“Glocalization”
Introduction
This paper intends to develop a critical assessment of “Glocalization” concept. Furthermore, the paper intends to illustrate how “Glocalization” and the “standardization-adaptation debate” relate.
Part I
Critical Analysis Regarding Relevant Literature
Definition
“Glocalization” is a term used to demonstrate a concept in which, products which are marketed globally are able to adapt to different local markets. Therefore, “Glocalization” refers to a concept in which, within the global market, a given product or a given service, has a higher likelihood of succeeding, when it gets customized according to the culture or the locality where sales of that product are made (Bantimaroudis 2017).
Additionally, based on the “Glocalization” concept, products are designed for the benefit of a specific local market, whereas a simultaneous development of the same products occurs, with the aim of distributing the products globally.
“Glocalization” context in reference to Globalization
“Glocalization” is a term developed from a combination of two broad terms which are the term localization and the term globalization (Drori, Höllerer, and Walgenbach 2014, pp.85). Globalization refers to the global movement regarding interaction or integration by diverse people, different companies, along with governments from dissimilar nations (Frenkel 2014, pp.133).
In contrast, localization refers to the adjustment of original output by different companies within their domicile countries sense. Localization also refers to the suitability of a perception using another language or a different culture (Küster 2016, pp.203). Thus, “Glocalization” results from both the forces of localization, along with the forces of globalization.
The driving idea of “Glocalization” is creating an initial product with a precise foreign marketplace in mind. However, “Glocalization” is more effective and efficient in companies that employ decentralized authority. Notably, employing decentralized authority is a force of globalization.
“Glocalization” presents many benefits to companies, along with the communities utilizing the products developed by the companies involved, or the services offered by the companies. Thus, companies that employ “Glocalization” are able to attend to a bigger market which they have targeted (Akgün, Keskin and Ayar 2014, pp 610). Conversely, the community benefits from increased market competition, which results in a drop in the product prices.
Therefore, “Glocalization” effectively reduces the gap of inequality, whereby individuals who previously could not be able to afford certain products due to the market being controlled by the local monopolies, get the capability of purchasing the products at a cheaper cost.
Therefore, when the term globalization is used, it implies all activities that place globally such as services offered companies available, and people, all being connected globally. However, “Glocalization” describes both global activities along with local activities (Apetrei, Kureshi and Horodnic 2015, pp 1520). Thus, “Glocalization” involves simulation of global activities to the locals. Globalization is thus assumed to be a significant phenomenon globally.
Furthermore, globalization interrelates with post-Fordism. Through globalization, social impacts along with economic impacts are achieved. Therefore, a difference in power or the ability of a company results in uneven social development along with economic development. Consequently, the development of “Glocalization” from globalization is significant in forming both a socioeconomic reality along with a political reality (Asseraf and Shoham 2016, pp 492).
Before the emergence of “Glocalization” people understood the nation state as an acceptable scale for understanding sub-national processes along with international processes. As the nation state faded, then “Glocalization” emerged.
“Glocalization” is characteristic of frequent economic implications, institutional associations along with socio-cultural implications (Hatzithomas, Fotiadis, and Coudounaris 2016, pp1099). Furthermore, it is also evident that scrupulous manifestations regarding global processes may also be witnessed in existing localities, while the supposed duality linking global processes to local processes is not literal.
Notably, “Glocalization” is a combination of the globalization process and localization process. Localization processes involve human beings, single subjects, different organizations, and diverse communities (Japutra, Nguyen and Melewar 2015, pp 102). In contrast, globalization is influenced by the planetary developments. However, global processes are influenced by concrete localities. Thus, “Glocalization” can be interpreted to refer to the act of thinking globally but acting locally.
Markedly, “Glocalization” thus, demonstrates the capability of human beings in mentally overcoming different territorial scales. Considering the economic perspective, global processes are described as turbulent and also volatile. Furthermore, economic subjects that constitute the process of globalization are accessible in specific localities. Therefore, companies are concurrently strongly local and hugely global.
Notably, the reduction of scales used in regulating work, along with scales of social replica corresponds to the increasing scale relating to economic organization and production forces (Magnusson et al 2013, pp 45). “Glocalization” processes along with territorial re-definitions are dominant within the system of finances.
For instance, reports show that the “Speculative foreign exchange market” raised from $15 billion in the year 1970 to above $2 trillion currently (Matusitz 2015, pp84). Notably, to appropriately allocate the flow of finances, the space available and the location to be used are significant. Thus, “Glocalization” becomes significant in attending to the system of finances.
Moreover, “Glocalization” is constantly applied within large economic units. Companies tailor their products along with services based on interests shown by local markets in diverse parts of the globe, which are strongly differentiated (Meyer and Su 2015, pp150). Thus, pecuniary interests play a significant role in “Glocalization” processes. Within a standpoint of an institution, making the authority of a state weaker implies transferring activities to global levels along with local levels.
Reflection on how “Glocalization” concepts transmit to “Standardization-adaptation Debate”
Globally, the debate regarding the significance of standardizing the marketing mix used by multinational corporations or adapting to the local setting has taken over five decades. The debate is however affected by global technological changes and the international economic crisis (Qureshi 2016). The past four decades were characteristic of research regarding “standardization-adaptation debate”.
Notably, research conducted in the 1980s focused on the necessity of companies following adaptation strategies for individual national markets as opposed to having standardization within every national market (Romanov and Kononenko 2014, pp 436). The discussions revealed that while an increase in market similarity was witnessed, and homogenization of markets emerged, companies gained the advantage of marketing similar products or services globally using programs of marketing, which are standardized.
However, critics of the view above dispute that disparity in culture, politic or economics among nations gets underestimated in the view above. Thus, questions develop regarding standardization feasibility. Consequently, other researchers focused on the “contingency approach”, which pays more attention to the desired degree of standardization along with feasible standardization (Roudometof 2016, pp391).
Moreover, due to the modern information developments along with technologies used in communication the debate on standardization-adaptation has increased. In addition, there has been an increase in globalization stream along with the volatility of economic conditions (Roudometof 2014, pp18). The debate, therefore, aims at providing an appropriate framework that exhibits the dynamics associated with adaptation selection or standardization range in elements of a marketing mix that affects how a firm performs.
The framework to be developed is aimed at influencing the advancement of business internationally. Generally, the debate on standardization or adaptation of the strategy for marketing started as an argument on homogenization of world markets, influencing companies to put more emphasis on the match between consumers globally (Schmid, Grosche and Mayrhofer 2016, pp536).
The debate further developed to reveal that the advancement of technologies used in communication and technologies used in transportation influenced market strategies standardization, which also includes a promotion mix. Afterward, there was an increase in agreements regarding multilateral trade, goods, services, information, along with capital started flowing freely.
Thus, globalization was accelerated, which resulted in support towards standardization approach (Some and Issa 2017, pp 925). There was a further reduction in cost influenced by the economic balance in activities of production along with marketing, transfer of experience, utilization of resources in a better way, development of global brands along with company images as part of the benefits realized from having standardization.
Other literature developed the assertion that standardization of the practice of global marketing. Furthermore, the focus was directed on the degree of effects which related to standardization based on the fact that it was understood that when costs are low, there would be an increase in profits (Sudarevic, Radojevic and Lekovic 2015, pp 2740).
However, the debate also develops views claiming that appropriateness of standardization relies on the influence standardization levels have regarding financial performance. When a firm enters international markets, it has to adapt or standardize in their market mix. Elements of a market mix include product, price, promotion and place. Since the 1980s there have been debates whether to choose a strategy of adaptation or standardization (Bantimaroudis 2017).
Standardization can be defined as activities of the market coordinated in many countries that integrate standardized goods and serviced, products of similar brands, corresponding products presented in the markets and advertisement messages that are similar and are usually carried out in numerous countries at the same time (Virvilaite, Seinauskiene and Sestokiene 2015, pp106).
For those scholars who supported standardization, they argued that standardization leads to a greater volume of sales, increased profitability, low cost of production and integrated image worldwide. For adaptation, it was necessary when a firm wants to reach out new sectors of the market or rather when a firm wants to be a leader in the market.
In standardization strategy, there is centralized management of international operations, tastes and preferences of consumers are homogeneous and they completion is global while in adaptation strategy, the management is decentralized with its own country, consumers tastes varies since they are heterogeneous and they compete locally(Apetrei, Kureshi and Horodnic 2015, pp 1521).
A product is anything that a market offer for use or for consuming that satisfies utility. The product is the easiest to standardize in the market mix elements. Product standardization is whereby a company can export their goods and services without changing the product. This is due to homogeneity of products on the market. International companies make sure they develop a global product that can be accepted worldwide.
By choosing standardization strategy, organizations consider that they take into account the needs and demands of local people (Küster 2016, pp.204). Product adaptation strategy comes in when a firm fails to modify the product into a specific market. Products have to be differentiated by branding, changing the design and different packaging.
Distribution channels can be defined as a set of connections of agencies and institutions that link buyers and sellers in a market. Sellers need to understand the channels of distribution for it is a major contributor to company’s success. With a clear understanding of distribution channels, a firm can easily be a leader in the market (Bantimaroudis 2017).
The decision whether to standardize or adaptation depend on various factors such as product, culture and the consumers. Standardization of product is quite difficult due to large variations in distribution channels. Each country has different places of supply and different distribution channels. Places of supply can be supermarkets or even shops or internet (Some and Issa 2017, pp 926). Therefore, distribution channel can be easily adapted since a country differs in distribution infrastructure, habits of purchase and disposable income.
Thus, standardization may be compared to promotion adaptation. Promotion consists of marketing tools used by a firm to persuade consumers to buy the good or service and also builds relationships with customers. Promotion can be achieved through advertising, personal selling, public relations and sales promotion (Bantimaroudis 2017).
Promotion standardization means that firms will use the same promotion worldwide without changing it. By doing so the firms ensure that they minimize costs. Advertising is usually affected due to language barriers, religions, laws, availability of media and difference in the economy all of these factors creates a need for adaptation strategy (Bantimaroudis 2017). Adapting strategy can be done by modifying the advertisement such that each region has its own way of advertising. However, this could be costly.
Standardization can thus be judged against pricing adaptation. Price is the monetary value of a good or service. The decision whether to choose standardization strategy to depend on factors such as preferences of consumers, market competition, inflation and exchange rates and regulations imposed on trades e.g. tariffs and duties. Price standardization means that the centralized office is in charge of fixing the price and the price is applied to all international market (Apetrei, Kureshi and Horodnic 2015, pp 1521).
This strategy ensures risks are minimal but also the profits are not maximized here. In Price adaptation strategy, the price is decentralized to local regions and managers set up price depending on international markets and revenues from consumers (Bantimaroudis 2017). Prices differ from one region into another. This is advantageous because a company can take advantage of the difference in price and sell their products where the prices are high.
Advantages along with drawbacks of the different strategies of Global Marketing
Notably, “glocalization” is developed from the concept of a sphere of cooperation in development and the continuity of processes relating to post-millennial goals (Bantimaroudis 2017). Therefore, “glocalization” does not only imply an essential principle of execution, it also refers to the factors influencing how communities develop, along with having a balance in development globally. In contrast, standardization occurs when there are a variety of products to be exported.
Moreover, the products being exported based on standardization measures should be of acceptable quality (Frenkel 2014, pp.134). Thus, standardization is characteristic of the existence of life cycles. Due to standardization, product changes may be witnessed along with brand changes. Furthermore, standardization is expected to observe various approaches of promoting exports.
“Glocalization” is an efficient tool for developing diverse interest groups along with entire communities. Outstandingly, “glocalization” facilitates the improvement of skills possessed by representatives of diverse communities in simultaneously thinking globally and acting locally, at the time when they are making decisions that relate to activities conducted daily within the community (Akgün, Keskin and Ayar 2014, pp 611).
Consequently, “glocalization” has the potential of creating a society, which is coordinated. Additionally, “glocalization” processes assist in the expansion of development of local along with global communities, which are civic coordinated. “Glocalization” also aids in the creation of a balance in development (Bantimaroudis 2017). Thus, “glocalization” effectively reduces gaps that may exist between individuals and the community, a country and a city, Countries who are members of the European Union and countries having different development levels globally.
Therefore, “glocalization” addresses the aspect of standardization through developing theoretical stops along with viewpoints that relate to the longevity of daily life and the improvement of cooperation (Bantimaroudis 2017). Additionally, “glocalization” addresses adaptability by influencing topicality in the field of politics, topicality in education, topicality in community development along with society development, and topicality on daily life.
Thus, “glocalization” is a significant tool in the achievement of Millennium goals of development along with sustainable goals of development (Akgün, Keskin and Ayar 2014, pp 612). Furthermore, “glocalization” influences global education and existence of development cooperation. Due to “glocalization” processes, there is diversity in experiences along with comprehension improvement. Consequently, “glocalization” is able to demonstrate what good practices are and how the society can efficiently improve the practices.
In standardization, market drivers constitute the following, products that are homogeneous, global channels and customers and transferrable markets. “Glocalisation” helps to improve access to these drivers. This leads to firms benefiting from economies of scale in production, marketing, management, and distribution hence firms maximizes their profits. Due to producing homogenous product or services firms reduces competition in the international market (Some and Issa 2017, pp 926).
There is also the advantage of improved customer fondness which can be attained by increasing appreciation and serviceability globally, increased quality of product and services which are achieved by concentrating resources on a small number of products (Bantimaroudis 2017). However, there are a number of setbacks such as there is a possibility of increasing currency risks, there might also be legal restrictions in some countries due to trade barriers.
Part II
Analysis of how Starbucks Company uses “Glocal” Marketing Strategies and how Costa Company uses “Glocal” Marketing Strategies
The extent of Starbucks Company’s “Glocal Strategy” application
Notably, Starbucks Company creates all its physical locations in a way that accommodates local nuances and cultural nuances. For instance, in China Starbucks Company introduced beverages, which are coffee-free, since there is a local detest of coffee in China (Qureshi 2016). Starbucks also designs its stores in a way that accommodates large groups. Thus, Starbucks creates a seating arrangement, which consumers can adapt more too. Furthermore, Starbucks has a digital strategy, which is “consumer-centric” (Qureshi 2016). Starbucks also incorporates online interaction with offline experience.
The extent of Costa Company’s “Glocal Strategy” application
In contrast, Costa’s most renowned “Glocal strategy” is engaging in partnerships with local companies. Furthermore, Costa relies on the negative publicity of prospective competitors as its “Glocal strategy” (Virvilaite, Seinauskiene and Sestokiene 2015, pp107). In China, for instance, Costa Company entered into a partnership with “Yueda Group”, which is Chinese Company. Thus, Costa Company is able to gain knowledge regarding the local Chinese market from the knowledge “Yueda Group” has regarding customers in China.
Difference in Starbuck’s “Glocal Strategy” and Costa’s “Glocal Strategy”
Starbuck focuses on creating all its physical locations in a way that accommodates local nuances and cultural nuances. In contrast, Costa relies on engaging with local companies in order to conduct its businesses. Thus, Starbuck is more global compared to Costa since, it relies on local nuances along with cultural nuances when creating its physical locations (Some and Issa 2017, pp 927).
Furthermore, Starbuck also penetrates more in the local markets compared to Costa since it conducts its own business without partnerships, hence relies on its own research. Additionally, Starbuck also uses a digital strategy, while Costa relies on strategies employed by its partners such as “Yueda Group”.
Reflection on Starbuck’s “Glocal Strategy” and Costa’s “Glocal Strategy”
Starbuck employs standardization in its “Glocal strategy” by developing theoretical viewpoints relating to the longevity of daily life. For instance, Starbucks creates a seating arrangement, which consumers can adapt more too. In contrast, Costa employs standardization by improving their cooperation with local companies in their target markets.
Furthermore, the “Glocal strategy” employed by Starbuck is influenced by the advancement of technologies used in communication and technologies used in transportation influenced market strategies standardization, which also includes a promotion mix. For instance, Starbuck has a digital strategy, which is “consumer-centric” (Qureshi 2016).
Conclusion
“Glocalization” is an emerging phenomenon in the business world. The paper above has developed a critical assessment of “Glocalization” concept and illustrated how “Glocalization” and the “standardization-adaptation debate” relate. From the paper, it has been clear that through “Glocalization” products which are marketed globally are able to adapt to different local markets.
Furthermore, the essay has revealed that standardization leads to a greater volume of sales, increased profitability, low cost of production and integrated image worldwide. To present a detailed analysis, the essay has considered the case of Starbuck Company along with Costa Company.
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