Factors Contributing To Program Standardization
geographic scope were essential concepts of international plan at the business altitude. This was because the firm-specific and location-specific rewards of international businesses were largely strong-minded by strategic decisions along these two proportions. (Douglas, Susan P. and Yoram Wind, 1987)
Prahalad and Doz (1987) suggested geographic scope was defined as the level to which firms compete in key markets on behalf of profit sanctuary of market leaders, or includes up to date customers who provide opportunities for huge sales volumes (Prahalad and Doz ,1987).
Abell and Derek (1980) States that abroad geographic scope shows that a firm competes in all or most key markets; a narrow geographic scope indicates that a firm competes only in a small number of chosen markets. Segment differentiation was defined as the level to which unusual competitive weapons were used in different important international markets. Segment differentiation around markets was defined as by means of diverse competitive weapons in diverse international markets. In contrast, a homogeneous move toward means that a firm uses the similar competitive weapons in each marketplace it serves. While the international marketing management literature had recognized the segment differentiation and geographic scope of strategy as important, the two dimensions have hardly ever been used together to classify international strategies. Instead, because of the necessity of a firm's international management and arrangement, researchers have tried to use these scopes to categorize international strategies (Abell and Derek,1980)
Galbraith and Kazanjian (1986) says management and arrangement were structural decisions rather than strategic scope. As helpful as this categorization was, it was based on aspect such as the centralization of decision making and the management of operating units relatively as strategic decisions with respect to products to manufacture, markets to provide, or competitive weapons to use. Thus, it was helpful for relating environments to formation rather than to strategy (Galbraith and Kazanjian 1986).
According to a researcher Govindarajan (1988)While categorization of international structure was clearly required, combining strategic and structural fundamentals into one categorization makes it hard to differentiate between the two and eliminate the likelihood of substitute alignments. A difference was required for determining if and when matches between definite strategies and definite structures lead to higher financial performance. Such an approach also permits findings of other studies regarding the associations among environment, strategy and structure to be connected to the present study Indeed, growth of separate categorization of these determinants of firm presentation had aided observed investigations in the field of strategic management .In this study, a categorization of international business-level strategies built on the scope of segment differentiation and geographic scope was sophisticated. In addition, performance outcomes connected with specific international environment and business-level strategy matches were analyzed. This study gives contribution to the international business literature by providing a categorization of strategy that does not rely on uniqueness of structure for its beginning, and by analyzing the ability of this method to explain variations in firm performance. (Govindarajan, 1988)
1.2 Problem Statement
To understand those factors which have significant difference in standardization of program on multinational and multi-domestic companies? As a matter of fact the study of program standardization was immensely complex and the factors which should be included to understand program standardization include several numbers. Therefore the key factors which have extreme significance should be included. In trying to investigate the above mention problem many other question were also unfolded as
Does a market intermediary have a significant difference in program standardization?
Does market development have a significant difference in program standardization?
Does diversification have a significant difference in program standardization?
Does nature of product have a significant difference in program standardization?
Does a market dynamic have a significant difference in program standardization?
Does Obsolescence have a significant difference in program standardization?
Does an environmental force have a significant difference in program standardization?
Does market position have a significant difference in program standardization?
H1: There is a significant difference in Market Intermediaries of organizations following program standardization as against those which do not practice program standardization
H2: There is a significant difference in Market Development of organizations following program standardization as against those which do not practice program standardization
H3: There is a significant difference in Diversification of organizations following program standardization as against those which do not practice program standardization
H4: There is a significant difference in Nature of Product of organizations following program standardization as against those which do not practice program standardization
H5: There is a significant difference in Market Dynamics of organizations following program standardization as against those which do not practice program standardization
H6: There is a significant difference in Obsolescence of organizations following program standardization as against those which do not practice program standardization
H7: There is a significant difference in Environmental Forces of organizations following program standardization as against those which do not practice program standardization
H8: There is a significant difference in Market Position of organizations following program standardization as against those which do not practice program standardization
1.4 Outline of the study
Throughout our analysis the researcher have found that multinational strategies and multi-domestic strategies vary differently in nature. When the firm was involve in industrial selling then multinational strategy work very efficiently and effectively. Multinational strategy was very economical as compare to multi-domestic strategies. However multi-domestic companies may vary because of buyers taste and preference and in many geographic areas awareness also play a major role for companies to opt for multi-domestic strategies. Firms which the research have found suitable for multi-domestic strategies were restaurants, FMCGs, garments, etc. The research of the concern was to find out those factors which contribute very significantly in multinational and multi-domestic industries.
Market Program Standardization
The term "program" comprises various facets of marketing mix, which can be classified as product design, product positioning, brand name, packaging, retail price, basic advertising message, creative expression, sales promotion, media allocation, role of sales force, management of sales force, role of middlemen, type of retail outlets, and customer service. Advertising (ad message and creative expression) and, to a lesser extent, product design were two aspects of the marketing program that have been examined more often than others, in both conceptual and empirical studies. Future research should explore globalization of other aspects of the marketing program as well. Conceptually, standardization of one or more parts of the marketing program was a function of five factors. Individually and collectively these factors affect standardization differently in different decision areas.
Activities to expand demand for particular product type marketing activities designed to increase the overall size of a market through education and awareness.
The term diversification implies that how much the firm was involved in different sector of the businesses.
Market intermediaries were the stakeholder of your organization. Market intermediaries were the people which create synergy in the company.
Market dynamics were all the changes which were taking place in market. The changing taste and behavior of the consumers and the government regulation which were the driving force of the organization.
In this study environmental forces were tested which included macro and micro environment.
Nature of Product
Nature of product term means that whether the product was consumer or industrial.
CHAPTER 2: LITERATURE REVIEW
According to Research conducted by Dunning (1988) suggested that international strategy was a function of the competitive. Advantage of multinational operations and the comparative advantage of the nations in which people were located (Dunning, 1988).
Barney (1991) suggested that comparative advantage of a nation was the outcome of the quantity and quality of resources it possesses to perform specific value chain activities. Competitive advantage grow to an international business when it was able to match hard-to-reproduce actions that can be performed mostly well with the key success aspect of the national markets in which it struggle (Barney, 1991).
According to Hamel and Prahalad (1985) a firm may utilize national relative advantages to strengthen its competitive advantages or balance its competitive weaknesses. Because each nation's relative advantages were necessarily diverse, a firm that participates in many national markets had greater autonomy both for proactive action and competitive reaction than a firm that competes in only a few (Hamel and Prahalad, 1985).
Takeuchi , Hirotaka and Porter (1986) identified some Essential questions in the international strategy literature were the scope to which customer needs were uniform worldwide, and whether those needs can be meet through a standardized strategic approach .The answers to these questions were very important because of the contact of standardization across national markets on value chain activities . For example, uniform customer needs may permits economies from a centralized R&D division and a common marketing approach. Diverse needs, by contrast, may require a firm to accept drastically different product designs, brand names and packaging for each national market, in result quick it to use different competitive strategies. For this reason, segment differentiation plays a vital role in the international situation. The above discussion mean that segment differentiation and geographic scope take on greater significance in international industries than in those restricted to domestic boundaries. Other extent, such as whether a firm decided to compete via low costs, product differentiation, or both, remains important. However, because decisions to participate across national boundaries enforce a unique set of requirements on a firm, the relative significance of segment differentiation and geographic scope enlarge. Furthermore, in the interests of cost-cutting, it was useful in both a theoretical and experimental sense to limit any categorization of strategy to the scope that was most applicable to the competitive circumstances. Based on the proposed framework, a firm pursues a mass-market strategy when it uses the similar set of competitive weapons from corner to corner a broad geographic scope. Firms with a segmented strategy also aim a broad geographic scope but exercise different competitive weapons in diverse national markets. Organizations that compete in a narrower geographic area follow either a focus or segmented-focus strategy respectively, depending on whether people compete in restricted markets in the same way, or use diverse competitive approaches (Takeuchi , Hirotaka and Porter , 1986).
Abell and Derek (1980) further elaborated that categorization was similar both in nature and language to the categorization proposed by excluding that it does not include specific category of competitive weapons for the reasons mentioned above. This relationship was of value because it includes many of the best features of the method of and maintain important characteristic of a sound classification: equally exclusive, internally uniform and collectively comprehensive groups (Abell and Derek, 1986).
According to researchers Chrisman, James J., Charles W. Hofer and William R. Boulton. (198I). In the previous section, four viable strategies for organizations competing in international industries were developed theoretically. However, while each of these strategies may be feasible, the performance of organizations following a particular strategy likely diverges depending on the competitive circumstances individual face. In other words, it was expected that definite strategies were leading to considerably higher performance than other strategies in certain environment. This supposition conforms to the location of the well-known crisis theory of business strategy first proposed .In the following pages, highly structured on the environmental conditions required for the useful implementation of the four international strategies talk about in this document (Chrisman, James J., Charles W. Hofer and William R. Boulton, 1981).
Hout, Thomas, Michael E. Porter and Eileen Rudden (1982) explains that Within the international management literature the theory of global and multi-domestic industries were exercises to describe international industries .A global industry was described by the existence of customers with uniform needs and few hurdles to trade or foreign rights of assets. A multidomestic industry was present when customer needs were heterogeneous/mixed or significant limitations on trade or foreign rights were compulsory by governments. In other words, the bases of competition in global industries were fundamentally similar in each national market, while in multidomestic industries competition were more changeable (Hout, Thomas, Michael E. Porter and Eileen Rudden,1982).
While Douglas et al, (1987) says few industries were enjoying characteristics that communicate to either of these pure categories, it was obvious that an industry's location on the range between these two boundaries have been important suggestion for the nature of competition within it. According to the conversation provided above, dissimilarity in the characteristics of international industries have been a serious impact on the usefulness of decisions concerning a firm's geographic scope and segment differentiation. With this in mind, the research turns to a discussion of the dependent relationships between environment, strategy and performance (Douglas et al, 1987).
According to Miller and Danny, (1986) the reason of segment differentiation was to modify products and services to better fit the needs of different cluster of customers .Segment differentiation was, however, expensive because dissimilarity in product designs, advertising programs, distribution channels, and so forth work adjacent to the development of economies in research and development, production and marketing. In contrast, if a firm be unsuccessful to segment its market, it risks sacrificing success for competence; few customers were attracted by a product that was unsuccessful to meet individual needs, no matter how inexpensive the purchase may be. In a multidomestic industry, the wants of customers were considered mixed. A firm that fails to respond to the diversity of customer requirements and buying reason may find itself at a competitive disadvantage vis-ÃÂ -vis firms that do. On the other hand, customer wants in a global industry were largely homogeneous. In this example, a firm that attempts to distinguish its offerings to dissimilar national markets may see its attempt goes unrewarded. It had, in other words, sacrificed competence with no corresponding gain in effectiveness (Miller and Danny, 1986).
White and Roderick E. (1986) claims that advantages of segment differentiation were described largely by whether an industry was global or multidomestic, the performance suggestion of geographic scope-taken alone-were also inclined by the environment. In global industries, firms with broad geographic scopes should enjoy numerous advantages that were largely unavailable to organization with narrow scopes, the most important of which may be economies of scale (White and Roderick E. 1986).
Capon, Noel, John U. Farley and Scott Hoeing, (1990) states that economies of scale arise when the unit cost of a product turn down as volume increases. Scale economies facilitate a firm to supply a product at a lesser cost than several smaller firms producing and selling the same collective volume. Geographic scope and prospective scale economies should be positively correlated because a larger base of customers should allow superior volumes, more competent capital-intensive production practice, marketing economies, and lower research and growth expenditures per unit. Since it had been shown that performance was have an effect on positively by both economies of scale and market share, it was expected that geographic scope and profit should have a similar relationship. Furthermore, greater geographic wideness may better position a firm to use differences in factor costs. Finally, a broad geographic scope should create prospect for new product introductions and economies of scope that may be occupied for a firm of more confidential scope Regardless of whether surroundings was global or multi-domestic, a broad geographic scope should permit a firm greater access to financial markets and information about product innovation happening in different places across the globe contrast to the more narrowly focused firm (Capon, Noel, John U. Farley and Scott Hoeing, 1990).
Bartlett, Christopher A. and Sumnantra Ghoshal (1987) explains that global marketing was much on the brain of academicians and practitioners today. It had been disagreeing that the worldwide marketplace had become so communized that multinational corporations can market standardized products and services all over the world, by the same strategies, with resulting lower costs and higher margins. Interestingly, the standardization issue was not new. Whether to standardize or to customize had been a niggling question with which inter-national marketers have struggle since the 1960s. The world went on without the matter being fully determined. Recent rebirth of interest in the international standardization subject was accredited to such global pressure as TV, films, widespread travel, telecommunications, and the computer. Though much had been said and written recently on globalization of marketing, the research was near to any convincing theory or practice. This situation was not amazing, as empirical studies in the area of international marketing were limited. Because empirical finding requires a theoretical base, this article was an attempt to provide a theoretical framework for gaining insight into the standardization subject. Hypotheses were on hand in the form of propositions. Ideas for testing these propositions were given. In brief, attempts were made to establish a research agenda on the standardization issue (Bartlett, Christopher A. and Sumnantra Ghoshal, 1987).
As used here, standardization of international marketing strategy refers to using a universal product, price, distribution, and promotion plan on an international basis. The subject of standardization first was move up by Elinder and Erik (1961) with reference to advertising. He stressed out that emerging likeness among European consumers make homogeneous advertising both desirable and practicable. Interestingly, advertising go on with to be the leading standardization concern Peebles, Dean M., Jr., John K. Ryans, and Ivan R. Vernon (1977).In the last 25 years, of the 34 major studies on the subject, 14 have been on advertising. In addition, almost 55% of these studies have been theoretical.
Though the subject of standardization had not been researched conclusively, an examination of these writings leads to the following conclusions.
There were two aspects of standardization, process and program
Across-the-board standardization was unthinkable (Killough and James , 1978).
The decision on standardization was not a dichotomous one between complete standardization and customization. Rather, there can be degrees of standardization .
A range of internal and external factors impose on the standardization decision. Among these, product/industry distinctiveness was paramount (Douglas, Susan P. and Yoram Wind, 1987).
Generally standardization was most possible in settings where marketing communications (Peeble et al, 1987).
Was well developed (Peeble et al, 1987).
Likelihood of program standardization depends on a range of factors recognized as target market, market position, nature of product, and environment. (Peeble et al, 1987).
Successful implementation of standardization strategy was influenced by organization point of view. The degree of standardization in a product/ market condition should be tested in terms of its long-term advantage. (Peeble et al, 1987).
Sorenson et al (1975) states the previous observations, taken as a whole, seem to propose that standardization at best was difficult and not practical. However, the researchers do be familiar with that the market-place was becoming more and more global and without a doubt there were global products. Among consumer durable goods, the Mercedes car was a worldwide product. Among non-durable goods, Coca-Cola was everywhere. Among industrial goods, Boeing jets were sold universal as a global product. How do the researches make clear this phenomenon theoretically? This article was an effort to establish a research schedule on the standardization topic. The article was organized into four sections. In the first part a frame-work for decisive marketing program standardization was introduced. The next section seriously examines various factors that affect standardization. Research proposition for establishing a research program on the standardization subject were developed around these issue. The degree of standardization possible in a particular case and its force on performance in plan markets were discussed in the third section. In the last section, administrative suggestions were provided. (Sorenson et al, 1975).
As illustrated before, standardization had two aspects: marketing program and marketing process. The term "program" refers to a variety of aspects of the marketing mix and "process" implies apparatus that help in program growth and execution. A company may standardize one or both of these features. In as much as the current argument pertains to program standardization, this article addresses only that feature.
Quelch J. A. and E. J. Hoff (1986), With few exceptions, most of the literature on standardization, particularly the earlier studies, deals with globalization/standardization of marketing program .The term "program" includes various surface of marketing mix, which can be classify as product design, product positioning, brand name, packaging, retail price, basic advertising communication, creative appearance, sales sponsorship, media allotment, role of sales force, management. Of sales force, role of broker, type of retail opening and customer service Advertising (ad communication and creative face) and to a lesser degree, product design were two feature of the marketing plan that have been inspect more often than others, in both theoretical and experiential studies. Future research should look at globalization of other portion of the marketing program as well Quelch J. A. and E. J. Hoff (1986).
Kale, Sudhir H. and D. Sudharshan (1987) states that enemy of globalization also use superior countries as individual indication point. Notes that civilization and background tend to keep it up and therefore the idea of the "European consumer" was a misnomer. Scholars observe that as group around the world become well educated and wealthier, individual tastes actually depart. Found sharp income and behavior dissimilarity between European consumers to be discouraging for globalization. OECD nation, which make up only 15% of the total quantity of countries in the world, account for as much as 55% of the global GNP. Markets in these countries have resemblance in consumer demand and commonalities in lifestyle outline that were explained by more than a few factors (Nissan Motor Company1 984). First, the purchasing power of OECD residents, as expressed in flexible income per individual, was more than eight to 15 times superior to that of residents of less developed countries (LDCs) and newly industrialized countries (NICs). Second, in OECD countries the saturation of television into households was larger than 75% whereas in NICs it was about 25% and in LDCs it was fewer than 10%. Third, more than one-third of the OECD consumers graduate from high school or higher educational institutions, but a similar level of education still was presented to less than 15% of the residents in NICs and to an even lower percentage in LDCs. Briefly, it was consumers education stage (what individual read and see), consumers television watching (consumers level of responsiveness), and consumers purchasing power that make the OECD residents alike to each other in performance and that differentiate them from the rest of the world. Thus standardization may be practicable among the OECD nations. Rather than looking at the target market with respect of rich/poor nations, it may be possible to classify segments, in both developed and developing countries, that were alike and represent a homogeneous market. Several scholars have openly certified this type of approach . ââ‚¬Å“The multinational corporation operates in a number of countries, and regulate its products and practice in each at high comparative costs . . . (companies should) know that achievement in a world of homogenized demand need a search for sales chance in similar section across the globe in order to attain the economies of scale essential to fight. Such a segment in one country was rarely unique-it had close cousins everywhere exactly because technology had homogenized the globe.ââ‚¬Â( Kale, Sudhir H. and D. Sudharshan , 1987)
Hill and Still (1984) have given experiential evidence on the inter-market segment notion was provided by, who found that greater product version was required in rural areas than in urban areas in the LDCs. This finding can be understood to mean that the urban areas in developing countries may have section that was alike in nature to those in industrialized nations. As a research thought, country markets can be segmented; say on the basis of profession, and the needs and shopping qualities of a particular segment can be examined on an international basis. The importance of the intermarket segmentation thought can be illustrated with indication to India and Kuwait. Kuwait's per capita GNP in 1983 was $18,000 and India's $260. On the basis of these statistics, Kuwait was about 70 times extra attractive than India. However, India's total GNP in 1983 was eight time greater than Kuwait's and its population was 400 times as big. If research suppose that only 5% of the Indians have the purchasing power of a Kuwaiti, the Indian market can be 20 times as lucrative as the Kuwaiti market (Hill and Still 1984).
Jain and Subhash (1984) suggested that segmenting world markets in separation of market-specific circumstance was insufficient. Market development, market conditions, and competitive factors must be considered. Different national markets for a given product were in different arena of development. A suitable way of explaining this occurrence was through the product life cycle thought. If a product's foreign market was in a diverse stage of market development than its United States market, suitable changes in the product design were attractive in order to make a sufficient product/market match. Polaroid's Swinger camera was claimed to have unsuccessful in France because the company follow the same strategy there as in the United States when the two markets were in dissimilar stages of development. The United States market was in the grown-up stage, whereas the French market was in the preliminary stage .The three market conditions that pressure the standardization decision were cultural differences . Economic dissimilarity (Douglas et al), and dissimilarity in customer perceptions . In foreign markets. Culture pressures every feature of marketing. The products people buy, the quality people value, and the principals whose opinions people accept were all culture-based choice For example, different levels of knowledge, awareness, facts, and affect with people, products in general, and specific brands may cause in differential approach toward similar products .Cultural differences influence consumer acculturation which, in turn, affects acceptance of standardized products .Hence, where a product was culturally fit with the society, it was likely to be more appropriate for standardization .Poor economic means may avoid masses in LDCs from buying the range of products that U.S. consumers consider necessary. To bring such products as automobiles and appliances within the get in touch with of the middle class in developing countries, for example, the products must be properly customized to cut costs without reducing practical quality. Finally, the decision on product standardization should be based on the psychological meaning of the product in diverse markets .Foreign products in many cultures were professed as high quality products. In such cases, standardization was desirable .In contrast, if the image of a country's products were weedy, it was strategically desirable to settle in a product so that it could be encourage as different from, rather than usual of, that country's products (Jain and Subhash, 1984).
Henzler and Herbert (1981)In the absence of current and prospective competition a company may keep on to do well in a market abroad with a standard product. However, the presence of competition may require customization to gain an advantage over competitor by providing a product that eventually matches local conditions exactly. Similarly, if the competitive place of the firm does not differ among markets follow a global strategy may be meaningful .For example, if a company had a "leadership" location (in terms of market share) in both the U.S. and select abroad markets, other things being equal, it can successfully standardize its marketing strategy in all those countries (Henzler and Herbert, 1981).
Yoshino, Michael Y. and Christopher A. Bartlett (1981), Studied on the subject demonstrate that standardization differ with the nature of the product. Two product aspects were related, type of product (i.e., industrial vs. consumer product) and product positioning. Standardization was more practical for industrial goods than for consumer goods . Among consumer goods, durables offer greater chance for standardization than nondurables because the later appeal to tastes, habits, and customs, which were exclusive to each society. Experiential evidence in this matter comes from a fresh study showing that industrial and high technology products (e.g., computer hardware, airliners, photographic equipment, heavy equipment, and machine tools) were considered most suitable for global brand strategies. Confections, clothing, food, toiletries, and household cleaners were considering much less appropriate .Coming Glass Works, for example, considered its electronic and medical products to be universal products that did not differ by country. Individual tended toward standardization in product policy, product development, and pricing. Corning ware, in difference, was not a universal product. It must be modified to suit various market needs. For example, the "oven-to-freezer" feature had been much admired in the United States but was not suitable in France; a soufflÃÂ© dish was admired in France but did not have a big market in the U.S. (Yoshino et al, 1981).
"Positioning" refers to designing the product to fit a given place in the consumer's mind .If a product was positioned abroad by the same approach as at home, standardization was feasible Positioned in the United States market as an orange drink substitute, but not in France (where orange drink was not a breakfasts staple), making standardization inappropriate .Phillip Morris, Inc, had been able to standardize Marlboro's Marketing program because it had positioned the
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