The Globalization of Markets

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The globalization of markets
Theodore Levitt

The worldwide success of a growing list of products that have become household names is evidence that consumers the world over, despite deep-rooted cultural differences, are becoming more and more alike - or, as the author puts it, "homogenized." In consequence, he contends, the traditional MNC's strategy of tailoring its products to the needs of multiple markets may put it at a severe disadvantage vis-a-vis competitors who apply marketing imagination to the task of developing advanced, functional, reliable standardized products, at the right price, on a global scale. A powerful force drives the world toward a converging commonality, and that force is technology. It has proletarianized communication, transport and travel. It has made isolated places and impoverished peoples eager for modernity's allurements. Almost everyone everywhere wants all the things they have heard about, seen, or experienced via the new technologies. The result is a new commercial reality - the emergence of global markets for standardized consumer products on a previously unimagined scale. Corporations geared to this new reality benefit from enormous economies of scale in production, distribution, marketing and management. By translating these benefits into reduced world prices, they can decimate competitors that still live in the disabling grip of old assumptions about how the world works. Gone are accustomed differences in national or regional preference. Gone are the days when a company could sell last year's models - or lesser versions of advanced products — in the less developed world. And gone are the days when prices, margins and profits abroad were generally higher than at home. The globalization of markets is at hand. With that, the multinational commercial world nears its end, and so does the multinational corporation. THE McKINSEY QUARTERLY

The multinational and the global corporation are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each - at high relative costs. The global corporation operates with resolute constancy - at low relative cost - as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere. Global vs. multinational Which strategy is better is not a matter of opinion but of necessity. Worldwide communications carry everywhere the constant drumbeat of modern possibilities to lighten and enhance work, raise living standards, divert and entertain. The same countries that ask the world to recognize and respect the individuality of their cultures insist on the wholesale transfer to them of modern goods, services and technologies. Modernity is not just a wish but also a widespread practice among those who cling, with unyielding passion or religious fervor, to ancient attitudes and heritages. H Who can forget the televised scenes during the 1979 Iranian uprisings of young men in fashionable French-cut trousers and silky hody shirts thirsting with raised modern weapons for blood in the name of Islamic fundamentalism? II In Brazil, thousands swarm daily from preindustrial Bahian darkness into exploding coastal cities, there quickly to install television sets in crowded corrugated huts and, next to battered Volkswagens, make sacrificial offerings of fruit and fresh-killed chickens to Macumban spirits by candlelight. f During Biafra's fratricidal war against the Ibos, daily televised reports showed soldiers carrying bloodstained swords and listening to transistor radios while drinking Coca-Cola. ^ In the isolated Siberian city of Krasnoyarsk, with no paved streets and censored news, occasional western travelers are stealthily propositioned for cigarettes, digital watches, and even the clothes off their backs. The organized smuggling of electronic equipment, used automobiles, western clothing, cosmetics and pirated movies into primitive places...
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