Tuesday, April 16, 2013

Localizing Globalization

This week we discussed about globalization and how organizations should leverage the opportunities the globalization provides. Be it fro countries that are similar to the ones that the organization is operating in or the ones that are seen as next growth opportunities.

In today's world it is understood that growth, beyond a point, comes only through globalization. Every successful industry in a country reaches a saturation once it serves most of its targeted users after which its growth slows down. In a world without globalization this would have forced the companies to innovate and diversify its products or services to maintain the growth or even run the organization. But with globalization we solve this problem of market saturation in a different way, which is by removing the boundaries between the countries. This lets the organizations expand their operations in new markets, typically with better growth prospects. Thus making global expansion a given than a choice to consider. In context of globalization it is important to also introduce the importance of Brazil, Russia, India and China (BRIC) nations, which are seen as the markets that lead the next generation of growth.

While globalization definitely gives new growth opportunities to the organizations, they should also be mindful of the fact that one-size-fits-all strategy doesn't work in globalizing effort. Organizations should consider the differences in preferences, cultures along with other factors when entering in to new markets. To explain this, we can take example of WalMart and McDonalds. WalMart used its standard strategy in its globalizing effort, and as a result it ended up making loses and eventually shutting the shops in countries like Germany and China. Whereas McDonalds on the other hand had a different approach for each of the market they are entering into, for instance McDonalds offers lamb burgers in India, McShawarma in Israel and Bulgogi burger in South Korea. There are several failure stories of globalization strategies where the organization tried to replicate what worked in their home country, and failed to localize to the target markets. Failure of Google, eBay and Amazon in China is good example of that. That shows how important it is localize your globalization strategy

Unlike early days of globalization, where globalization was limited only to the large enterprises, it is now part of the strategy for an organization of any scale. This was made possible by the innovations in technology which reduced the virtual distance between the countries, and also the liberal foreign trade policies by developing countries to encourage investments and boost economies.

Globalization efforts have to be planned out carefully considering the cultural, attitude differences etc., even before entering the market. Because organizations don't get second chance to make first impression.


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