CHALLENGES TO GLOCALIZATION

Challenges to GlocalizationEdit

To expand into new markets you need to successfully understand and adapt to the existing local environment. Each culture is different due to their customs and history, one of the hardest part of glocalisation is understanding your new market and how to be successful in it. A major part of succeeding in this is to be aware which of the four categories of society your target market falls into, is it a

1. Traditional society such as Arab countries and Japan- these societies value collectivism, religion, tradition and heritage ^[15] This means that there is a large emphasis on hirachy and centralised power. This makes it hard for the management in the new country to make decisions and changes effectively and efficiently as they have to go through multiple levels of management before they are approved. In a traditional society it is also very important to network as there is pre-existing channels.^[15]
2. Rational society like Germany- these countries have individualistic values rather than collectivistic but their ideology is still shaped by their past history ^[15] In these countries the needs of the individual come first which makes it easy to adapt to which creates a welcoming market for new products and companies.
3. A materialistic society which is commonly characterised as ex-communist countries.^[15] This category is relatively new and was created due to the shift in culture caused by an increase in economic opportunity and mainly consists of emerging markets which makes it a perfect market place for businesses to break into as they have no existing channels.^[15]
4. Or a post modern society, this is the largest category of society which consists of countries such as New Zealand and most of western Europe. These countries are defined by having a mix of everything, they are individualists, tolerant to change and multicultural which makes their market welcoming to new products and companies.^[15]

It is important to note and understand that countries are constantly evolving and may switch societies, for example the Chinese culture has changed from being a strictly traditional society to being a materialistic society, this is a result of emerging economic opportunities.^[15]

Glocalisation works best for companies which have decentralised authority.^[15] This means that countries like Japan where the hierarchal system is reinforced into their culture find it a lot harder to adapt to new markets compared to countries like the Netherlands as the Dutch have a low power distance which means they only use hierarchy for and mainly prefer to have a coaching leadership style where the superiors are easily accessible.^[15] This means that decisions and necessary chances are able to be made effectively and efficiently compared to going through various layers of management before a decision is made.^[15]

Decentralised authority is also important as there may be disagreements between management in new destinations who deal with the day to day running of the business and executive management at the companies headquarters, if power is not decentralised the wrong decisions may be made.

The cost to the companies increases as they cannot standardise products and projects, different cultures have different needs and wants which is highlighted in this challenge. An example of a company succeeding in creating new products for their emerging market is McDonald's new rice meals in India and China ^[16] This shows that McDonald's has done research on and understands their new market's requirements for a successful takeaway food. This however can be very costly and time-consuming.^[16]

Although there are many challenges to globalisation when done right it has many benefits, allowing companies to reach a larger target market is just one of them. Society also benefits when globalisation occurs as an increase in market competition generally pushes the price of products down which means the consumers benefit by gaining a lower price point.^[17] This decreases the inequality gap as people who couldn't previously afford products when the market was controlled by local monopolies are able to purchase the product for cheaper.

Although globalisation has benefits to the consumer it does not always benefit the producer with newer and smaller companies struggling to keep up with the low production costs of the multi-national competitors. This results in either a higher price and loss of consumers or a lower profit margin which in turn results in less competition within the market.^[18]

by Minzi Catherine L.

BAPRM 42616