12_global brands & local markets23
TRANSCRIPT
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Definition: Globalization has been defined in business schools as the
production and distribution of products and services of ahomogenous type and quality on a worldwide basis.
Why?
The fact that foreign sales account for more than 50 per centof the annual revenues of companies such as HewlettPackard, IBM, Johnson and Johnson, Mobil, Motorola, Procter& Gamble, etc..
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Features of globalisationRemoval of barriers to free tradeCloser integration of national economiesShrinking planet phenomenonNetwork society
Globalization process involves: costs risks challenges conflict
potential benefits
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Yesterdays Globalism
In yesterdays one-size-fits-all world, big companies couldoften migrate something that was a hit in the U.S. orEurope by tweaking the language and advertising .
Examples:
Mercedes-Benz, traded on its reputation for buildinghighly engineered automobiles to drive into foreignmarkets.
Coca-Cola Co. and Marlboro cigarettes traded ontheir American-ness to create large overseasfollowings.
Sony Corp. found that compact, economical, and
reliable electronics like the Walkman, struck a chordwith people everywhere.
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Todays Globalism
Things have changed.
No company can safely assume there will be
viable foreign markets for an existing product.Any company seeking to expand globally needs
to ask if its offerings are culturally and sociallyappropriate for its targeted market.
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Problems faced byGlobal brands
Companies find it difficult to succeed in new markets thatare culturally unfamiliar.
They often underestimate differences in the patternsof daily life in the new markets.
This makes it difficult to develop products and servicesthat fit peoples lives,
It is difficult to extend their brand, and manageculturally diverse teams.
Western companies are now paying a great deal ofattention to the growing number of people withexpendable income in China, India, and otherdeveloping regions where the cultures are verydifferent from those in the West.
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Coca-cola : Global is Out,
Local is In Initial set backs in 80s the benefits of global integration are
sought and the need to adapt products to local markets islargely ignored.
Coke is instituting a strategy of think local, act local byputting increased decision making in the hands of localmanagers.
Make model citizen by reaching out to the localcommunities and getting involved in civic and charitableactivities.
Better understanding and appealing to local differences.
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sney: earn ng o ay u oYes
Before :
Workers were required to speak English, even if most people in attendance were French.
Liquor was not sold in the park, they have a drink with lunch or dinner.
Many of the exhibits and rides did not have a local theme, they were the same as thosein Disneyland USA and thus did not appeal to Europeans.
After :
Began creating European-specific attractions
Started to serve alcoholic beverages
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Kingfisher: Where Retail isDetail
The Kingfisher Group, a British retail enterprisewith annual sales of over $10 billion, wasfounded in 1989.
Retail is detail and local knowledge is vital.
The approach that is used in managing thesegeographically dispersed operations
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Advanta
gesof
global
isation
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Advantages
Incresed free trade between nations
Increased liquidity
Greater flexibilty Mass media
Increased flow of communication
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Advantages
Greater ease of transportation
Reduction of cultural barriers
Spread of democratic ideals
Reduction in chances of war
Increase in evironmental protection
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Disadvantages of globalisation
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Disadvantages
Economic disruptions
Local culture and tradition is threatened
Spread of materialistic lifestyle and attitude Greater chances of reactions being voilent
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Risks posed by globalization
1.Income differentials cause basic poverty-associatedconditions for poor health.
2. Job insecurity, substandard wages, lowest-common
denominator approach to occupational environmentalconditions & safety can jeopardize health of workers &their families.
3. Diseases ofdietary excesses, as food production &food processing become intensified, & as urbanconsumer preferences are shaped by globally
promoted images.4.Continued widespread rise ofurban obesity.
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Extreme Stage ofGlobalisation
Global market participation
Global products and services
Global location of activities
Global marketing
Global competitive moves
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Two general types of research that companies use tounderstand new markets
1. product-focused research: asks consumersthrough surveys, focus groups, interviews, home
visits and usability tests, about existing orprototypical products and services.
2. culture-focused research:uses measures like census-taking and demographic data, to look at general patterns
of daily life like value systems, social structures, andrelationships among friends and relatives.
How Companies Try toUnderstand Consumers?
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Tips
Do not assume an integrated global market.
Be prepared to design strategies that take into
account regional trade and investmentagreements.
Encourage all your managers to think
regional, act local and forget global!
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Contd. The foreign market is not always the same as your
home market.
Make alliances and foster cross-cultural awareness.
When global brands target their regional markets using
the appropriate economic integration/nationalresponsiveness, they tend to be successful.
Develop new thinking and knowledge about regionalbusiness networks and assess the similar attributes ofcompetitors, rather than always developing pure global
strategies.
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Steps to be followed Which market do we want to access. Take macro and micro data to make a segmentation
decisions on these markets and choose our priorities. How can we modify our product to make more
attractive to each sepate group: you can change.
Performance levels Design Support Speed of services Packagining
Positioning Price?
Can we position ourselves as being the best wherethere are many others to choose from?
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How it will help?
Planning products and services for
culturally divergent markets.
Managing their brand across cultures. Create and managing teams of culturally
diverse employees.
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Thankyo
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