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

Case Study of Zara: A Better Fashion Business Model

Zara is one of the most well known brands in the world and is also one of the largest international fashion companies. They are the third largest brand in the garment industry and are a unit of Inditex. It their flagship range of chain stores and are headquartered in Spain. Zara opened its first outlet in Spain in 1975. The headquarters of the company is based in Galicia. There are more than 2600 stores across 73 countries in the world. The Zara clothing line accounts for a huge bulk of its parent group’s revenues. There are other clothing brands owned by Inditex such as Kiddy´s Class (children’s fashion), Pull and Bear (youth casual clothes), Massimo Dutti (quality and conventional fashion), Bershka (avant-garde clothing), Stradivarius (trendy garments for young woman), Oysho (undergarment chain) and Zara Home (household textiles). Inditex owns all Zara outlets except for places where they are not allowed ownership of stores (that’s where Franchises step in).

Zara is renowned for coming up with products on a short timescale instead of taking forever. They are known for taking around 2 weeks to develop products and have been known to come up with around 10,000 new designs every year (which is an industry record). They have bucked the trend by making productions in Europe instead of shifting their entire production to Third World or Developing countries. However some of their clothes are manufactured in parts of Asia due to the fact that they have a longer shelf life. They make most of their own products inside Spain or other European Countries as they own a large number of factories in both Spain and Portugal.… Read the rest

Case Study: Merger Between US Airways and American Airlines

On December 9th, 2013 the two airlines, US Airways and American Airlines merged to form the American Airline Group that turn out to be the major airline in the world. This merger was structured by the enlarged competition that airlines are countenancing in the business at present. The merger offered a prospect for both airlines to make use of the benefits of an extensive network that would effect subsequent to merging as countered to when each one operates separately. One of the foremost circumstances that encircled the merger was the imminent insolvency of American Airlines. The company in 2011 had filed for bankruptcy even though it relapsed to profitability the same year in July. The merger would enhance admission to opportunities of business for both airlines, particularly American Airlines that would decrease its coverage to financial risks, which were the preliminary grounds for the corporation filing for bankruptcy. The merger would generate enhanced synergies that would be apparent in the course of increased flexibility and financial strength in the market.

Each of the entities merged would have admission to further destinations and bigger clientele. Each of them would admission to a bigger destinations network i.e. 300 destinations all around the world. They as well had a code share contract where customers would impeccably book their flights from any US Airways or American Airlines networks. Such controls are an enhancement to each of the airline’s ability and results to bigger business and performance.

There are a variety of positive traits of this merger.… Read the rest

Case Study on Marketing Strategy: Starbucks Entry to China

Starbucks is one of the largest coffee chains in the World. The company has a unique style and atmosphere in their coffee houses. We chose China because it is the world’s most populous country with over 1.3 billion people live there and second-largest country by land area. After 1978, the country’s economy were underwent dramatic changes which involved such relief as permission for entrepreneurs to start up their own business and opening the country for foreign investment. It is obviously that Starbucks managers decided to take advantage of such opportunity to expand their business into new region. To evaluate Chinese market the company used several steps of analyses.

Who might be interested in buying coffee in China?

To introduce the Starbucks brand the company begun to distribute coffee for free to guests in several Beijing’s hotels in 1994. This initiative indicated that there was a strong demand for their products, particularly among foreigners in China. Local people, who strived to imitate the Western lifestyle, also showed interest for coffee drinking. In addition young generation were enchantment by brands and products from the West. These factors led Starbuck’s managers to learn and understand more about business climate in that Asia country.

Next step for Starbucks was to determine financial and economic conditions of China. Company’s managers were aware that Chinese Gross Domestic Product (GDP) continuously grew approximately 9 % on an average and a GDP per capita was US$3.800. All these factors led to rising income of middle class. That was undoubted advantage for entering Chinese market for Starbucks.… Read the rest

Global Market Models and Concept Analysis

Managers must be conscious that markets, supplies, investors, locations, partners, and competitors can be anywhere in the world. Successful businesses will take advantage of opportunities wherever they are and will be prepared for downfalls. Evidently, successful managers, in this environment, need to understand the similarities and differences across national boundaries, in order to utilize the opportunities and deal with the potential downfalls. In developing appropriate global strategies, managers need to take the benefits and drawbacks of globalization into account. A global strategy must be in the context of events around the globe, as well as those at home. International strategy is the continuous and comprehensive management technique designed to help companies operate and compete effectively across national boundaries. While companies’ top managers typically develop global strategies, they rely on all levels of management in order to implement these strategies successfully. The methods companies use to accomplish the goals of these strategies take a host of forms. For example, some companies form partnerships with companies in other countries, others acquire companies in other countries, others still develop products, services, and marketing campaigns designed to appeal to customers in other countries. Some rudimentary aspects of international strategies mirror domestic strategies in that companies must determine what products or services to sell, where and how to sell them, where and how they will produce or provide them, and how they will compete with other companies in the industry in accordance with company goals. The development of international strategies entails attention to other details that seldom, if ever, come into play in the domestic market.… Read the rest

Case Study: Lenovo’s “PC Plus” Strategy

Lenovo is the largest personal computers (PC) maker in the world as ranked by IDC, but global PC market is a hyper-competitive market with tough competition from competitors like HP, DELL and Acer. The industry also suffers from low profit margins too where Lenovo’s profit margin is around 2% only compared to Apple’s profit margin of 25-30%. Also the PC market itself is declining as consumers are buying more tablets and smartphones which is affecting the sales of desktop computers and laptops. All these factors have pushed Lenovo to adopt a new business strategy called as “PC Plus” Strategy, which covers terminal products like PCs, smart phones, table PCs and smart TVs. Lenovo’s acquisition of Motorola Mobility’s handset and tablet business from Google, following its acquisition of IBM’s x86 server business, puts the company exactly where it wants to be: at the forefront of the computing and smart devices businesses. Starting with its strong base in the world’s fastest growing market, China, Lenovo has thrived by acquiring, integrating and reengineering leading global hardware businesses. Already the world leader in PC sales and one of the largest tablet vendors, the IBM acquisition made it a major global player in data center hardware; the Motorola Mobility acquisition makes it a major global player in handsets. “It’s a very logical extension of our strategy,” said Gerry P. Smith, the head of Lenovo’s Americas business. “A couple of years ago, we recognized that the business is not just about PCs anymore.” Lenovo has been successfully implementing this strategy as highlighted by June 2013 IDC numbers, Lenovo has a 7% share of the global “smart interconnected device market” — smartphones, tablets, and PCs and the market is dominated by Samsung with 24% and Apple 14% market share, Lenovo is followed by, HP, with 3.6%.… Read the rest