Globalization and Localization Quiz

Globalization

• Globalization is a process of interaction and integration among people, companies, and governments of different nations.
• It is characterized by worldwide interdependence.
• It involves politics, the economy, culture, society, ecology, trade, and communication.
• Globalization is worldwide.
• Multinational corporations (MNCs) have increasing global reach.
• Travel and shipping have become cheaper and safer, significantly faster than in the past (two months to cross the Atlantic in 1800 vs. 5 hours by plane and less than a week by ship today).
• Governments have reduced tariffs and regulations on international trade resulting in free trade.
• Globalization of markets refers to the merging of historically distinct and separate national markets into a single huge global marketplace, facilitated by falling barriers to cross-border trade.
• Global consumers equal a global market.
• In many global markets, the same firms frequently compete in nation after nation (eg. Coca-Cola vs. PepsiCo, Boeing vs. Airbus, Sony vs. Nintendo vs. Microsoft).
• Globalization of production is the sourcing of goods and services from various locations around the globe to take advantage of national differences in cost and quality of factors of production (labor, energy, land, capital).

Globalization – Pros

• Free trade, new jobs, and increased competition among companies results in lower prices for customers.
• Sharing technology, the development of technologies, and research and development (R&D).
• Easier travel and mass communication.
• Easy to sell and buy products and services.
• Influx of information between countries.

Globalization – Cons

• Rich versus poor people (social polarization).
• Multinational corporations are accused of social injustice, unfair working conditions, including slave-labor wages and poor living conditions.
• Developed countries lose jobs to lower-cost countries.
• Terrorism and data protection.
• Ecological disasters.

Globalization of Production

• Japanese suppliers make parts for the fuselage, door, and wings of the Boeing 777.
• A supplier in Singapore makes the doors for the nose landing gear
• Three suppliers in Italy manufacture wing flaps.
• In total, 30% of a Boeing 777, by value, is built by foreign companies.
• Price of Boeing 777: $258 – $316 million USD.

Internationalization

• Doing business in many countries of the world, but often limited to a certain region (e.g., Europe).
• International business: any company that engages in international trade or investment.
• Should the company stay at home or go abroad?

Internationalization Theories

• The Uppsala internationalization model involves small, incremental commitments to new markets, choosing entry modes with few risks and avoiding large distances.

• Stopford's model of internationalization describes gradually entering foreign markets, starting with exports and eventually creating owned subsidiaries abroad.

• Dunning's eclectic approach: a framework for analyzing foreign direct investment.

• Uppsala Model Stages*

• Stage 1: no regular export activities (sporadic export).

• Stage 2: export via independent representatives (export modes).

• Stage 3: establishment of a foreign sales subsidiary.

• Stage 4: foreign production/manufacturing units.

How to Build a Global Business-ESET

• ESET is an IT security company that develops leading-edge security solutions against cyber threats.

• Headquartered in Bratislava, Slovakia.

• Branches/research centers around the world (San Diego, California, Prague, Buenos Aires, Singapore, Jena, Sydney).

• Research centers: Krakov, Montreal, Moscow.

• Founded in 1987.

• One of the first PC viruses: "Vienna" (M. Trnka + P. Paško).

• Later NOD 32 – one of the most famous and most used antivirus software, selling solutions worldwide in over 200 countries and territories, localized into more than 30 languages.

Competitors of ESET Worldwide

• Symantec
• McAfee (An Intel Company)
• Avast!
• AVG
• Kaspersky

Strategic Years

• 2002, 2006: "IT company of the year" in Slovakia
• "Fast 50 CE" and "Fast 500 EMEA" (Deloitte).
• 2008, 2009, 2010, 2016: Trend magazine "Company of the year."
• 2012-2015: one of the top 10 employers of the year in Slovakia
• 2012: half a billion people worldwide recognize the brand ESET
• 2014: San Diego, Slovak American Innovation Centre.

ESET Today

• Richard Marko: Slovak CEO 2015 (Forbes).
• Company revenue: €526 million.
• 22 branches worldwide (2019 – Italy, Milan).

Critical Thinking and Discussion

• What kind of famous global products are possible to buy in your home country?
• Prepare a list of companies from your home country that run their business worldwide and are adapted around the world.
• How does the Internet affect international business activity and the globalization of the world economy?

Global vs. Local

• Coca-Cola vs. KOLA.
• Coca-Cola global advertising (using standardized products) vs. local advertising (adapting products, advertising to local tastes).

Local Adaptation

• Final modification of products and services to meet local customs.
• Adapting products and services to national customs and traditions in all areas, from product design and quality to customer services and advertising.
• A great opportunity to profit from progression.
• Caused by individual region and country market and know-how requirements.
• Adapting is important for products, advertisements, packaging, and communication and adapting for local customs, traditions, and geographical conditions.

Coca-Cola in Brazil

• Coca-Cola adapted to the Brazilian market.
• They sell the Guarana drink.
• This is a major example of adapting global products to local tastes.

Heineken Marketing

• Heineken adapts its advertising campaign to different local markets.
• Using local advertising styles in each country or region of the world.

Brand Zlatý Bažant

• The brand, on TV, is associated with the company and is adapted to appeal to that country's local customers.

Glocal Strategy

• Think GLOBAL, act LOCAL.
• Taking advantages of globalization and standardization and localization (differentiation).

Global-Local-Glocal Strategy

• Global: thinking globally, acting globally
• Local: thinking locally, acting locally.
• Glocal: integrating both localism and globalism

Framework for Alternative Global Marketing

• Globalization: International integration of goods, technology, information, labor, and capital.
• Localization: Adapting to local appeal, culture, communication, and needs.
• Glocalization: Combining global with local—e.g., a worldwide brand adapting products and service offerings to local specific market needs.

McDonalds Adapted Products Worldwide

• McDonald's adapts its products to different markets and local tastes, for example: The Chicken Maharaja Mac (India) and McArabia (Middle East).

Cadillac Adaptation for China

• Cadillac adapts vehicles to the Chinese market.

Coca-Cola Adapted Drinks in Japan

• The company sells Sokanbicha in Japan. This is a major example of adapting global products to local tastes.

Learning Case

• Case studies of how global products are adapted to local market needs.

Nestlé Company for Japanese Market

• Nestlé adapts its KitKat products to local tastes and preferences (strawberry, melon, etc.).

Nestlé Company for Brazilian Market

• The weight of Bono cookies varies in the Brazilian market.
• The company recorded a 40% increase in sales. This is an example of local adaptation impacting sales.

Red Bull for Chinese Market

• Red Bull in China has a local adaptation.
• The company's logo, packaging, and advertising are tailored to appeal to Chinese consumers and local tastes and preferences.

Avast!: Czech Security Software Company

• Avast is a Czech security software company founded in 1988.
• The company utilizes the freemium model for pricing.
• They have over 180 billion active users globally.

Freemium Model

• A business model in which a core product is given away for free and premium products or paid services are offered to a smaller portion of users.

Word-of-Mouth

• Verbal reference and personal recommendations are a way to spread the word among existing and potential customers without advertising.

Think Local - Steps of AVAST - Brazil

• Language adaptation: Changing to Portuguese.
• Using local currency: using the Brazil real currency.
• Method and form of payment: adapting to installments and cash-based payments.

Advantages of Glocal Strategy

• Gaining a strategic advantage for establishing a strong position in foreign markets.
• Building positive relationships with local customers.
• Creating a stable and reputable position, not only for product brands, but for the company as a whole.
• Achieving profitable growth.

P. Kotler on Glocal Marketing

• Customers perceive the brand as relevant, tailored to their particular needs.
• There is harmony and balance in strategic, tactical, and operative marketing activities.
• Brands that implement global-local strategies increase market share.

International Business Strategies (framework)

• Shows different approaches to globalization (global, transnational, international, multidomestic) based on the level of integration/responsiveness

Multidomestic

• Low integration and high responsiveness strategy

Global

• High integration and low responsiveness strategy

International

• Low integration and low responsiveness strategy

Transnational

• High integration and high responsiveness strategy

Assignment NO. 1

• Teamwork (3 students maximum).
• Topic: Local adaptation of international companies.
• Submit via MS Teams (one submission per team).
• Presentation Date: October 17, 2023.