The StandardizationAdaptation Debate

1
The Standardization/Adaptation Debate

• Glen H. Brodowsky Ph.D.
• University of California, Riverside

2
The Players

• Theodore Levitt (1983)
• The Globalization of Markets
• Harvard Business Review

• Susan Douglas and Y. Wind (1987)
• The Myth of Globalization
• Columbia Journal of World Business

3
Levitt

• Living in the Republic of Technology
• Success Factors - Economy and Value
• Efficient production, marketing
• Focused on price
• Superior quality and reliability built into cost
  systems
• High quality - low cost operations

4
Levitt

• Production Concept
• Low cost - high quality and reasonable
  suitability
• Standardize as much as possible
• Dont assume customers know what they want
• Consumer wants best value for money

5
Levitt

• Global company
• knows everything about one great thing.
• Offers standardized product
• Reaps scale economies

• The Multinational company
• knows a lot about many great things.
• Offers products tailored to each market
• Does not realize scale economies

6
Levitt

• Global convergence through technology
• Commonality of scarcity
• Consumers dont part with their money easily
• Consumers will satistifce

7
Levitt

• Some differences remain
• Cultural preferences,
• National Tastes
• National Standards
• Preferences arent fixed, but fluid
• Multinationals too eager to adapt to local
  conditions.

8
Levitt

• A Failure in Global Imagination
• Failure in execution of standardization
• Focus on what consumers will accept not what
  they want
• Offer lower-priced alternatives
• Use cost savings for promotions

9
Levitt

• Differences can be overcome
• Adapt only as a last resort.
• What is important is what a company makes and how
  it sells
• Nobody is safe from global reach of technology
• Economies of scale are irresistible.

10
Douglas and Wind

• The Global Standardization Philosophy
• Convergence of customer needs and interests
• People are willing to satisfice
• Economies of scale in global markets

11
Douglas and Wind

• Convergence of Customer Needs and Wants
• Homogenization of world wants?
• Lack of evidence
• Growth of intra-country segmentation
• Price sensitivity

12
Douglas and Wind

• Willingness to Satisfice?
• Vulnerability of low price strategy
• Standardized low price may be overpriced
• Economies of Scale Do they matter?
• Flexible automation
• Production costs small portion of Overall Cost
• Production Driven

13
Douglas and Wind

• Global Standardization works only if
• Global market segments
• Global synergies
• International communication and infrastructure

14
Douglas and Wind

• External Constraints to Standardization
• Government and Trade Restrictions
• Nature of Marketing Infrastructure
• Interdependencies of Resource Markets

15
Douglas and Wind

• What to do?
• Standardized Strategy
• Mixed Strategy
• Differentiation Strategy

16
Douglas and Wind vs. Levitt

• Do they really differ?
• How do they differ?
• With whom do you agree?
• To what extent is globalization a reality?
• To what extent is it a myth?