Question

What value is there to understanding the factors driving standardization versus localization of HR policies, processes, routines, procedures and practices?

Answer 1

The value of understanding the factors driving standardization versus localization of HR policies, processes, routines, procedures and practices can be derived from the fact that the strategic decisions in a global market place have become increasingly complex. A global industry is one which competition crosses national borders; the strategic moves of a MNC in one country can be significantly affected by its competitive position in another country. Examples are found in aircraft making, automobiles, computers, durable electronic consumer goods. Hence, in international management, an Organization attempts to undertake various global strategies in order to expand its horizon to the Global markets. Accordingly, there are four types of main strategies as under:

1. International strategy
2. Localization strategy
3. Global Standardization i.e. cost leadership strategy
4. Transnational strategy

In terms of Standardization versus Localization, the value of understanding these two strategies is very essential in defining the marketing mix when a Firm sets forth to an International strategy. Although independent of each other, they both form a critical part of the mix because the trade has to operate at a global scale. The reason is that such firms now spread their customer base across various regions thereby calling for diversity and at the same time, not compromising with the standardization of the quality of their products and services but localizing the same to the host country’s local markets.

With regards to Localization, the ingrained socio-cultural patterns, biases, customs, and attitudes influence the prevalence of religion as one of the “on the surface” variable that is easily observed that can have a significant impact on the diet of the people, upon attitudes towards colors, the way the dress themselves in, the business hours that they follow, etc. This variable causes the major pervasive impact on how Organizational buying decisions are made. Moreover, it impacts the decisions of the promotional channels to reach out to the consumers. On the other side, Global Standardization strategy in many products do not make the buying decisions easier for the consumers. The promotional idea to establish an emotional connect with the target audience differs based on the ingrained socio-cultural patterns, biases, customs, and attitudes that has an ability to make standardization absolutely ineffective. For example, the US public is more liberal in thoughts as compared to the public in Pakistan. Hence while advertising the products revolving around the women models; care needs to be taken as to how such models are objectified in the advertisements. The costumes that such women wear, the attitudes that they bear, everything differs in these two countries and hence Global standardization would only worse the matter. With this, the value of understanding both the strategies would be significant.

For example, in case of Localization strategy, it customizes the advertising and promotion of its products and services to best fit local needs. It customizes so as to acquire the positive local response in the international markets through the approach of multi-domestic strategies. It is help able to create a relationship well with the local customers of the country. Example could be Unilever Limited. Example could be Hindustan Unilever Limited (HUL), an MNC working in India. All the retail products of HUL (Hindustan Unilever Limited), a subsidiary of its Parent Company Unilever, has been known worldwide for its very efficient supply chain management even in the remotest part of India, 7th largest country in terms of land size and second largest in terms of Population. Hindustan Unilever Ltd. was formerly known as Hindustan Lever Limited. The Company renamed itself in the year 2007. It is India’s largest Company in Fast-moving Consumer Goods sector. It also amounts to country’s one of the largest exporters thereby focusing upon a vast chain of supply and distribution. HUL holds 40 factory units across India to manage its highly diversified line of retail products. The products are so well customized that it has been able to deeply connect with the localites of the nation.

Whereas in case of the Global standardization strategy, it is a Cost leadership strategy which is concerned with the Organizations that bear high manufacturing skills. In the situation where Global competitiveness is at higher level, this strategy could be undertaken. Under this strategy, rapid marketing expansion happens. There is an overall value addition in the technology. The database of the Global clientele with the track record of consistent growth is also seen.

• Example would be the Stokes group (U.K.) in January 2006

   - focused on passenger cars segment

   -supplied to global major OEM  

• Schoneweiss (West Germany) in December 2006

    -high class production facilities

   - focused on truck and automobile segments

• JECO Forgings (West Germany ) in November 2006

   -Highly diversified product range

   - Mainly catered to truck segment

   -High customer orientation in designs facility.