Question

1. What is the significance of the concept of market (or customer) homogeneity as it pertains to global product standardization? Properly use the concepts of globalization, localization and standardization, Theodore Levitt and cost control in your answer.

2. There are numerous external events that might motivate a firm to “go international. Describe five reasons. Make sure your answers are clearly differentiated and complete.

Answer 1

Answers-

The significance of the concept of market or customer homogeneity as it pertains to global product standardization that Levitt’s argument was about new technology has “proletarianized” communication, transport, and travel, a new commercial reality-the emergence of global markets for standardized consumer products, Converging Consumption Pattern: Almost everyone, everywhere wants global products, wish of modernity, Prefer low prices to supposed national characteristics and the Earth is flat. He also argued about Global Corporation vs Multinational Corporation and further more over Multinational corporations knows a lot about great many countries and adapts to supposed differences.

   He also proposed that not to adapt the superficial differences but force suitably standardized products globally. Which means that the market for standardized products should be kept global. He urged over making the standardized products global in order to maintain their market worth and image. Another concept given by Levitt was about offering everyone simultaneously high-quality, more or less standardized products at optimally low prices. People tend to prefer more standardized products so this was the best deal for them.

   In 1983, the great professor Theodore Levitt argued that marketers were becoming confronted with a ”homogeneous global village.” He advised firms to market standardized , high-quality, world products, i.e.,standardized advertising, pricing, distribution and product features. A major source of competitive advantage has become the ability to produce high-quality products at lowest cost, since global consumers will sacrifice their idiosyncratic preferences for the high-quality but low-priced products.

The concepts of globalization, localization and standardization, Theodore Levitt and cost control is that the Globalization: the standardization of products, brands and advertising or marketing practices across the world. Localization: the variation of the marketing mix to meet differential environmental forces of each market.Localization is the adaptation of a product or service to meet the needs of a particular language, culture or desired population's "look-and-feel." A successfully localized service or product is one that appears to have been developed within the local culture.,

There are numerous external events that might motivate a firm to “go international. The five reasons are as follows-

1. Increase Sales and Profitability

Expanding on a global marketspace is more likely to increase overall revenue sales and reduce operational costs, through attracting a larger customer base. In addition, through the help of technologies and the revolution of the internet, international commerce has become even more attractive, for smaller businesses. Through having the opportunity to outsource, they are able to reduce costs and improve their business management & operational efficiency.

2. Greater Economies of Scale

Some companies may want to expand their business products, as they are more likely to be accepted around the world. In many industries, expansion through internationalisation may benefit companies, through achieving better economies of scale. This is especially the case for companies operating in smaller more domestic markets. Moreover, internationalisation may also serve as an opportunity to differentiate or exploit a new product extension, service, or brand.

3. Enter new Markets & Spread the Risk

The popularity of internationalization is also thanks to countries opening up trade barriers and lowering tariffs across the world. Internationalization allows companies to diversify their businesses and be able to ease the risk of decelerating demand, across different countries. Operating in various countries also gives companies the opportunity to invest in innovation and develop different variations of their products and services, which may also shield them from declining interest in a particular product or service.

4. Attracting new Talents

Going international enables companies to have access to a broader talent pool. Employees that speak multiple languages and are accustomed to different cultures are able to amplify connections with a wider customer base. Moreover, it allows companies to create global work teams, that have expertise in local markets and that are able to exploit domestic market resources and raw materials, through connecting with local suppliers.

5. Saturation of Home Market & Competitors’ Move

Offset of home market is also a reason as to why companies decide to expand globally, as well as first mover advantage, as this avoids local rivalry and could lead to exceptional high returns on invested capital.