Glocalization – Definition, Advantages and Disadvantages

Globalization is one of the most important phenomena of the recent past and of the future. The term “Globalization” describes an ongoing process by which regional economies, societies and cultures are becoming more integrated through a dramatically increased global network of technological, economic, political and cultural exchanges. In specifically economic contexts, the term refers to the integration of national economies into the international economy through trade, particularly trade liberalization or free trade, foreign direct investment, capital flows, migration and the spread of technology. This worldwide phenomenon of interaction among the countries is driven largely by advances in communication, transportation and legal infrastructure as well as the political choice of countries to open cross-border links in international trade and finance.

Due to many difficulties that a globalization strategy faces another term has developed in recent years called “Glocalization”. In contrast to globalization, the glocalization strategy, which means thinking globally but acting locally, is a more modern and different approach.

The term “Glocalization”, which had become a buzzword in business world in 2000, describes a historical process whereby the local is integrated into the global. This means that localities develop economic and cultural relationships to the global system through information technologies, bypassing and subverting traditional power hierarchies like national governments and markets including cultures clash with newly introduced cultural concepts, ideologies and practices. So put simply, globalization is a move toward centralization, while glocalization is a move toward decentralization.

Definition of Glocalization

Glocalization is a combination of the words “globalization” and “localization” and emphasize the idea that a product or service is developed and distributed globally is more likely to succeed if it is adapted to the specific requirements of local practices, legislation, fiscal regime, socio-political system, cultural expectations, local laws, customs and consumer preferences.… Read the rest

Push and Pull Factors in International Business

Companies decide to go global and enter international markets for a variety of reasons, and these different objectives at the time of entry should produce different strategies, performance goals, and even forms of market participation. However, companies often follow a standard market entry and development strategy. The most common is sometimes referred to as the “increasing commitment” method of market development, in which market entry is done via an independent local partner. As business and confidence grows, a switch to a directly controlled subsidiary is often enacted. This internationalization approach results from a desire to build a business in the country-market as quickly as possible and by an initial desire to minimize risk coupled with the need to learn about the country and market from a low base of knowledge.

International markets evolve rapidly and very often companies struggle to keep up in terms of their strategy. It is therefore reasonable to deduce that many companies’ international operations will consist of a collage of country market operations that pursue different objectives at any one time. This, in turn, suggests that most companies would adopt different entry modes for different markets. More commonly, however, is for companies to evolve a template that is followed in almost all markets. This usually starts with market entry via an indirect distribution channel, usually a local independent distributor or agent.

The factors leading to the wide acceptability of international business are:

  1. Globalization of economics: The policy of liberalization was adopted which led to the globalization of various economics including the former communist countries and socialist pattern of the society.
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Importance of Understanding Culture in International Business

As described by the famous author Edgar Schein, the culture in reference to the corporate world is the different corporation’s learning that is developed by different discoveries, invention and the development for handling the internal and the external issue effectively. These learning and development should be successful enough to be passed and taught to the coming and joining employees for handling such affairs in the future. He also remarked the famous quote, “the culture has a same meaning to the group what personality has to with individual”. Also it is well understood in the current era of global market that a successful multinational company has to have an in-depth knowledge of the environment and the different cultural background of the different countries and regions in which it is operating to have a considerable amount of success.

For any of the successful MNC, it is very essential to understand the different cultural distinctions between the different cultures. The selling of same kinds of products in the markets that are entirely different in terms of their cultural backgrounds has always proven to be quite a tough task. Also, the product or services should not violate any rule or regulation based on the culture of the country it is operating. The promotional campaigns and the mode of the advertisements also should be designed according to the cultural background of the region it is going to be launched or shown. If these things is not taken into the marketing strategy, the product which had been very much successful in one country, may even fail in the other.… Read the rest

Globalization and International Marketing

The concepts of globalization and international marketing are two important concepts that must be addressed and discussed in relation to business operations of large multinational companies. Globalization is defined as the integration of the economy at a global level and involves two main features. The first main feature states that in globalization, most trade takes place among multinational corporations, while the second main feature emphasizes that the major activity in the global economy is the flow of money in the form of derivatives, foreign investments and many others. In simple terms, the concept of globalization simply means the opening and cross relating of different economies in the world, in line with the desire to have a wider and diverse market. With this, since the aim of globalization is to expand and diversify its market, the concept of international market then becomes relevant. International marketing refers to marketing across national borders, in which, the environment from where products and services are offered differs from country to country, and services and facilities are priced differently, with some products or services not available at all in some countries. From this definition, it can be observed that the concepts of globalization and international marketing are similar, with the aim of market expansion and diversification. However, the difference lies on the fact that globalization may become the effect of international marketing.

A lot of business organizations and companies engage in and focus on international marketing, with the desire for more profits, sales and recognition from consumers.… Read the rest

Cultural Sensitivity is Crucial Factor in Company’s International Business Success

Due to progress in communication, transformation and technologies which have performed in development of world’s economy, people from different nations, cultures, languages and backgrounds are now communicating, meeting and doing business with each other more than ever. As there is increase in business activities between people from different nations, cultures, languages and backgrounds, companies who are operating internationally or which are going to be a global they have to concentrate on many factors to be a successful in international market. One of the significant factors among them is a culture. For the success of any business in variety of countries or regions it requires to have understanding of how cultural differences across and within nations can affect the way business is practiced. The main determinants of culture are religion, political philosophy, economical philosophy, education, language, social structure etc. Businesses have to understand and match with all this cultural determinants, as cultural sensitivity is a crucial factor in a company’s international business success.

Cultural sensitivity means being aware that cultural differences and similarities exist and have an effect on values, learning and behavior. Culture is defined by many authors as “collective programming of the minds that distinguishes the members of one group of people from another. It is in various forms which cover the areas such as politics, history, faith, mentality, behavior and lifestyle. To be a successful in international markets any business must have to determine the specific role culture plays in the company’s product markets. Culture may influence business success by consumer culture and business culture.… Read the rest

Modes of Entry into International Markets

A foreign market mode of entry is a channel which enables the enterprise’s product, human skills, management, technology or other resources, to enter into a foreign country. The choice of market entry mode is a vital strategic decision for firms intending to carry out business overseas. A number of definitions of different modes of entry exist. The major modes of international entry is classified as indirect export, direct export and alternatives to export.

Most models of foreign market mode of entry is due to limited resources, therefore enterprises initially penetrate a foreign market through indirect export methods. Indirect paths to internationalization are those whereby small firms are involved in exporting, sourcing or distribution agreements with intermediary companies who manage, on their behalf, the transaction, sale or service with overseas companies. Export intermediaries play an important middleman role in international trade, linking individuals and organizations that would otherwise not have been connected. Small and new ventures use intermediaries to overcome knowledge gaps, find customers and reduce uncertainties and risks associated with operating in foreign markets.

The modes of entry into international markets will switches to direct export such as agents, distributors, and sales branches, when the enterprise becomes more dynamic in international business. Direct export known as the producer will conduct the distribution activities to a foreign agent or importer or to the end customer directly

Selecting the channel of distribution is a long-term strategic decision and need to build long-term relationships and the necessity of stimulating cooperation among distribution alliance partners.… Read the rest