Nowadays globalized businesses offer a broad range of similar products and services throughout the world adapting or standardizing them to local markets. This paper is aimed at the review of concepts associated with the international marketing, in particular, standardization, adaptation, multi-domestic, global, and transnational strategies resulting in the case analysis of Roy Choi’s restaurant empire and Xiaomi company and recommendations for their international expansion.
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In the international marketing, marketing principles and functions persist, but they possess some characteristic features connected with different national, cultural and other peculiarities of foreign markets. According to Herbig, there are two types of the global expansion: the international marketing standardization (globalization) and adaptation (glocalization) (31). If the company focuses on the similarity of the characteristics of certain foreign markets while choosing a target market, in this case, the complex of a standardized marketing is developed. Standardization covers goods, advertising, and distribution channels that provide significant cost savings.
As a rule, such international marketing is based on the principle of ethnocentrism, in other words, the possibility of using in the foreign markets the same methods as in the home country. In fact, such companies are expanding the national market to international offering a standardized product.
For instance, the standardization of advertising is suitable for products associated with widespread habits (Marlboro cigarettes or Beefeater gin that are perceived and remembered literally without words), or with the universal consumer evaluations of their main functional characteristics (shoes or clothing). In addition, analyzing the possibility and necessity of standardization in developing the international marketing, factors that affect the degree of adaptation should be taken into account as adaptation marketing strategies depend on competitive geographic, national, racial, religious, and cultural contexts.
The concept of glocalization is based on the characteristics of each national market. Therefore, the adaptation of the marketing to conditions of each market is necessary. This concept is inherent in multinational corporations. Their geocentric orientation pays attention to both similar and distinctive features of foreign markets, whereby the marketing could be adapted, but if appropriate – partially standardized. For example, the promotion of a standardized product might be accompanied by a completely adopted advertising.
It is also significant to consider concepts of multi-domestic, global, and transnational strategies. The multi-domestic strategy means the adaptation of a strategic approach to conditions of each country where the company operates (Jeyarathmm 136). The strategy considers significant national differences in cultural, economic, and political environments in different countries along with needs of customers and their habits.
This type of strategy is suitable when consumers in the country need only specific products, when product demand is relatively small, when national governments impose requirements on the necessary conformity of the goods sold on the spot market, and when trade barriers of the national government are so diversified and complex that hinder the development of a single coordinated approach. In this case, one might observe the development of strategies appropriate to the conditions of the particular country. Moreover, the strategy is characterized by a focus on local suppliers and full adaptation to the specifics of the national demand, culture, and customs of the country. As a rule, it is implemented in markets where competition is limited to the national market and does not depend on what occurs outside it.
The global strategy occurs when prices and competitive conditions of national markets are closely linked (Steers and Nardon 117). In this regard, the competitive position of the company in the same national market significantly affects its position on another. In markets with global competition, the marketing tends to the standardization and harmonization, and the main struggle is the unfolding for the price efficiency.
The global strategy allows the company to focus on providing a competitive advantage for both the international and domestic competitors. If differences between countries are small and could be taken into account when developing a global strategy, it is preferable as it gives the opportunity to combine efforts of the company to provide a competitive advantage in the global market due to the low cost or differentiation.
The transnational strategy imposes contradictory requirements. On the one hand, companies should be effective in relation to costs and prices, on the other hand, to ensure the adaptability of the production and marketing system to national circumstances. The company could transform to this type of strategy in two ways. First, to change consumers’ preferences in global market by means of price pressure from standardized mass production to differentiated one. The second way is to strengthen the price competition in the multi-domestic industries.
It should also be mentioned that companies are reviewing their strategies and changing them in accordance with the changing market environment to the extent of the geographical and sectoral diversification
Speaking of the Roy Choi’s food truck or restaurant business international expansion, I would recommend following the product localization and the overall transnational strategy. The food industry should take into account differences in consumers’ taste preferences that are largely related to national characteristics. The product standardization does not correspond to this concept that requires a high degree of product adaptation to the particular market.
Consequently, the company should adapt as much as possible including foods, recommended recipes, and other aspects. However, it is necessary to preserve the image of the company and its initial mission. “I’ve always had a magnetic ability to connect with people on the fringe. That’s why my food relates to so many different people,” states Choi (Walker par. 8).
He also claims that “wherever it goes from there will be up to the concept that fits the community” (Frausto par. 8). Therefore, I believe that the company’s strategy should be based on transnational strategy. Thus, the optimal solution of the issue is, perhaps, the partial localization along with the preservation of the spirit of the single campaign in all markets where the product is offered, but, at the same time, making it possible for the necessary degree of standardization in order to strengthen the impact on the consumer.
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As for the Chinese Xiaomi company, I would recommend the product standardization and the overall global strategy. According to Hugo Barra who joined Xiaomi recently, “the equation of quality and affordability” are the principal components of the company’s expansion strategy (Larson par. 6).
The product of the company does not require the consideration of special features as a smartphone is comprehensible for everyone, and, as a result, might be standardized. In order to implement this type of strategy, it seems appropriate to improve the organizational structure, form of control where a special role is given to the corporate culture, increase the role of innovation, and the effect of global learning. The latter consists in the fact that the company is organized in such a way that any new knowledge about improvements comprising product, functional system, and market service methods should be available in all divisions of the company wherever they are, and, most importantly, they should be freely accepted and implemented.
Frausto, Manny. “Are Roy Choi’s Eyes Bigger than His Stomach?” The Orange County Register. 2014. Web.
Herbig, Paul A. Handbook of Cross-cultural Marketing, Binghamton, NY: International Business, 1998. Print.
Jeyarathmm, M. Strategic Management. 2nd ed. New Delhi: Himalaya, 2008. Print.
Larson, Christina. “Xiaomi’s Resolution: Double Its Smartphone Sales Volume in 2014.” Bloomberg Business. 2014. Web.
Steers, Richard M., and Luciara Nardon. Managing in the Global Economy, Armonk, NY: Sharpe Inc., 2005. Print.
Walker, Tim. “Keep on (gourmet) Trucking: The Cuisine-bending Secrets of LA’s Famous ‘Kogi Korean Taco‘” The Independent. 2013. Web.