The Globalization of Market

Lecturer: Dr. Nor Hayati Zakaria 

Review: Levitt, Theodore (May / June 1983). The Globalization of Markets from Harvard Business Review, Vol. 61, No.3, p. 92-102.

As the end of World War II, the world has seen major changes in communication, information processing and transportation technologies for example the development of the Internet and World Wide Web. It is no doubt that with these changes, it helps to create electronic global market place as well as reducing the distance between countries. For example, Malaysian consumer easily can buy the American product through Internet - eBay or Amazon.com without travelling to United States just to buy their product. Besides, their order will be delivered to their door.

It is supported by Levitt’s article that new technology is the powerful force that drives the world towards a converging commonality (Levitt, 92) which led to the development of global markets. These technological changes has standardized the products as well as lowered the prices of the product. Also, he  quoted  that  no  one  is  exempt  and  nothing  can  stop  the process (Levitt, 93). It means everyone everywhere needs everything they have heard about, seen, or experienced through these new technologies.

I agreed with Levitt that a marketer should be more perceptive when collecting information from consumers. Besides, a corporation will achieve long-term success by really concentrating what the consumer need instead of worried about what consumer thinks they may like. Moreover, when a global corporation standardizes its product across the global, for example McDonald’s hamburger, consumer which stayed probably in Malaysia for instance can easily find their basic product exactly as in New York.

It is supported by Levitt’s article that it is important to homogenize the product across the global rather than making made-to-order product to fit consumer preference. To  illustrate  this  idea,  he  used  a  case  of  a  famous  washing machine  manufacturer  named  Hoover. Hoover tried to enlarge their business in Germany by offering their product with higher price and less practical. However, its business failed due to their “proper’ marketing orientation” (Levitt, 97).

Is there something wrong with Hoover’s strategy? Yes. I agree with Abdelal and Tedlow that Hoover asking wrong questions in Hoover’s study. Supposedly, Hoover should look into depth what consumers want in a washing machine instead of what they think they like. Did everyone need a product specifically made to their preference? Yes. But, were they prepared to pay more money for such product and deprived them from other things? No (Abdelal, R and Tedlow, R. S.,7). As Levitt quote, “People preferred a low-priced automatic … even though [it] failed to fulfill all their expressed preferences.”(Levitt, 98)

Even though I agree that Levitt’s article may have some problem, it does not mean that it is not discerning and beneficial for nowadays manager. Why don’t we ponder that Levitt’s view as an experiment to view the global market?

From my point of view, globalization means a place, everywhere across the world where everyone has freedom to do business without fewer barriers. There are two aspects in globalization; market and production. Globalization of market means an economic system in national market which isolated from barriers: trade, distance, time as well as culture shift away and merged into one economic system; global market. For example, we can see Starbuck; an American global coffee company and coffee house chain exist across the world with different setting in order to suit local consumer preferences and tastes.

In his article, Levitt insists that “The multinational and global corporations are not the same thing” (Levitt, 92). And, he compared these terms with animal i.e. fox; multinational corporation whereas hedgehog; global corporation. He quotes that fox knows a lot about a great many things, but hedgehog knows everything about one great thing (Levitt, 96).

However, I believe nowadays either multinational or global corporation is hedgehog. Both of them need to know everything from A to Z regarding the market as well as fully understand the consumer need instead of assume to know consumer better than consumer himself. Purchases are not depending only on price unless they are standard product such as Clorox, Coke as well as Levis. The truth is purchases nowadays are emotionally-driven. That’s why brand is more important than homogenization spreads including technology product (International Council BlogSpot).