Analysis of the Globalization of Markets by Theodore Levitt

ANALYSIS OF THE GLOBALIZATION OF MARKETS BY THEODORE LEVITT

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ANALYSIS OF THE GLOBALIZATION OF MARKETS BY THEODORE LEVITT

In the article “The Globalization of Markets” by Theodore Levitt asserts that efficiently managed companies are the ones that are able to offer globally standardized products that are functional, reliable, advanced and low priced. The author further argues that only those multinational (global) companies that concentrated on what everyone wants can achieve long-term success and not those companies that worry about the details of what everyone thinks they may like (Levitt, 2004). The argument is that only proactive global companies will thrive in global markets. He further argues that these well-managed companies have moved away from the concept of customizing products.

Technology drives the world towards a common characteristic that is, the wants of people from different places or regions of the world are converging. This is due to the technology improving speed of travel of information and thus no part of the world is isolated. The consumers in different parts of the world for example are used to Coca Cola brands because the company produces a standardized product for all their markets. Technology has made it possible for people to travel in almost any part of the globe with ease (Levitt, 2004). Result of the ease in travel and communication has aligned the interests of the people into common point and therefore standardized products will thrive in the global markets.

The essay gives a distinction between multinational and global corporations which is; multinational corporations are those corporations that have sound knowledge of markets in different countries with adjusted products at relatively high cost while global corporations are those that knows the need for homogeneity and thus sell the same product in the same away in the different parts of the globe at relatively low cost for example coca cola. Therefore companies should adjust their operations towards global corporations rather than multinationals.

The distinction above results into analysis of world major companies; these companies knows that national rules, distribution channels and language are distinction in the market but not a difference. For this the companies standardize their products at high quality for instance; Japanese on one hand export cars to United States and Europe and on the other hand they speak Portuguese in Brazil, McDonalds production processes are standardized with customized menus, coca cola and Pepsi use the same brand name with the products differentiated in terms of sweetness depending on the market and Apple and other computer companies have standardized products for all markets. These strategies have seen these companies thrive in the global market.

Activities of a global company are only important in one significant respect which is what they produce and how much sale they make. A company should constantly shape and reshape their preferences based on level of modernizations. Companies should emphasize on product reliability combined with quality, low price, transformed distribution channels and sales compensation packages to ensure success in the globalization error. Key point that global corporations should observe is not completely rejecting customization or differentiations for it may be a requirement for success in certain markets or products.

Levitt arguments can be criticized base on; relevancy of time, homogeneity and heterogeneity. In terms of relevancy of time in 1983 there were only a few countries that multinational companies had their offices and sold product (North America, Japan and Western Europe), thus he excluded a large portion of the global market. For homogeneity products such as chemicals, steel, sugar, petroleum and other industrial and consumer products are uniform all over the world thus the consumers choose them out of no other option rather than taste and preference. This is so because the market is now one and the consumers can buy online regardless of their location. In terms of heterogeneity, the consumer’s tastes and preferences are evident in the demand for different models of cars. This difference may be as a result of the level of infrastructure development surrounding the consumer.