Technology has become a major factor on the globalization of markets. Technology was able to abolish the different barriers (communication, transportation etc.) that prohibit companies into bringing their business in the global market. In this blog post, I will share the role of continued innovation of technologies played in the drive of companies in to global markets.
As Theodore Levitt said in his article The Globalization of Markets, “A powerful force drives the world towards a converging commonality, and that force is technology”. With reduced barriers in communication and transportation costs, businesses are free to move to places where conditions favor them. Products are now becoming more generic because of the different demands of local markets. According to Theodore Levitt, this “pushed markets towards global commonality”. Consumers now look for the same attributes that they see in foreign brands and demand that local companies produce the same benefits. Manufacturers now also look for countries that can strategically benefit them. They go to countries that, for example, have low labor costs, manufacturing costs, transportation costs etc. which in return reduces the over-all cost of companies.
According to Theodore Levitt, “The most effective world competitors incorporate superior quality and reliability in their cost structures. They sell in all national markets the same kind of products sold at home or in their largest export market. They compete on the basis of appropriate value – the best combinations of price, quality, reliability and delivery for products that are globally identical with respect to design, function, and even fashion.” Having said that, standardized benefits of products appeal more to consumers because of the continued innovation of technologies. The companies’ tailor-fit the design and function of their products with regards to the culture but with the same benefits. This is called “Glocal” strategy.
In “How global brands compete” by Quelch, Holt and Taylor, they said that “people in different nations, often with conflicting viewpoints, participate in a shared conversation, drawing upon shared symbols. One of the key symbols in that conversation is global brand.” Consumers may say that they don’t like global brands, but they can’t ignore it. Most often that now, consumers now perceive global brands are expensive but reasonable with regards to the quality. But unlike local brands, global brands come up with new products all the time. That’s why consumers are now associating it with innovation which is becoming the trend in this decade.
Technology has really changed the game in the global markets because of its fast-paced change. Companies should learn how to adapt in the changes because this may benefit them with more than they can think of. If they can adapt dynamically, this may lead them into having a big competitive advantage among their competitors.