Globalization

Globalization is the tendency of investment funds and businesses to move beyond domestic
and national markets to other markets around the globe, thereby increasing the
interconnection of the world. Globalization has had the effect of markedly increasing
international trade and cultural exchange. Proponents of globalization say that it helps
developing nations catch up to industrialized nations much faster through increased
employment and technological advances; critics of globalization say that it weakens national
sovereignty and allows rich nations to ship domestic jobs overseas where labor is much
cheaper. Globalization is used to explain the recent integration of domestic economies,
industries, cultures and government policies around the world. This integration has occurred
through increases in the technological capabilities and efficiency of world trade,
communication and transportation. Primarily, globalization refers to the economic integration
of the global markets, but it is also used to describe the socio-cultural integration that has
been brought on by the rise of the Internet.

Factors

Public policy and technology are the two main driving factors behind current globalization.
Recent implementations of government policy, both domestic and internationally, have
opened economic borders for countries across the world. Over the past 20 years, world
governments have integrated a free-market economic system into fiscal policies, monetary
policies and trade agreements. This evolution of economic systems has stimulated domestic
production potential and opened countries to increased financial opportunities abroad. World
governments now focus on decreasing barriers to trade and actively promote international
commerce in relation to investments, goods and services. Technology has also been a major
reason for the growth in globalization. Advancements in information technology (IT) and the
flow of information across borders have empowered individuals to take control of their
financial lives. Technology has helped people become more informed about economic trends
and allows people to transfer financial assets and take advantage of investment opportunities.
Technology has increased the ability to communicate internationally, closing the gap between
different cultures.

Consequences
 Critics of global economic integration warn that

The growth of international trade is exacerbating income inequalities, both between

and within industrialized and less industrialized nations

Global commerce is increasingly dominated by transnational corporations which seek

to maximize profits without regard for the development needs of individual countries or the
local populations

Protectionist policies in industrialized countries prevent many producers in the Third

World from accessing export markets;

The volume and volatility of capital flows increases the risks of banking and currency
crises, especially in countries with weak financial institutions

Competition among developing countries to attract foreign investment leads to a "race

to the bottom" in which countries dangerously lower environmental standards

Cultural uniqueness is lost in favor of homogenization and a "universal culture" that

draws heavily from American culture

Critics of economic integration often point to Latin America as an example where increased
openness to international trade had a negative economic effect. Many governments in Latin
America (e.g. Peru) liberalized imports far more rapidly than in other regions. In much of
Latin America, import liberalization has been credited with increasing the number of people
living below the USD $1 a day poverty line and has perpetuated already existing inequalities.

Positive effects of globalization for developing country business

Conversely, globalization can create new opportunities, new ideas, and open new markets
that an entrepreneur may have not had in their home country. As a result, there are a number
of positives associated with globalization:

It creates greater opportunities for firms in less industrialized countries to tap into
more and larger markets around the world

This can lead to more access to capital flows, technology, human capital, cheaper
imports and larger export markets

It allows businesses in less industrialized countries to become part of international

production networks and supply chains that are the main conduits of trade
For example, the experience of the East Asian economies demonstrates the positive effect of
globalization on economic growth and shows that at least under some circumstances
globalization decreases poverty. The spectacular growth in East Asia, which increased GDP
per capita by eightfold and raised millions of people out of poverty, was based largely on
globalizationexport-led growth and closing the technology gap with industrialized
countries (Stiglitz, 2003). Generally, economies that globalize have higher growth rates than
non-globalizers (Bhagwati and Srinivasan, 2002).

Also, the role of developing country firms in the value chain is becoming increasingly
sophisticated as these firms expand beyond manufacturing into services. For example, it is
now commonplace for businesses in industrialized countries to outsource functions such as
data processing, customer service and reading x-rays to India and other less industrialized
countries (Bhagwati et al, 2004). Advanced telecommunications and the Internet are
facilitating the transfer of these service jobs from industrialized to less industrialized and
making it easier and cheaper for less industrialized country firms to enter global markets. In
addition to bringing in capital, outsourcing helps prevent "brain drain" because skilled
workers may choose to remain in their home country rather than having to migrate to an
industrialized country to find work.

Further, some of the allegations made by critics of globalization are very much in dispute
for example, that globalization necessarily leads to growing income inequality or harm to the
environment. While there are some countries in which economic integration has led to
increased inequalityChina, for instancethere is no worldwide trend (Dollar, 2003). With
regard to the environment, international trade and foreign direct investment can provide less
industrialized countries with the incentive to adopt, and the access to, new technologies that
may be more ecologically sound (World Bank Briefing Paper, 2001). Transnational
corporations may also help the environment by exporting higher standards and best practices
to less industrialized countries.

Comparison of Two Companies

A comparison is now made between two companies that have globalized. The first is Nike
and this company has a wide presence across the world due to its effective globalization
strategy. Nike is a company that has been able to evolve its global presence through the
careful selection of international sponsorships such as its previous long-standing relationship
with Manchester United. Although sponsorship spending can be fairly unpredictable demand
costs tend to surge due to triggers like championships and tournaments and these partnerships
have certainly helped the brand capture the attention of a global audience. Nike's NikeID co-
creation platform serves as another strategy that the company is using to appeal to
international markets. By putting the power of design into the hands of the consumer, Nike is
able to deliver customized products that align with different cultural preferences and styles.

McDonald's is another company that has successfully globalized. It is a successful global

brand that adheres to an effective strategy for globalization. While keeping its overarching
branding consistent, McDonald's practices 'glocal' marketing efforts. McDonald's brings a
local flavor, literally, to different countries with region-specific menu items. For example, in
2003, McDonald's introduced the McArabia, a flatbread sandwich, to its restaurants in the
Middle East. McDonald's has also introduced macaroons to its French menu. It has adapted
its menu to suit local needs of consumers all around the world and this has enabled the
company to gain a higher degree of acceptance around the world.

Recommendations

A number of recommendations can be made or companies that are keen on achieving success
at their globalization.

Recommendation 1: Clarify what is driven globally and what is managed locally

A global marketing approach does not mean the absence of local, market-specific plans and
initiatives. These should, in fact, be complementary. Global marketing will typically set the
framework and parameters within which local marketing operates, whilst giving in-market
teams the freedom to control local success levers. Some areas of marketing that lend
themselves to being led at a global or central level include branding and brand guidelines,
strategic marketing planning and budgeting (with autonomy given to markets within their
allocated budget), large-scale marketing campaigns, social media strategy and guidelines,
research strategy, and global PR. Other areas best managed locally include local outreach
initiatives and more tactical campaigns, local social media channels and PR initiatives, local
partnerships and events, etc. Markets need to have some control over the local channels that
contribute to driving their success.
In practice, it might be useful to divide your markets into tiers. A tiered market will help you
identify territories that might drive the highest potential returns. It also allows top tier
markets to access bigger budgets, giving them autonomy; for example, research into local
users behaviours to inform product development. Global and local areas of ownership may
differ from company to company. However, it is critical you define the areas clearly to avoid
friction and inefficiencies. Take the time to do this upfront - dont wait until issues start
arising.

Recommendation 2: Understand local market needs and develop a collaborative approach

Too often, operating globally is seen as an excuse to avoid spending time understanding local
cultures, customer needs and behaviours, as well as successful and less successful marketing
approaches. And yet, it is obvious that a US-based customer is likely to be very different from
a customer located in India or SEA. Their lives, cultures, and needs are different, so it makes
sense they will interact very differently with your products or services. For a global model to
work, global teams need to develop an understanding of local markets and establish a close
relationship with local marketing teams. Gone are the days when global campaigns and
strategies were applied in a blanket fashion across all international territories - it simply
doesnt work. Globally defined initiatives and plans need to factor in a degree of flexibility to
cater for cultural differences. A community meet-up, social media competition, or treasure-
hunt based campaign might resonate well with some markets, and not at all with others.
Celebrity endorsement or participation will only work with well, actual celebrities. And an
Indian celebrity is unlikely to be known in France or Japan. Privacy laws can be very
different from country to country too. Research the markets and take the time to get to know
the international teams you will be working with.

Recommendation 3: Develop and socialise a global marketing plan early (seek feedback)

So, you have established key relationships, researched local markets, and defined global
marketing plans which you think accommodate local needs where required. Thats a great
start, but dont wait for the campaign to begin to validate your assumptions. Socialise these
plans with your international teams as soon as possible, seek their feedback and ensure that
there are no legal issues to prevent your plans from working in certain markets. A proactive
approach will give you time to adjust and revise your plans in the event of a problem. It will
also allow you to get buy-in from your local colleagues. And, after all, a huge part of the
success will rest on their shoulders during execution.

Recommendation 4: Manage campaigns like an army operation plan ruthlessly

As the time for your campaign to kick-off approaches, there are a few key elements to
consider to help it succeed; starting with outstanding project planning. Appoint a global
campaign manager - with responsibility for all communication and coordination around the
campaign. Make sure his/her overall accountability is understood by all. Failing to do this
will result in cross-communication, misunderstandings and missed deliverables.

Plan ruthlessly make sure deadlines, responsibilities and deliverables are clear to everyone
involved. Plan your campaigns official launch at a time and date that works for all the
countries in the campaign. And, at every step of the way, get all parties to confirm when
deliverables have been completed so you can stay on top of the project at a global level.

Consider time-zones - your timelines must reflect these so all relevant materials are ready
concurrently across all markets. And dont forget to factor in time for translation, localisation,
reviews and iterations.

Communicate - plans, deliverables and expectations across different channels and multiple
times. Touch base with in-country teams regularly to provide support and advice and to stay
on top of the campaign as it unfolds.

Recommendation 5: Make sure you track and adjust in real time

Running a campaign in multiple markets means you will have to be particularly disciplined
about tracking results. The campaign manager is a good person to coordinate this. Define key
metrics and goals at the start of the campaign at both global and market level (clicks, click-
through rate%, conversion rate, average customer spend, etc.) Get buy-in from in-market
teams on these targets. Share these metrics early and share them all. Seeing how each
market contributes to the overall success of the campaign might help drive a bit of healthy
competition! Keep a centralised shared template where market metrics are updated every
week/day/any other relevant frequency.

Review metrics weekly with the team, preferably on a call or video call, and take actions to
address under-performance. These discussions should be active and vibrant, allowing all local
teams to chip in and contribute. This is also a good opportunity to leverage best practice
across markets