5) Levitt’s “Globalization of Markets” is considered to be a seminal article in

Question

5) Levitt’s “Globalization of Markets” is considered to be a seminal article in international marketing

A) Summarize Levitt’s article in detail. In your summary, be sure to identify and discuss the factors that Levitt states have led to the globalization of markets.

B) Explain the meaning and advantages of standardization.

C) Do you agree with Levitt’s premise given that this article was written more than two decades ago? Is the article still relevant today? Why or why not? (You may conduct additional research and use external sources of information to explain your answer, but be sure to cite all your sources of information after each answer.)

Explanation / Answer

ANSWER:

(a) Technology is forcing the world forward and toward a common way of doing things. A side effect of this has

become market globalization. Global markets standardize products for the consumer that were previously

unimaginable. Corporations profit because of the massive economies of scale. Levitt consistently places

emphasis on technology and the future. He knew that this was the way the world was advancing and that it was

a powerful force. He describes it as “alleviation of life’s burdens”. Technology would provide transparency for

the market and make it easier for corporations and consumers.

Levitt goes on to describe and emphasize the difference between multinational corporations and global

ones. Multinational corporations have investments in other countries, but without coordinated products offered

in each country. They are more focused on adapting their products for the individual tastes of each market.

Global companies have investment in other countries as well, but they market their products through the same

coordinated image in all markets, as opposed to specifically tailored products. Their emphasis is on volume,

efficiency, and cost management.

He reiterates that the consumer has the desire for the most advanced objects at the lowest price, best

quality, and most reliability: homogenization was the goal. Superior quality and reliability with low costs is why

Japan is succeeding in its worldwide dealings. By customizing products for the country it is being sold (left hand

driving cars for the US, tweaking tastes for the particular region), they are able to sell to more quantity and in

more places.

Although there are still some remaining difference in cultural preferences, tastes, and standards and some

have managed to go worldwide and mainstream such as Chinese food, country music, and pizza.

Levitt’s theory was that “companies must learn to operate as if the world were one big market – ignoring

superficial regional and national differences.” He states that the purpose of business is to create and keep a

customer. Companies must be obsessed with the idea of innovation to keep coming up with new ideas to woo

and maintain customers. Preferences are always changing with technology and the times so it is important for

corporations to keep this in mind when designing and marketing a product or service.

(B) Boorstin said “the Republic of Technology [whose] supreme law…is convergence, the tendency for

everything to become more like everything else”. This is standardization. Global corporations are selling

standardized products the same way everywhere across all disciplines.

An advantage of standardization is ease for corporations. Manufacturing or production is made much

simpler by not having to cater to every culture’s differences. This cuts costs and increases quality and reliability.

International cultures in the 80’s would have been far more distinct than they are now. With the availability

of instant communication, people in China can see trends in the U.S. and people in Russia can see trends in

Germany. This allows for companies to ease standardized products into markets much more easily.

(C) In the 80’s, Levitt’s description would have been the ideal. It was what everyone hoped the near future

would look like. The transition from multinational corporations to global corporations certainly became more

apparent but it seems like today there are some combinations of the two that are flourishing. McDonald’s ,

while maintaining a relatively similar base menu, added white rice to their menu in Hawaii; steak fries to their

menu in Germany; and curry dishes to their India menu. No one can deny that McDonald’s is not a successful

corporation, but by making little tweaks to their products they can capture the local market at no more cost. It

seems as though many companies are replicating this model of relative standardization with small tweaks

consisting of only a small price increase at the expense of the corporation.

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