The Globalization of Markets

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The Globalization of Markets

By | September 2010
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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...

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