International Business Essay

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Next, standardized strategy is also common in automobile industry. Reason provided (Liu 2010) is because this industry is suitable for global market due to the pressure and need of reducing cost. Global standardization strategy aims to increase profit by utilizing cost reductions that comes from economies of scale, leaning effect, and location economies. This strategy is commonly used when cost reduction is crucial and local responsiveness is minimal while universal needs prevail. For example, Toyota adopts a standardized strategy to employ location economies, save transportation cost, circumvent local political barriers, gain benefits of economies of scale and learning effect (Liu 2010). Toyota produces the same product model in almost 26 countries and sells its automotive vehicles worldwide. Through standardization strategy, Toyota is striving to reduce cost by decreasing vehicle platforms, with goal of building a wide range of models on a limited range of platforms that share many common components parts or modules.

This study actually proved that whether it’s standardization or differentiation strategy, each has its pros and cons as shown in Figure 1 below. Thus, most companies adopt both strategies including Apple (IPhone) and Toyota Company discussed above. The reason is because by implementing both strategies, they are able to complement each other and bring out the best for the company.

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For Apple Company, although they had standardised their product design, several layers had undergone localisation. Apple personalized its e- commerce website across 125 regions by customizing the web page with local language for users to access. For brick- store (Hovivian 2014) around the world, own strict customer service protocol which suits the region was created to create insane customer loyalty through personalized approach to communicate with customers. Store building is also chosen to match the culture in the region. Bob Bridger, vice president of Apple Retail Development explains what makes Apple Stores so popular.

“Once a location is picked, it’s all a matter of working towards making sure the store has an inviting appeal that matches its surrounding culture and environment. It’s about ‘getting out into the street’ and feeling what the local feels.”

Next, Liu (2010) stated that it was obvious that localization strategy was used by Toyota Company as the company’s management team went into Americanization. American designers had brought great impact since they successfully convinced Japanese managers to produce a V8 pickup truck which suits local needs and redesign the hybrid car, Prius for the America market. Further involvement from Americans about new designs, marketing and innovation indicates that localisation grew stronger.

A famous company which uses both strategies is McDonald. Figure 2 gives a rough insight of this company’s usage on both strategies (Yashada 2014).

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National culture is the collective programming of the mind that distinguishes members of one human group from another (Hofstede, 1994). Cultural factors (Anandspace 2011) bring great impact to product strategies because it determines the preferences, priorities of people which directly influence the sales of the product. Many strategic decisions are made according to the culture it belongs to. House et al. (2004) based on research has state that national culture affects managers’ strategic thoughts and actions. Managers are influenced by various national cultures as they socialised in different countries and thus suitable strategic choices should be made to adapt to market needs Harris and Ghauri (2000).

The most widely used (Dimitratosa et al. 2011) culture dimensions are those suggested by Hofstede, 1980 and Hofstede, 1994 which initially grouped forty countries along four dimensions. These were power distance; individualism vs. collectivism; uncertainty avoidance; and, masculinity vs. femininity. Hofstede and Bond (1988) subsequently developed a fifth dimension which is long-term vs. short-term orientation. This five-dimensional framework has been widely used because of its ‘clarity, parsimony, and resonance for managers’ (Dimitratosa et al. 2011). The definition of these dimensions by Hofstede (1994) is shown in the glossary section attached. Hofstede concludes that (Hatum 2006) the differences of models in people’s minds will not only determine how they work but also the basic organizational features which reinforce specific values, guide managerial actions and choice.

According to Hatum (2006) who researched on Argentinean culture, he found that the country’s power distance is increasing because they do not like authority nor trust these figures. Argentina is more of a collectivist than individualistic and has high uncertainty avoidance due to frequent economic and political commotion. Lastly, Argentineans have a tendency toward masculinity as Hofstede presume masculine countries fight rather than negotiate. During the Falkland crisis in 1982, Argentina chose to fight and acquire to solve the conflict. By summing up these factors, it is proven that culture do affect product strategies as decision making process is affected. For instance, high power distance increases the degree of formal hierarchy and the extent of centralization while decreases empowerment in decision making. Other factors and its influences are summarized in Table 1 (Hatum 2006).[pic 9]

Table 1: Implications of National Culture for Argentine Businesses

To investigate further, Table 2 (Megan 2009) is constructed to show the cultural differences in Asia and United States.

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Table 2: Cultural differences in Asia and United States

Therefore, it could be seen that cultures do affect strategies including product strategies. The best way to portray a clearer picture is by applying these concepts to McDonalds, a multinational company. McDonalds is excellent in adapting its product to local culture. For example, different type of burgers are only found in certain countries such as pork burgers are absent in Malaysia due to the nation’s “halal” culture.

In addition, the IB strategic insight done by India showed us that India’s McDonald did well in its product strategy. For instance, India’s well known vegetarian nature is taken into consideration and hence many vegetarian menu items are developed. Family and child- centric nature of the society is understood and