cooldesign/Freedigitalphotos Expanding globally is the next logical step for any organization that has found success in their home territory. "Driven by costs and enabled by technology, companies are aggressively pursuing global markets" (hermanmiller, n.d.), and they are right to do so, if they want to monetize on the global economy and not depend on one sole market to survive during market volatility. While there are disadvantages to offering a globally standardized product I believe there are more advantages as long as the organization recognizes that"While the global product itself is standardized or sold with only minor modifications, the branding, positioning and promotion may have to reflect local conditions"(Levitt, 1983)
There are many factors to the advantages of offering a globally standardized product. It can be an effective way for an organization to operate in new markets and a faster Go-To-Market strategy to reach market penetration. For the consumer it can mean better products and lower pricing. Take Nestle for instance, to increase their global efficiency, Nestle began a SAP (an enterprise software) installation that needed to reconcile 15,000 processes. The cost savings and benefits became clear, "In two years time, the percentage of Nestle business units using standardized processes jumped from 30 percent to 80 percent. Among other benefits, standardization made it easier to integrate acquired companies"(CIO, 2013). The Nestle CEO also recognized that "balancing local flexibility with global efficiency was pivotal to future growth and success"(CIO, 2013). This standardization allowed for a more efficient offering of products to the local markets. By standardizing a global product the consumer also benefits because "there are less products, better reliability, Support teams become more knowledgeable and more customers using the same products result in better product feedback"(Captec, 2012). It can be a win-win situation, efficiency for the organization and reliable and less expensive products for the consumer.
There are also many factors to the disadvantages of offering a globally standardized product. Standardization may be feasible for some aspects of the business like production, but "Customer Service, advertising, distribution and product pricing must be driven by local market conditions"(Houston Chronicle, n.d.). For example in Asian countries some of the products may be green which resembles balance, but in some South American countries Green is associated with death. In some countries the definition of product benefits differ as well. In Britain quality is defined as durability while in France it's defined as style. (hermanmiller, n.d.) Another factor is being inconsistent in consumer needs. A difficult call and failure to address the needs of the local consumer can be devastating. Accenture's global consumer survey "found that only 21 percent of consumers believe the companies they do business with are good at providing a tailored, relevant experience" (Accenture, 2011). If the consumers feel that way, then you can argue that the products were not ready to be launched into the market, and need better planning and marketing.
I believe that Software, IT Hardware and Data such as DaaS (Data as a Service) and SaaS (Software as a Service) products truly lend themselves to be offered as standardized global products. In my experience selling and marketing Daas and Saas products worldwide, the products are sold as is. The changes are minimal when integrating the products based on the customers specifications. Once the mapping is done that connects their code to the products code, then the only thing that is localized is the UI (user interface) which is in their language. The processes going forward are automated. The backbone structure that runs the data and hardware are standardized. This allows for faster integrations and faster go-to-market products. One of the projects I worked on last year was for a Cable Operator in Colombia. My company provided the entertainment data, a company in China provided the hardware (set top box), another company in the US provided the back-end (servers,SaaS), another company in the US provided the video streaming service, a company in France provided the security, another company in Spain provided the Mobile software and a company in Israel provided the UI (user interface) experience. All we had to do was integrate the moving parts, all standardized processes and the only localization was the UI. The project took 6 months to integrate. All services are housed and maintained in their respective countries. The beauty of standardization when it works!
References:
Herman Miller. (n.d.), Companies Going Global, Retrieved on January 15, 2014 from http://www.hermanmiller.com/research/research-summaries/companies-going-global.html
Levitt, Ted (1983), The Globalisation of Markets, Harvard Review, Retrieved on January 15, 2014 from https://www.boundless.com/marketing/global-marketing/introduction-to-global-marketing/global-marketing-standardization/
CIO. (2013, September 27), How to Overcome Resistance to Global IT Standardization, Retrieved on January 15, 2014 from http://www.cio.com/article/740333/How_to_Overcome_Resistance_to_Global_IT_Standardization
Captec Group. (2012, February 17), What are the benefits of product standardization?. Retrieved on January 15, 2014 from http://www.captec-group.com/blogs/what-are-the-benefits-of-product-standardisation/
Houston Chronicle. (n.d.), The Disadvantages of Standardizing a Business. Retrieved on January 16, 2014 from http://smallbusiness.chron.com/disadvantages-standardization-business-25120.html
Accenture. (2011, May 5), Customer Experience Suffers as Organizations make Inconsistent Use of Analytics, Accenture Research Finds. Retrieved on January 16, 2014 from http://newsroom.accenture.com/article_display.cfm?article_id=5195
There are many factors to the advantages of offering a globally standardized product. It can be an effective way for an organization to operate in new markets and a faster Go-To-Market strategy to reach market penetration. For the consumer it can mean better products and lower pricing. Take Nestle for instance, to increase their global efficiency, Nestle began a SAP (an enterprise software) installation that needed to reconcile 15,000 processes. The cost savings and benefits became clear, "In two years time, the percentage of Nestle business units using standardized processes jumped from 30 percent to 80 percent. Among other benefits, standardization made it easier to integrate acquired companies"(CIO, 2013). The Nestle CEO also recognized that "balancing local flexibility with global efficiency was pivotal to future growth and success"(CIO, 2013). This standardization allowed for a more efficient offering of products to the local markets. By standardizing a global product the consumer also benefits because "there are less products, better reliability, Support teams become more knowledgeable and more customers using the same products result in better product feedback"(Captec, 2012). It can be a win-win situation, efficiency for the organization and reliable and less expensive products for the consumer.
There are also many factors to the disadvantages of offering a globally standardized product. Standardization may be feasible for some aspects of the business like production, but "Customer Service, advertising, distribution and product pricing must be driven by local market conditions"(Houston Chronicle, n.d.). For example in Asian countries some of the products may be green which resembles balance, but in some South American countries Green is associated with death. In some countries the definition of product benefits differ as well. In Britain quality is defined as durability while in France it's defined as style. (hermanmiller, n.d.) Another factor is being inconsistent in consumer needs. A difficult call and failure to address the needs of the local consumer can be devastating. Accenture's global consumer survey "found that only 21 percent of consumers believe the companies they do business with are good at providing a tailored, relevant experience" (Accenture, 2011). If the consumers feel that way, then you can argue that the products were not ready to be launched into the market, and need better planning and marketing.
I believe that Software, IT Hardware and Data such as DaaS (Data as a Service) and SaaS (Software as a Service) products truly lend themselves to be offered as standardized global products. In my experience selling and marketing Daas and Saas products worldwide, the products are sold as is. The changes are minimal when integrating the products based on the customers specifications. Once the mapping is done that connects their code to the products code, then the only thing that is localized is the UI (user interface) which is in their language. The processes going forward are automated. The backbone structure that runs the data and hardware are standardized. This allows for faster integrations and faster go-to-market products. One of the projects I worked on last year was for a Cable Operator in Colombia. My company provided the entertainment data, a company in China provided the hardware (set top box), another company in the US provided the back-end (servers,SaaS), another company in the US provided the video streaming service, a company in France provided the security, another company in Spain provided the Mobile software and a company in Israel provided the UI (user interface) experience. All we had to do was integrate the moving parts, all standardized processes and the only localization was the UI. The project took 6 months to integrate. All services are housed and maintained in their respective countries. The beauty of standardization when it works!
References:
Herman Miller. (n.d.), Companies Going Global, Retrieved on January 15, 2014 from http://www.hermanmiller.com/research/research-summaries/companies-going-global.html
Levitt, Ted (1983), The Globalisation of Markets, Harvard Review, Retrieved on January 15, 2014 from https://www.boundless.com/marketing/global-marketing/introduction-to-global-marketing/global-marketing-standardization/
CIO. (2013, September 27), How to Overcome Resistance to Global IT Standardization, Retrieved on January 15, 2014 from http://www.cio.com/article/740333/How_to_Overcome_Resistance_to_Global_IT_Standardization
Captec Group. (2012, February 17), What are the benefits of product standardization?. Retrieved on January 15, 2014 from http://www.captec-group.com/blogs/what-are-the-benefits-of-product-standardisation/
Houston Chronicle. (n.d.), The Disadvantages of Standardizing a Business. Retrieved on January 16, 2014 from http://smallbusiness.chron.com/disadvantages-standardization-business-25120.html
Accenture. (2011, May 5), Customer Experience Suffers as Organizations make Inconsistent Use of Analytics, Accenture Research Finds. Retrieved on January 16, 2014 from http://newsroom.accenture.com/article_display.cfm?article_id=5195
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