying similarities of what is happening now to national preferences at the cutting edge cumulatively form an overwhelming, predominant commonality everywhere.
- Cosmopolitanism is no longer the monopoly of the intellectual and leisure classes; it is becoming the established property and defining characteristic of all sectors everywhere in the world.
Why Remaining Differences?
Different cultural preferences, national tastes and standards, and business institutions are vestiges of the past. Some inheritances die gradually; others prosper and expand into mainstream global preferences.
- Many of today’s differences among nations reflect the respectful accommodation of multinational corporations to what they believe are fixed local preferences. They believe preferences are fixed, not because they are but because of rigid habits of thinking about what actually is.
Living in the Republic of Technology
In business, this trend has pushed markets toward global commonality
- Corporations sell standardized products in the same way everywhere
- Coca-Cola and Pepsi-Cola are globally standardized products sold everywhere and welcomed by everyone
- “High-touch” products are as ubiquitous as high-tech
- The commonality of preference leads inescapably to the standardization of products, manufacturing, and the institutions of trade and commerce
- Success in world competition turns on efficiency in production, distribution, marketing, and management
A Failure in Global Imagination
Many companies have tried to standardize world practice by exporting domestic products and processes without accommodation or change-and have failed miserably
- Poor execution is often an important cause, but failure of nerve-failure of imagination is more important
- Consider the case of Hoover, which introduced fully automatic home laundry equipment in Western Europe at a time when few homes had even semiautomatic machines
- Due to insufficient demand in the home market and low exports to the European continent, the washing machine plant in England operated far below capacity
- Hoover conducted consumer preference studies in Britain and each major continental country, and the results showed feature preferences clearly enough among several countries
Accepting the Inevitable
The global corporation accepts for better or for worse that technology drives consumers relentlessly toward the same common goals-alleviation of life’s burdens and the expansion of discretionary time and spending power.
- It orchestrates the twin vectors of technology and globalization for the world’s benefit.
Vindication of the Model T
If a company forces costs and prices down and pushes quality and reliability up-while maintaining reasonable concern for suitability-customers will prefer its world-standardized products
- Success in a world with homogenized demand requires a search for sales opportunities in similar segments across the globe to achieve the economies of scale necessary to compete
- Even small local segments have their global equivalents everywhere and become subject to global competition, especially on price
The Hedgehog Knows
The multinational corporation knows a lot about a lot of countries and adapts to supposed differences
- Its mission is modernity and its mode is price competition, even when it sells top-of-the-line, high-end products
- It knows about the absolute need to be competitive on a worldwide basis as well as nationally and seeks constantly to drive down prices by standardizing what it sells and how it operates
- Treat the world as composed of few standardized markets rather than many customized markets and actively works toward global convergence
- Scarcity is the one thing all nations and people have in common
