Nowadays, the concept of globalization has become one of the most important concepts that affect the operations of many organizations and companies worldwide. The changes happening in the society, including changes in terms of communication and technology have led to the modification of business and marketing processes and strategies, with the aim of coping with the mentioned changes. Due to the existing fact that along with the changes that happen in the society is the event of observing global markets becoming more homogenous. With this, companies and business organizations, especially multinational companies, continuously develop and improve their marketing programs and projects to meet the standards of consumers and serve them across national boundaries. The development and improvement of such marketing programs, strategies and projects lead many researchers and analysts to evaluate and assess the effects or impacts of globalization. With this in mind, this paper seeks to discuss the perceived impacts of globalization on the international marketing strategies of organizations, with reference to a major multinational company. In addition to this is the discussion of the major forces that have led to growing globalization of markets.
Globalization and International Marketing
The concepts of globalization and international marketing are two important concepts that must be addressed and discussed in relation to business operations of large multinational companies. Globalization is defined as the integration of the economy at a global level and involves two main features (“What is Globalization?…”, 2003). The first main feature states that in globalization, most trade takes place among multinational corporations, while the second main feature emphasizes that the major activity in the global economy is the flow of money in the form of derivatives, foreign investments and many others (“What is Globalization?…”, 2003). In simple terms, the concept of globalization simply means the opening and cross relating of different economies in the world, in line with the desire to have a wider and diverse market. With this, since the aim of globalization is to expand and diversify its market, the concept of international market then becomes relevant. International marketing refers to marketing across national borders, in which, the environment from where products and services are offered differs from country to country, and services and facilities are priced differently, with some products or services not available at all in some countries (Benneth and Blythe, 2002). From this definition, it can be observed that the concepts of globalization and international marketing are similar, with the aim of market expansion and diversification. However, the difference lies on the fact that globalization may become the effect of international marketing.
A lot of business organizations and companies engage in and focus on international marketing, with the desire for more profits, sales and recognition from consumers. International marketing also allows business organizations opportunities for further development and improvement, in terms of their products, services, strategies, systems, and operations. This is because international markets offer vast business opportunities for firms with a product or service in high demand, in line with newness, cultural adaptation, attractiveness, and appropriate marketing strategies that can assist them particularly (“Global Marketing and Supply Chain”, 2007). In addition, when firms focus on international marketing, they are given the chance to gain more knowledge and information in their industry, thus, having the opportunity to provide more innovative services and products to their consumers.
With this, the strategies used in international marketing can be discussed. The strategies or methods used in international marketing are being used by multinational companies, with their aim of expanding and diversifying their markets. Primarily, exporting is the initial strategy of firms in entering a foreign market. Exporting means manufacturing a product in one country and selling it to another, and involves marketing products that have been made or assembled in a target country (Benneth and Blythe, 2002). This is the initial step of international businesses because exporting is a low risk strategy, wherein few investments are made (Perner, 2007). Second strategy is through an establishment of an enduring presence in the foreign country through contract manufacturing, which involves having someone else manufacture products, while a specific firm take on some of the marketing efforts, thus, saving investment (Perner, 2007). Third strategy is through licensing and franchising the products of local businesses (Benneth and Blythe, 2002), which are low exposure methods of entry, as they allow other individuals or groups of individuals to use the firm’s trademarks and accumulated expertise, thus, generating little control over the operation of the business (Perner, 2007). In addition, firms can also establish their name and reputation in a foreign market through sourcing components from foreign states (Benneth and Blythe, 2002), or importing raw materials and other equipments. This would somehow assist the company in establishing its reputation and name in the foreign country, thus, giving it enough opportunity to be known by its target market. Last strategy or method of market entry is through direct entry strategies, where the firm either acquires a firm or builds operations that involve the highest exposure (Perner, 2007). With direct entry strategies, the firm can gather more knowledge regarding the local market of its target country, and sustains greater control over its resources and information (Perner, 2007).
These strategies are used by business organizations and firms to ensure their establishment in the market of their target country. With the use of such methods of strategies, business organizations and firms are able to focus on their aims and goals, thus, making them more focused in taking advantage of open opportunities that they can consider as their edge over other companies from the same industry. In addition, with these strategies and methods, multinational companies or firms would be able to obtain adequate and relevant information and knowledge regarding their target market and country, thus, would be useful in line with their product or service development and improvement. The use of such strategies, thus, enabling them to participate in the process of and in enhancing globalization.
In relation to the strategies and methods used by firms to engage in international marketing are the global strategies that also aim for the same goals that international marketing have. Most companies perceive globalization as a matter of taking a superior business model and extending it geographically, with necessary modifications, to maximize the company’s economies of sale. From this perspective, the key strategic challenge is to simply determine how much to adapt the business model – how much to standardize from country to country versus how much to localize to respond to local differences. However, the balance of localization and standardization does not disregard the fact that not all companies are similar from one another, including their differences in potential for development. Differences from country to country, in contrast, are viewed as obstacles that need to be overcome (Ghemawat, 2003).
The presence of differences is being recognized by companies as not only as a disadvantage, but also as an opportunity for business and sales. This is exhibited by the large multinational company Coca Cola. The Coca Cola Company is the world’s leading manufacturer, distributor and marketer of non-alcoholic beverages, concentrates, and syrups, and is present in almost all parts of the world (“Global Influence of Coca Cola”, 2005). It is considered a global company, one that largely participates in the process of globalization, for it is able to recognize and respect the cultural differences among countries and continents. Coca Cola was able to learn and educate itself to be able to continue serving, satisfying, and meeting the demand of its customers, through product innovation and development (“Global Influence of Coca Cola”, 2005). With this, the company was able to participate immensely in the process of globalization, for the establishment of their name and reputation in the global market does not only mean the increase in the sales and profit of the company, but also the promotion and encouragement of education and learning, through the Coca Cola Foundation. The Coca Cola Foundation was formed and now operates in nearly 200 countries, with the primary goal of helping those in need, especially those who lack education and knowledge from academic institutions (“Global Influence of Coca Cola”, 2005). From this, it can be seen and proved that the Coca Cola Company has been able to become successful with its endeavors, and thus, contributory to the process of globalization.
Moreover, in contrary to the global strategy of Coca Cola is the perception that going global does not mean that the company must necessarily have a presence around the world, like Coca Cola. This simply means that the company must perceive global competition and global markets and has determined the best strategy to prosper in that environment. The word “global” means the entire world, but is made up of smaller, more individual geographic entities, beginning with the market in a particular state or province and extending beyond, thus, does not limit only to the participation of large manufacturers (Dossenbach, 2002). There are several furniture manufacturers who have carved a niche in the European market. One Northeastern company with 70 employees exports to England and currently dedicates about 20% of its production to its market. Again, it is important to understand that a global strategy does not have to encompass every continent but can be regional, and giving large importance to plan, above all else (Dossenbach, 2002).
Major Factors that Influence Globalization
The primary drive of companies and firms to globalize is their intention or desire to expand and widen their target markets. The expansion and widening of the target markets of international firms indicates that the firm has enough resources to sustain and maintain its operations and production. Expansion of the company also indicates that the company has acquired enough knowledge in maintaining the operation of the company, thus, more learned and experienced in its own industry. This is a major factor to recognize, for with the desire to expand, the company aims for more profit and sales, which would enable to company to become more established in its industry. Second major factor to recognize and emphasize is the role of diversification, which is related to the presence of different cultures and races in the company. Several positive effects are attributed to diversification, and includes efficient resource allocation through internal capital markets, the increase in the ability of firms to internalize market failures, and increase in productivity (as cited in Li and Jin, 2006). In addition, diversification can also increase the generation of ideas, for more individuals become involved in the processes of the firm. Employees are also exposed to more cultures, practices and knowledge, thus, developing its organizational culture. Third major influence is the open opportunities for firms to engage in new business ventures, which would provide them with chances for more profit and prestige. New business ventures involve the production of new products or the innovation of a specific product or service. Fourth major influence or drive is the fact that firms may achieve fame or prestige if it globalize. The establishment of name, product/service, and reputation in specific countries and continents gives the business organization a chance to be regarded as one of the most successful business organizations in the whole world, thus, becoming more established in its own industry. Last major influence is the possibility of attracting new and more talents and skills in the company, which would give the organization the edge of performing well over other companies.
Impacts of Globalization
One of the perceived impacts or effects of globalization are the establishment of international alliances or coalitions, which link firms of the same industry based in different countries (Agnihotri and Santhanam, 2003). With international alliances, international policies and agreements will be established and reinforced, thus, effecting an increase in the establishment of harmonious relationships among companies. In addition, international alliances strengthens the industry where specific companies belong to, thus, reinforcing their bond that would enable them to come up with strategies for further improvement and development. Second impact of globalization is the development and improvement of the whole organization in order to address challenges or problems, for in line with the participation in globalization is the increase in the number of problems to be encountered. The need to configure and coordinate globally in complex ways creates some obvious organizational challenges, such as organizational structure, reporting hierarchies, communication linkages, and reward mechanisms (Agnihotri and Santhanam, 2003). With this, it can be understood that along globalization is the need to develop, improve, innovate, and adopt new strategies and methods in relation to systems modification to enable adjustment to the changes and challenges being encountered by the organization. Modification and restructuring in the organization is needed because along with the company’s intention to expand and widen its target market is the need for additional workforce and management processes and styles that would enable the company accommodate the increase in changes. Restructuring and remodeling of the company, thus, serves to be a good way of adjustment.
Third impact of globalization is the establishment of government relations. In the globalized era, the selection of foreign market to enter and the mode of entry will largely depend on the negotiations with the foreign governments concerned (Agnihotri and Santhanam, 2003). This is because the international business must be able to make negotiations and agreements with the government concerned, in order to comply with necessary requirements and encourage harmonious relationships. In addition, the ‘muscle power’ of the global firm can be vital in deciding the shift of power equilibrium, such that it must manage its relationship with the foreign government to its advantage (Agnihotri and Santhanam, 2003). Establishing a good and manageable relationship with the government concerned ensures a lasting relationship with the firm, thus, extending its operations in the foreign country. Last major impact of globalization is the increase in competition among other firms in the same industry. A global firm may be in a better position to compete with its global rival, as it can enhance its resources globally (Agnihotri and Santhanam, 2003). Being able to participate in its foreign target market makes the global firm more advanced and more developed compared to its rivals in the same industry, for it is able to meet the standards and demands of its foreign customers. From this perception, major suppliers and stakeholders would prefer the global firm to other firms.
From this discussion, it can be perceived that the concepts of globalization and international marketing affect one another, in terms of the operations of global business firms. Coming up with international marketing strategies enables a global firm to participate in the process of globalization, which enhances its abilities in addressing all the problems and challenges that come its way. In addition, the development of international marketing strategies enables a global firm gather relevant and additional knowledge regarding its target market. The use of such knowledge would come in handy in the actual process of developing a product or service and in its operations. Several factors determine the drive of organizations to participate in the process of globalization, and include expansion, diversification, new open opportunities, fame or prestige, and attracting new talents and skills in the organization. The interaction of such factors enables a global firm to devise useful and innovative ways on entering a foreign market. These methods produce a number of impacts, including international alliances, organizational challenges, government relations, and competition. These impacts enable global firms address issues in their organization, which further develop and improve their management and system.
Cite This Work
To export a reference to this article please select a referencing style below: