When firms choose to standardize a product worldwide, what assumptions are they

Question

When firms choose to standardize a product worldwide, what assumptions are they making about external and internal situations? Name and briefly describe five (5) assumptions these firms make. Make sure your answers are clearly differentiated and complete.

Please briefly explain the following assumptions

•One product fits all

•Significant homogenization of world consumer needs and wants

- cultural issue are minimal

- incremental profits are less than incremental costs of product   modification

•Lower price/consistent quality that standardization drives, outweighs benefits of tailored product features

•Economies of scale are greater and more readily achieved

•There is a preference for global corporate and product image

•Absence of external (host country) restraints

- Legal, regulatory, societal, financial and behavioral norms

•Absence of internal (corporate) restraints

- e.g., manufacturing and people skills

•Favorable synergy’s gained from multi-country operations

- product design, engineering, production, R&D, service, quality control, marketing mix management

Explanation / Answer

The core of a corporations global operations is a services or products. This will also be outlined as the tricky of tangible and intangible factors that distinguishes it from the other entities available to buy (Czinkota, Rinkainen, 1995: 262). Product may also be outlined as: it's a bundle of satisfactions (or utilities) the purchaser receives. This includes its type, style, colour, odour and texture; how it services in use; the package deal; the label; the assurance; brand's and retailer servicing; the boldness or prestige enjoyed by using the brand; the company's repute; the country of foundation; and some other symbolic utility acquired from the possession or use of the items (Cateora, Graham, 1999: 355-356). The success of the company depends upon the way it's possible to differentiate from different rivals. However the key reasons of success can vary from one nation to one other country. For this reason for the organization it's foremost to prefer the correct process between the product adaptation and product standardisation. Product adaptation means that the firm adapts the product to the regional markets. It is the procedure of enhancing products for exceptional nations and areas or designing new merchandise for foreign markets. Product standardisation signifies that the firm sells and advertises a standardized product within the worldwide context. However which method is the better one? Within the following the author wishes to provide an explanation for the distinctive advantages and disadvantages and figure out, which procedure is the first-class for exact circumstances seeing that it depends upon the crisis which strategy is healthier.

As mentioned above the merchandise are the factor which is offered into a brand new market. There are different forms of products related to the goal workforce (international Agricultural marketing management, chapter 8):

1) nearby merchandise - seen as only compatible in a single single market.
2) global merchandise - seen as having extension advantage into different markets.
Three) multinational products - merchandise adapted to the perceived distinctive characteristics of national markets.
4) international merchandise - merchandise designed to satisfy global segments.

There are also distinctive approaches to introduce new merchandise into a new market. They are going to be stated within the following however not further explained due to the fact that it might extend the scope of this paper an excessive amount of. The extraordinary methods are: Exporting, international Licensing, Joint enterprise, wholly owned subsidiary, Turnkey, administration contracts (Kahler, Kramer, 1977: seventy four).

Standardisation

usually the reasons encouraging standardisation are (international Agricultural advertising administration, chapter 8):

1)economies of scale in production, marketing and R&D (lowered stock and progress bills)
2)patron mobility - the more buyers journey the more is the demand
three)technological know-how
4)snapshot, for illustration "eastern", "made in".
5)global competitors

The essential potential of standardisation is the fee saving in compartments like research and progress, advertising and creation. In the compartment of study and progress the forces and financial assets can be all in favour of one product without having the situation to adapt the product to the extraordinary cultures. So this department is ready to work more easily with no need really high fees. Within the marketing department it's the equal: the point of interest is on one product and the work may also be aligned on one campaign for the product. The advertising systems like branding, packaging, etc. Are standardized and make the market extra unified. In the production there's a excessive cost saving on the grounds that of using the equal technological know-how, same infrastructures. The corporation have got to no longer adapt the equipment to regional desires due to the fact that it is promoting the same product in other markets. The sector is becoming more homogenized and the quantity of businesses which use the strategy of product standardization is increasing, but nonetheless the procedure relies on which product is marketed and the place they are marketed. Additionally a predominant factor is that at present high-quality is the most important factor and standardising pleasant might be by way of the global excellent administration tools (e.G. ISO 9000). At present it is simpler to standardize high-quality and to warranty exceptional in the international context.

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