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The globalization of markets
Transcript of The globalization of markets
- Theodore Levitt, 1983
Theodore (Ted) Levitt
born in Germany 1925
emigrated to the United States in the age of ten
professor of Business Administration and head of the marketing area at the Harvard Business School about 30 years
author of several article for Harvard Business Review, e.g. his classic "Marketing Myopia" (1960)
source: The Economist (2009), Theodore Levitt.
The Economist (2009), Theodore Levitt, http://www.economist.com/node/13167376 (Download from 20th of April 2015)
Theodore Levitt (1983): The globalization of markets, published in Harvard Business Review.
State of affairs - 1983
Multinational vs. global corporations
Example wasching machine
Why remaining differences
State of affairs in the 80's
many of the world
third of its population
e.g. southeast european states
worldwide communication, transport, travel
in the early 80's Levitt's theory looks like a "futuristic fantasy
(except: "Manhattan advertisement" for British Airways
Emergence of global markets for standardized consumer products.
"Companies must learn to operate as if the world were one large market - ignoring superficial regional and national differences."
Theodore Levitt , 1983
Globalization of markets
Multinational vs. Global
- many customized markets
- surveys (wishes, needs)
- adjusted products
- high costs and prices
- treats the world as composed of
- globally standardized product
- high quality and lower price due to economies of scale
Example: Coca-Cola, Japanese companies (Sony)
Conclusion & criticism
End of domestic territoriality
High-value products in smaller markets
Cheaper products with good quality
Why remaining differences?
personalized business relationships (different cultures & religions)
form of government
- transfer of technology & data
- resistance to radio & television interference
"With persistence and appropriate means, barriers against superior
technologies and economics have always fallen."
some differences are unyielding! (e.g. Teradyne Corporation, 2 productlinesc
some different cultural preferences expand to mainstream global preferences (e.g.
like Chinese food, pizza, jazz)
as a push for economy (Japan's automotive companies)
confirm global homogenization
unthinking belief in the immutability of differences
- preferences are not only local fixed
Theodore Levitt, 1983
economies of scale
- cost advantages comes from long production runs
learning curve effects
economies of scope
- share expenses by the common use of resources along the value chain
(generic competitive strategy)
Porter, M. E., published in "The Competitive Advantage: Creating and Sustaining Superior Performance", 1985
lowest cost of operation industry wide
Example automatic washing machine 1960
McDonald's - Global Strategy & Local Specilization
low price segment
high market share/ competitive
bargaining power against supplier
Thank you for your attention!
Are there any questions?
Levitt's strategy of globalization
"technology drives the world toward a converging communality" -
emergence of global markets for
standardized consumer products
obsolete multinational corporations
vs. global corporations
high quality & and low costs are compatible - " twin identities
pushing the business
no entirely rejection
- but the last possibility
- global corporation
Unique Selling Proposition
Benefits (quality, technology, brand image, service)
Surveys/research (identify customer's needs & preferences)
Asking the right questions
top-of-the-line, high-end products (price is quiet indifferent)
Profitable markets/ risks
low costs vs. good quality Red Ocean