Introduction
In the business context, the term localisation refers to carryout the production process of commodities locally with localized labour in order to reduce transportation and other production cost. In localisation policy, along with the transplantation of production process in host country, the products are meant to meet the local needs of the community. Business firm can attain positive attitude from host country government through employing nationalized labour force, because through this business firm increase the job opportunity for nationals. The firm can establish good relation with local government by avoiding expatriate workers. The recruitment and retention of local employees helps firms to reduce labour cost. Since there are too many advantages for localisation, it suffers from certain limitations such as barriers related to cross cultural communication and demographical factors. These may affect the localisation strategy and then it leads to mislocalisation.
Impacts of localization strategy on business
Along with localisation strategy the economic utilization of local resources is implemented and it helps to reduce cot of production. Due to better relation with host country rulers, the conflicting issues can be easily solved. Localized labour force is useful for improving communication with the host community and thus the business performance can be further enhanced. The main disadvantages of localisation policy are that, for understanding local markets opportunities it takes much time and effort. The local labour force may create costly mistakes or events, and it may occur outside the direct control of parent company then they will be subjected to heavy financial burden. (Harry and Collings 2006, p.139).
Localization as a social strategy
In terms of social concern, localisation is the production of locally needed goods and commodities through the utilization of local labour and other resources. Thus it ensures increasing job opportunity, enhanced social conditions, and better protection of environment through following better business policies. The firm required to undertake supply of goods and services by promoting native labour force, improving community standards and the economic environment. In localisation the flow information gets affected with cross cultural communication barriers. Then steps for effective communication has to taken for overcome these barriers. By serving the needs of primary local consumers, with their own resources is useful for creating a self sufficient society. By transferring the control of firms from distant corporations to the local, better communication can be established. Localisation is the necessary element of self sufficiency of different communities. (Parkins 2000).
Impacts of Globalisation
Globalisation creates trade relation between different nations. Developing countries are benefited from globalization through higher levels of foreign investment in all levels of the economy. Large scale exports of goods and services makes possible through it. Consumers are benefited from high quality product at cheap rate through global competition. Flexibility is another advantage of globalization. Firms can set off their business losses from a particular region with profit from other regions. Through development in technology and communication, advertising becomes so easy and thus world becomes a global village. The global village effect created from developed communication technology, cross- cultural barriers becomes reduced. But the threat of cultural invasion is always with globalization. As a result of increased marketing strategy of firms, a commodity culture has raised which point out the consumption as a way to prosperity. (Advantages and Disadvantages of Globalization).
Business Strategy of Globalisation with Localization
The disadvantages of globalization such as entire control under few hands can be overcome with localisation strategy. Democratic control of production process ensures following of business ethics by firms. In the age of globalization, understanding of local needs is critical because only a localised firm with customer support can exist for a long term in this changing business world. Local needs of customers have to be identified for the supply of goods that meet their expectation.
The crucial problem of integrating local culture in the globalisation programme of international business can be easily solved out through localisatin policy. In localsied business cultural integration is taken place. Awareness of local culture creates better relation with the customers and thus communication becomes ease. Business firms can identify the needs and intentions of the customer through effective communication.
Steps for effective localization
For a successful localisation, fixation of the target market is the primary step. The distinct features of each society have to be analysed deeply before starting business. Indexes such as Power distance index, individualism, long term devotion etc can be used for the community analysis. The power distant Index measures the equality and inequality in the distribution of income among the society. Individualism takes the degree of reinforces of society in the individuals’ achievement. Long term orientation measures the community’s attitude of long term devotion towards cultural and traditional values and commitments. Through these different indexes appropriate target market can be selected for planting business. (Globalization as Localization: A Model for Measuring Cultural Diversity. 2004).
Benefits of Localization in Globalisation strategy
Localisation helps to market product according to the cultural needs of customers through the identification of their cultural diversity. Prosperity of individuals and communities can be achieved through globalization. Economic partnership of nations through business relation makes it possible to enhance the undeveloped nation to get chance to rise up. Localisation can be used for overcoming consequences of globalisation. Localisation helps to spread the benefits of globalisation to the society’s lowest level through local production and usage of local resources. In localisation, the participation of community in product design and execution as well as monitoring the projects towards their benefit is assured. Community participation must be followed by international business firms as it helps them to reduce the restrictions of community towards their project. (Glocalisation: Globalisation Plus Localisation. 2002).
The increasing commodity prices in the market make it necessary to strong up the local production of commodities. Together with this companies can reduce the transportation cost at a greater level. For exploiting the availability of cheap labour in developing nations developed country firms have transferred their production process in such countries. Thus in developing countries, more employment opportunity becomes generated and hence economic prosperity could be resulted. The reduced labour cost makes it possible to produce products at cheap cost and thus the commodity prices can be minimised. By decreasing the production cost with comparatively low cost of transport, final production cost also can be reduced. Thus availability of quality products at cheap rate reduces the global market inflation. (From Globalization to Localization. 2008).
Globalisation and localisation have same purpose. They are interconnected and interdependent. By globalisation, economic and cultural integration between nations takes place. It helps companies to locate their products and services in multiple countries and thus economic dispersion takes place between nations. In localisation, production of goods and services are carried out nearer to end users and thus the transportation and other external costs of globalisation can be reduced.. The target market in localisation policy is single community occupying specific cultural needs. The production process is carried on by integrating the cultural needs of the community. Hence close relation with the community can be ensured by business firms. In internationalization product marketing is carried on with target of an international community. Thus there is no specific attention for a particular community and hence cultural integration takes place. Localisation is the marketing targeted to a specific region. For the production process, the resources from such region like human resources, is employed. Economic prosperity of specific community can be achieved through localisation. (Dadhich 2006).
Cross Cultural communication theories: Cross cultural communication is built under the concept that communication is distinctive within each culture. The existing cultural differences and similarities across communities can be explained with the dimensions of the cultural variability. One of the major dimensions is individualism-collectivism. In individualism, individual goals are more highlight than group goals, whereas in collectivistic culture the group goals are more emphasized. These different dimensions have influence on the communication process.
Cross cultural communication process: Cross cultural communication is important due to the fact that individuals of different community have limited common information. Frequency of communication skills and knowledge among different community affects the communication process. Language is another major constraint in cross cultural communication. To overcome this barrier a common language may be used.
Cross cultural communication in the age of globalization
New business world is characterized by innovative technology and integrated markets. In globalization, the general trend is that products are based on generalization of dominant culture. This creates invasion of dominant culture towards less powerful cultures. Globalize business firms design their products and services on a standardized way. This put limit on their customer relations. In this context, localisation is a useful method of doing business internationally with better customer relations. The cultural differences across different nations can be solved out through localisation. In Localisation understanding of the community culture for which the business is targeted, is the first step for starting business. It is reverse process of globalization where the local needs and ideas are collected through proper communication strategies. (Panetta 2001, p.50-51).
“Within the business context, cross cultural communication refers to interpersonal communication and interaction across different cultures. Effective cross cultural communication is concerned with overcoming cultural differences across nationality, religion, borders, culture and behaviour.” (Cross Cultural Communication Needs).
Cross cultural communication is the basic ingredient of globalization strategy. In order to get customer acceptance on a global ways business firms has required supplying product and service that meet the needs and expectations of different customer groups. Success of any business depends of the integration of feedback from customer to the products and services. For understanding the needs and cultural background of different communities across different nations, proper communication is necessary. In cross-cultural communication, the main barriers are diversity in culture and social conditions. To get entry in the competitive global market, and attain successful growth, interaction with different communities and creation of good customer relation is necessary. Effective cross cultural communication involves better understanding of cultural diversity and acquisition of local language. (Cross Cultural Communication Needs).
Cross -cultural communication is necessary factor in the age of globalisation. Effective cross-cultural communication can be met through localisation policy. All communications are cultural in nature. There will always chance for miscommunication when communications becomes cross-cultural.
Barriers of Cross cultural communication
Significant cultural differences between the communicators often act as communication barrier. For avoiding such barriers better understanding of cultural features of different community is necessary. A cultural awareness can be met through localisation of business. The main barriers to effective cross cultural communications are time and space constraints, fate and personal responsibility, face and face saving etc. Time and space act as separating factor of cultures. Communication barriers across different cultural groups are affected by fate and personal responsibility of individuals in particular communities. The nonverbal communication has an important role in cross cultural communication as it helps in communicating ideas through a common understandable language.
Steps to overcome cross cultural communication barriers
Cultural awareness is the key element of effective cross cultural communication. Understanding of limitations in communication and adjustments is necessary for good cross cultural communication. Intermediaries will be helpful for better communication as they familiar with both cultures. But negative effects of intermediaries like more time usage may affect communication process. (Lebaron 2003).
Cross cultural communication suffers from communication barriers resulting from cultural differences. The differences in communication styles of countries, a global firm required to select proper advertising strategy which includes selection of message and medium for local community level. For the selection of the media through which the idea of the business is transferred to customers, the understanding of cultural differences and variance in pattern of behavior is very crucial. Cultural differences of communities influence the attitude of individuals in the community towards their markets. Culture influence the way people respond to advertisement of business firms. (Fang).
Globalisation is the reshaping of business towards global market. For this, strategies for overcoming cultural changes between nations have to be followed. Along with national cultures, regional cultures and organisational culture have to be identified for proper marketing of products. Traditional values of different cultures are playing important role in reshaping the projects of Multinational companies. Due to the intermixing of different cultures there may be loss of cultural identity between nations. This contradictory movement of cultures through globalisation can be reduced through localisation. Emerging global culture across nations’ boundaries can be avoided through transplanting the production of commodity in local level. Thus local culture and indigenous culture values can be maintained. (Cross-Cultural Communication Strategies. 1998).
Case Study: Application of Localisation in Globalisation Strategy by McDonald’s Corporation
Mc Donald’s Corporation is a multinational food marketing company operating in 119 countries. In each of the operating countries, the company adopts localization strategy for ensuring customer satisfaction. Thus along with core Mc Donald’s menu, localized food products also included in their local menu. Examples of their product localization strategy are supply of Croque McDo in France and Chicken Maharaja Mac in India. Both of them are prepared by taking into account the local taste needs whereas the basic ingredients are same.
For providing adequate managerial training to the human resource of the McDonald’s Corporation, they organized the Hamburger University in Illinois. It conducts adequate training programs to all of the managerial personnel in the group. Localized managerial talent is also developed through these training programmes. Its branches have opened in other countries for empowering the managerial development of the entire business group. McDonald group is concentrating on maintaining standardized and quality products and services on its global operation. Together with global standards, supplying locally demanded food products which meet the local food safety regulations are included in their localization strategy. For supporting inter-communication between different regional business units, language services are provided by the group. The entire reports of the business group are published in different languages. Adoption of globalization management system (GMS), within the business system is also supportive for its localization process in various countries. Organizational communication becomes effective through the language services. Training programs to the managerial persons are delivered in 40 languages and this facilitates their local and cross-cultural communication in their business areas.
In India Mc Donald’s is organized as a locally owned company under the name, McDonald’s India. As a part of the localization strategy McDonald’s has developed a special product menu for the Indian market involving vegetarian items only. They do not include any beef or pork items in their Indian menu as it is against the cultural ethics of Indian population. McDonald India always concentrating on adding local flavor in their food products and this will be helpful for appealing the native palate. In the preparation of vegetarian food products, stringent precautions are followed such as only vegetarian ingredients are used for production with pure vegetable oil as cooking medium. Localized product naming is another crucial strategy. This helps them to attain market acceptance at its entire business region without changing the ingredients. For example the Big Mac food in America is renamed as Maharaja Burger in India.
Application of localization in McDonald’s globalization strategy helps the group to attain global market acceptance with profitable growth. Through localization strategy, customer satisfaction is assured by them in their product. The local language service of the group is effective for better cross cultural communication in the operating areas. Through they attain business enhancement in entire operating countries.
Conclusion
Multinational companies adopt the localisation for exploiting the benefit of local firms by starting their subsidiary firms in local level. In their business undertakings, the resemblance of global firms often felt. It is the challenge faced by MNCs to keep a balance between the community needs by keeping global standards. Localisation of human resources, especially managerial labours are required to be selected from local pool for creating better relation with the host community. However the demographic features of specific community restricts the availability of efficient and skilled labour in managerial field. For this firms may take care to support the local personnel to develop their personnel skills by giving on the job training and other support. But communication barriers across different culture also affect the training programme. Understanding of the host community and creating awareness about their culture will help to overcome these challenges. Localisation of human resources in the top managerial level is necessary for creating a mutually beneficial, long-term human relation with the organization and the host community. The local workers seem to be more reliable for a long-term. The business firms can positively influence the economic condition of local community and thus create goodwill among the community as a whole.
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