From the International Business Point of View - Assignment Example

Name: Tutor: Title: Date: From the International Business point of view, how far is the world still not homogeneous? Globalization has turned the world into a global environment or village in which from the standardization point of view, advancement in the means of communication as well as transportation have made the world preference structure to get more pressed into a kind of homogenized commonality. It is apparent that global corporations find it difficult to make decisions about the appropriate marketing strategy to adapt as they go global. The most common question is whether they should standardize their processes or adapt the marketing strategy they have put in place according to the environment. Since the global market is still growing into homogeneous environment, it means that the homogenization of the global markets requires the firms to continuously and effectively adapt the standardization strategy worldwide. Therefore, it is relevant to point out that standardization is critical in managing the changing world structure because globalization world is increasingly becoming homogenous based on their needs and wants. Due to increased globalization and the need for more standardization, it implies that to a larger extent, the world is still not homogeneous for international business (Hussain & Khan 2013, pp.355-356). Generally, consumers pick global brands based on its three major dimensions namely; quality signal, global myth as well as social responsibility and these causes variations within brand preferences across the globe. In each country, therefore, consumers hold different views about global brands. Most consumers worldwide are categorized into at least one of the four segments-global citizens, global dreamers, anti-globals and global agnostics with emphasis on how they relate to specific global brands. In particular, Global citizens are more concerned about firms’ behaviour on the environment. Global dreamers accept brands without hesitating, while anti-globals tend to avoid buying products from trans-national companies. On the other hand, global agnostics totally do not regard the global nature of brands as anything that deserves special consideration. This clearly shows how the world is still not homogeneous for international business (Bolt, Quelch & Taylor 2004). Research shows that uniform production conditions as well as product homogeneity still exist internationally. As a result of uniform production conditions, it is apparent that unit costs cannot differ from country to country due to the existing differences in productivity between plant locations (Moore & Rugman 2005, p.38). In addition, production methods used for a product basically rely on identical or homogeneous inputs of both labour and capital. Therefore, constant returns associated with increased scale of output are experienced regardless of their source of production (Storehouse 2004, p.34). On the other hand, the practice of product homogeneity is still troublesome across the world particularly in regions where, apart from the key industrial goods, various products offered in the global markets is differentiated. Although differentiation is crucial for determining the specific firms which will be capable of specializing and surviving, specialization requires firms to strategically select products within the ranges in which the share firm-specific advantages. This is important in acquiring export markets (MacCharles 2013, p.56). To a larger extent, international business activity is facilitated by effective communication. This clearly shows that in the global business environment, different activities which include exchanging information and business ideas, matters pertaining decision making and negotiating as well as motivation and leading entirely depend on the ability of managers of a particular culture to effectively communicate with other managers and employees from different cultural backgrounds (Hill 2002, p.32). However, achieving and maintaining effective communication proves to be difficult for managers across the globe even in environments where the workforce is seen to be culturally homogeneous (Adler 1991, p.65). This implies that when multinational companies include different languages and cultural backgrounds, it becomes more difficult to achieve and promote effective two-way communication yet it is vital for international business. Although the logic of globalization is increasingly becoming strong, it should be noted that it also creates some challenges. For example, world markets are still considered not homogeneous, and thus cause the need for local variation within many product categories. Furthermore, a high level of coordination is still required to avoid the higher costs needed in managing the global supply chains. Therefore, with these two related challenges, it becomes difficult to offer local markets the various products and services they seek whilst still be able to gain the advantage associated with standardized global production. Similarly, it is challenging to manage the links within the global chains existing from different sources of supply through the end-user (Christopher & Peck 2012, p.130). In his article titled “The Globalization of Markets,” Professor Theodore Levitt of Harvard Business School provocatively declared the emergence of a global market for uniform products and services. His argument was that corporations need to exploit the aspect of economics of simplicity in order to grow by offering standardized products across the world. However, Levitt did not go into explicit discussion of branding, but managers interpreted his ideas in a broader way that it is time to rethink global branding, and therefore transnational companies are required to standardize their products, packaging and communication as way of achieving if possible common denominator positioning that would effectively fit across cultures. Globalization was regarded as a powerful force that drives the world into a converging commonality. This allows international businesses to go global by standardizing their product and service offering. However, the tension between the focus to deliver standardized products so as to achieve economies of scale and the need to pay attention on local responsiveness to appropriately meet consumer needs creates more complexity to the corporate strategies of multinational companies (Levitt 1983, p.96). It is surprising to note that although global branding seems to be a good approach towards managing cross cultural needs, it has lost more value recently due to the claim that transnational companies are seen to be under virtual siege. For example, major brands like Nike, Coca-Cola and McDonald’s have been cited as lightning rods or references for anti-globalization protests. Until recently and based on the quality signal, the perception of many people about quality for value and technological prowess were basically associated with nations from which the products supplied or originated. For example, Japanese quality, Italian design and made in the USA are highly considered important in some industries. This means that a company’s global stature is determined whether if its business operations excel on quality (Niels & Anne-Wil 2003, p.64). Based on the economic perspective, there is a close connection between globalization and cultural diversity. Therefore, in a homogeneous world dominated with nations or regions with same economic and social structure controlled by the supply side and demand side means that globalization without diversity albeit occurring with variations of quantitative level, would lead to internationalization. However, in a global economy where it is regarded that cultural diversity is driven by the purpose of avoiding the occurrence of homogenization but instead favouring the integration of various cultures, provides the view that economic development would not merely mean culturally sustainable (Triandis 2006, p.212). It should be noted that due to the changing tastes and preferences as well as diversity of cultures, a variegated demand for different products would exist. As a result, the dangers associated with the saturation of markets would be minimized because the diversity could be referred to as the source of implementing a sustainable process of innovation that would create more incentives to investment (Pagano 2007, p.648). The world is still not homogeneous and how this influences the decisions made by Multi-national Companies Unification and harmonization particularly of international demand are considered important for firms that intend to operate specialized plants that target either regional or world-wide markets. It is necessary to mention that world demand is increasingly becoming homogeneous. Therefore, firms are required to unify their various products as well as globalize their strategies. However, it should be noted that international demand exists in a simultaneous manner showing homogeneous and segmented tendencies in the global market (Schroiff 2004, p.84). This implies that homogenization in different countries may be seen compatible with segmentation though based on different customer groups or segments. As a result of segmentation, such homogenous groups in many countries may demand to be supplied by single or main specialist plants (p.159). Due to high conflicting economic as well as political imperatives faced by multi-national companies (MNCs) or businesses that operate on global scale, such companies adopt strategies that show their own negotiating power which in most cases is associated with their market power. Such capability is also linked to the ownership of critical technologies with strong emphasis on the size of national markets and linkage to at least government contracts that the companies may develop interest in (Dahan, Doh & Guay 2006). In addition, MNCs either opt to follow their own world-wide integration strategy so as to implement the requested national strategy of responsiveness or adopt a more administrative coordination strategy. This leads to negotiation between forms and host governments which in turn cause the establishment of specialized plants that produces for export which aim at satisfying the objectives of governments to enhance their trade balance. In so doing, MNCs find it as great opportunity to create specialized or more optimally-sized plants (Cox, Clegg & Letto-Gillies 2013, p.163). Emerging markets for Multi-national Enterprises (MNEs) are not homogeneous. However, they face similar challenges or location disadvantages which include weak institution environments, legal systems and property rights systems. It is also notable that various differences exist between EMNEs themselves, for instance, their origins, competitive advantages, markets, industries and internationalization paths are widely not the same in relation to their business operations (Dunning 1998, pp.47-48). Although these multinational enterprises develop firm competences to compensate for their specific home-country location disadvantages, it should be noted that others have a tendency of relocating their headquarters to at least developed countries. This is aimed at achieving location-based advantages. When the importance of cross-border trade is realized and firms internationalize, it becomes quite obvious that EMNEs will relocate to industrialized countries to seek for assets and markets. To some extent, relocation is strategic significance because it creates greater opportunity or access to capital as well as other needed resources (Klein, Wocke & Hughes 2014, p.254). Considering the nature and size of the demand within the home country, studies show that large home markets are key players of industry development. However, in circumstances where large home market happens to develop before it shifts elsewhere in the world, it means that experienced firms will have opportunity and enough incentives to establish business abroad when saturation at home emerges. It is not only the location of the initial demand but its composition is also significant. This suggests that the fundamental or core design of a particular product greatly reflects the various needs of home-market. In such a case, it is evident that the nature of home-markets needs as well as the complexity of the associated home-market buyer becomes key determinants of the industry to monitor a future global position (Oster 1994, p.56). Conclusion Based on the above discussion, it can be concluded that to a larger extent the world is still not homogeneous. It is apparent that the global market is still growing into homogeneous environment. Therefore, homogenization of the global markets requires firms to continuously and effectively adapt the standardization strategy worldwide. The practice of product homogeneity is still troublesome across the world particularly in regions where, apart from the key industrial goods, various products offered in the global markets is differentiated. Since the world is still not homogeneous, multinational companies either opt to follow their own world-wide integration strategy so as to implement the requested national strategy of responsiveness or adopt a more administrative coordination strategy. It is worthwhile to note that due to the changing tastes and preferences and diversity of cultures, a variegated demand for different products occur. As a result, the dangers associated with the saturation of markets are minimized because the diversity is regarded as the main reason for implementing a sustainable process of innovation that creates more incentives to investment. List of references Adler, N.J., 1991, Communicating across cultural barriers: International Dimensions of Organizational Behaviour (2nd ed.), PWS-KENT Publishing Company, pp. 63-91.Boston. Cox,H, Clegg, J & Letto-Gillies, C., 2013, The growth of Global business, Routledge, New York. Christopher, M & Peck, H., 2012, Marketing Logistics, Routledge, New York. Dahan, N., Doh, J., & Guay, T., 2006, The role of multinational corporations in transnational institution building: A policy network perspective, Human Relations 59: 1571. Dunning, J. H., 1998, ‘Location and the multinational enterprise: A neglected factor’, Journal of International Business Studies, Vol.29, No.1, pp.45-68. Hill, W.L.C., 2002, International Business, Competing in the Global Marketplace (3rd edn), McGraw Hill, USA. Holt, D.B, Quelch, J & Tailor, E., 2004, How Global Brands Compete, September 2004 Issue, Harvard Business Review. Hussain, A & Khan, S., 2013, ‘International Marketing Strategy: Standardization versus Adaptation’, Management and Administrative Sciences Review, Vol.2, No. 4, pp.353-359. Klein, S., Wocke, A& Hughes, M.J, 2014, ‘Leaving home: Relocation choices of South African multinational enterprises’, African Journal Business Management, Vol.8, No.8, pp.253-269. Levitt, T., 1983, ‘The globalization of markets’, Harvard Business Review, Vol.61, No.3, pp.92–102. MacCharles, D., 2013, Trade among Multinationals (RLE International Business): Intra-Industry Trade and National Competitiveness, Routledge. Moore, K., & Rugman, A., 2005, ‘Globalization is about regionalization’, McGill International Review, Vol.6, No.1, pp.37–45. Niels, G. N & Anne-Wil, H., 2003, ‘The Country-of-Origin Effect within Multinational Corporations’, Management International Review, vol. 43, No. 2, pp. 47-66. Oster, S. M., 1994, Modern competitive analysis (2nd ed.), Oxford University Press, Oxford, UK Pagano, U., 2007, ‘Cultural globalization, institutional diversity and the unequal accumulation of intellectual capital’, Cambridge Journal of Economics, Vol.31, No.5, pp.649-667. Schroiff, H.-W., & Arnold, D., 2004, Strategies for managing brand and product in international markets. In J. Quelch & R. Deshpande (Eds.), The Global Market, Jossey-Bass, San Francisco. Stonehouse, G. et al., 2004, Global and Transnational Business. 2nd ed, John Wiley & Sons, Chichester. Triandis H. C., 2006, ‘Cultural aspects of globalization, Journal of International Management’, Vol.12, No.2, pp.208-217. Read More