Phenomenon of Glocalization - Essay Example

Introduction Glocalization today is gaining prominence as borders are disappearing and countries are entering into treaties with each other which favour free trade. This has made companies expand its reach. Companies are “benefitting greatly from the global markets as it is giving them a wide market to cater to and at the same time helping to improve the bottom line”. (Ellis, 2001) This is making more companies to get acclimatized to the local conditions. Today “businesses which are global are a force for good”. (Ellis, 2001) This is because it gives them ample opportunities to grow. The advent of technology and integration of different regions of the world to function as a common market free from national boundaries has seen glocalization gain importance. Glocalization has helped companies to expand its reach at the same ensure that the local conditions are integrated in their working culture. The growth in glocalization heas helped economies ensure a higher GDP than expected but has also resulted in widespread contribution towards environmental pollution. The paper thereby looks into the aspect of glocalization. It examines the different factors which have contributed towards a growth in glocalization. The paper also dwells on the manner it has shaped the UK economy and the effects glocalization has resulted on the society. It is a serious matter of concern and in coming days it is going to multiply manifold. The paper thereby provides important insights into this direction and will help companies looking to function in this arena grow. Glocalization for multinational companies is to understand the local conditions and get it transformed so that the local people start to favour the company. (Ellis, 2001) The reason for which companies are looking to get global is because it can buy and sell goods in market which are profitable, distribute those in the best countries which favour them, produce at the lowest cost, get a global outlook and achieve economies of scale. (Ellis, 2001) This motive is guiding every company to become a multinational. It is seen by the fact that foreign direct investment is increasing. This is making more companies enter new area of business. Internet has been a major force which has resulted in glocalization. Internet today has been integrated with the business functions are it marketing, manufacturing, selling, customer handling, logistics or any other related to business. (Bansal, 2009) This has increased the usage of internet and resulted in glocalization. Internet has educated the customers by transmitting information about the product and services thereby changing the usage of internet from the educational purpose to a commercial tool. (Anderson, 2010) Multinational companies working in UK has been successful as “they have the appropriate structure and support system”. (Aharoni, 1996) They along with it have flexibility so that they can grasp the strategic options which might arise due to environmental changes. (Aharoni, 1996) This has been possible as the companywasable to adapt to the local responsiveness in UK. A company which want to be in a global arena has to ensure that they understand these factors clearly. To put is multinationals need “to achieve local responsiveness, global efficiency and creating more knowledge”. (Aharoni, 1996) Multinational companies working in UK have ensured that “their subsidiaries understand the typologies prevalent in the local condition by creating subsidiaries”. (Enright & Subramanian, 2008) This is very important that multinational companies understand the local condition. It helps them to “build their strategies and helps in capacity creation and proper utilization of that capacity”. (Enright & Subramanian, 2008) This ensures that companies get acclimatised to the local environment. This helps to build long term strategies. It also ensures that the efforts are directed towards the right direction. This becomes more necessary for multinational companies who render services in the UK. Since “they look to earn by satisfying customers on a regular basis an understanding of the condition such as culture, caste, religion and prevalent customs” (Kundu & Merchant, 2008) in UK goes in a long way to build relations. This is seen by the fact that companies who were able to “delve themselves on the basis of customs were successful”. (Kundu & Merchant, 2008) This is seen in the UK. The region is dominated by a mix of different religion. So a multinational companies coming with a service that goes along with the custom of that country helps to build relations. Those companies are favoured and they find it easy to market themselves. This is a concern for company as it can backfire. A miscalculation or interpretation might result in ruining the name. This would put a stop for the company to grow in countries which are similar as they loose reputation. Thus understanding the local typologies helps multinationals to pave a path which they can follow for their success. A major force that has led towards glocalization is internet. Internet has also evolved the market as it has made the market a global place where the customer can look for products all around and ensure that they get the best one at the correct price. (Chaffey, Fiona, Johnston & Mayer, 2008) This has increased the bargaining power as people from different background, culture and religion can convulse together and ensure that their satisfaction and bargaining power increases. Internet has ensured that the global market is able to deliver on the promise of customer satisfaction as it has helped them to evolve the way it functions. (Biff, 2002) This has changed the way global market perform as can be seen from the following example. The usage of internet for electronic goods has pushed the market beyond the physical stores to electronic store where the customer can gather information about the product and compare with others thereby pushing sale for the electronic item. (Biff, 2002) This has mad companies realize the importance of glocalization and shape their working environment accordingly. Even a research conducted shows that internet has changed the face of global market as it has increased the customer value and power as it provides the customer with lots of option to chose from. (Jose & Carmen, 2004) This is matched by another research highlighting that “internet marketing of the consumer product has ensured that consumers pay 2% more than the normal customers who purchase offline as customer uses the search options to find about the product”. (Morton, Florian & Jorge, 2004) This ensures that companies get a better bargain as consumers using the internet finds various options and then choosing on the basis of that helps the company get a better price as the price is charged according to the other competitor. This has made companies look towards different market and get them moulded to the local conditions to that they can benefit from glocalization. Another factor which has led towards glocalization is the integration of culture. With technological advancement and ability of the economies to cope with the changing environment made it possible for different culture to come together. This made it possible for economies to copy the western and developed countries. For example, the use of six sigma which reduces errors is being widely used and has been possible due to integration. The integration of culture has made it possible for the local environment to gather valuable findings from other world and use it in a manner that reaps maximum benefit as seen in UK. The manner in integration has happened has made it possible for people to come together and pool their resources towards the development of the country. Another factor which has a role in glocalization is the widespread migration that has taken place. This has mad possible for different communities and people to be settled in different parts of the world. This has benefitted the developing world as the experties and knowledge makes it possible for the developing country to ensure that they are able to take advantage of the local conditions. Migration has helped economies to utilize their core competencies and develop those. This has heled certain economies to outperform and brought about a mix of different people which has helped the economies to accomplish the task in hand. This fact can further be substantiated from the fact that HRM managers of the UK operators say that there should be a balance between centralization and localization in HRM. (McGraw, 2004) This is very important as it helps the HRM manager to pursue its hiring spree. As the company is operating locally so HRM managers say that balancing the local and centralization HRM helps in administrative heritage, and helps to find talent for the future. (McGraw, 2004) It is very important that multinationals look into this because the work force will be local people. This is irrespective of the fact whether the multination is a productive or a service industry. Thus, it becomes imperative that the HRM department integrate the two functions so that the efforts can be well directed. Multinational companies need to be more active by moulding themselves to the local conditions. Multinational companies need to look into more cultural sensitive factors to be able to win consumers. (Slawomir, 2010) This is a very vital point for any company. This helps them to win the hearts of consumers and as a result get loyal customers. Multinational companies need to ensure that they bring about a change in the perspective so that they can enter a new market. The effects of local factors are such that multinational companies working in UK are reorganising their production system by integrating production by producing locally and for the research tasks they work on a global scale. (Zeller, 2000) This helps multinational companies as they can make their products according to the local requirements. The effect is such strong that “even different labour laws in different countries are looked after”. (Zeller, 2000) This is helping them to comply with the government requirements. This is more of a case with pharmaceutical companies. They work on the same business model. They develop their product locally according to the requirements but research is carried globally. This helps to track the social movements. It is very important that multinational companies look into this. This will help them mould themselves and the local factors will be looked after. This is also seen from a study conducted in this field. It shows that multinational companies have a different understanding when it comes to labour laws as compared to the local requirements. (Edwards & Ferner, 2008) It is seen that UK multinationals tend to be centralised in their decision making process (Edwards & Ferner, 2008) but when they enter a new market they might have to change it. This helps to build long relations. It also ensures that the company gets an opportunity to tap the local talent. This helps the company to get new ideas from locals and this can go a big way in deciding the future of the company. A study carried out in this field show that UK business system is shaped by anti-unionism but the US local subsidiaries are shaped in the UK by the conditions there. (Ferner, Almond & Colling, 2005) This study highlights the importance of adapting to the local laws. Multinationals that follow a similar path are able to understand the requirements better. They are in a better position and their policies are determined by the sector they are prevalent in, subsidiary policy and this leads to determine their behaviour towards the union which is influenced by the complex interaction of the forces. (Ferner, Almond & Colling, 2005) Multinationals as we have seen in the case above for US companies in the UK highlights that marketing was easy when they followed the patter changes. It gave their workforce a boost and helped them to take a path where they were able to nurture the local responsiveness towards their understanding. This helps the company to “create a synergy between institutions and multinational companies”. (Muller & Tulder, 2005) A better understanding of the local responsiveness and factors helps the multinational companies to comply with the legal requirements of the different institutions thereby creating an environment of certainty of MNC’s. (Muller & Tudler, 2005) There has also been a study which throws light in somewhat a different direction. The study says that MNC’s pursuing the local responsiveness has created more jobs for the local residents but the upgrading has been less as compared to the global strategies followed by MNC’s. (Hansen & Petersen, 2008) This is attributed to the fact that those people who are hired according to the local responsiveness understand the local requirements as seen in UK where local talent is preferred. An area of concern due to glocalization is the rise in environmental pollution in the UK. Society on a large is giving stress to combat it and multinational companies are viewed with increased suspicion as they lack the economic concern for different regions which has forced climatic changes to take its toll. (Multinational Corporations, 2009) Multinational companies working in UK are looking at different alternatives which will help them accomplish their tasks. For example, it is seen that paper industry is making a considerable effort to ensure that paper is recycled as it constitute 25% of the land fills and recycling this by multinationals has ensured that resources are not wasted at the same time pollution is curbed. (Keeble, 2010) It is also seen that multinational companies have to adhere to the different trading cap norms and ensure that the emission is within the limits prescribed by the rule. (Winston, 2010) This will help to bring down pollution to a certain extent and will help UK to gain from glocalization. Companies working in UK are also looking towards an environment which is pollution free to improve their brand image. Multinationals are using this as a mechanism to ensure that transparency improves which will help to reduce accountability towards the public (Pasternack, 2009) and will ensure that work is carried out free from biasness. Multinational Companies to reduce pollution and to ensure environment friendly atmosphere has made it a part of their corporate social responsibility and are using it to advertise their code of conducts. (Levis, 2006) Understanding the local responsiveness is thus important for multinationals. Still with the increased usage of technology the de-localisation has slowed down. Technology is “helping people communicate with each other and they don’t have to come in face to face contact”. (Gray, 1999) This is more of a case in banking and retailing. In this sector direct interaction is less. This helps companies in this sector to determine the action they would take in the future. Despite being the case it is seen that still the local responsiveness are taken into consideration. It is seen in banks especially in UK that local talent are hired in the different states so that they can understand the local requirements better. (Gray, 1999) It also helps the companies as the customer feels a sense of belongingness. They feel that the management is better able to understand their feeling and as a result the services rendered are better. This has been further substantiated by the fact that employment is mostly local according to the local condition but strategies might be prepared keeping in mind the global and local condition on a global level. (Castells, 2001) This helps the multinationals as the local resident hired understand the global requirements and can pass that on to the consumers. This helps to create a ripple effect which helps the multinationals to sell their products and services by making the consumer aware about it. This helps multinationals as they are able to respond to the changes quickly i.e. bring about changes both in the market and production. (Castells, 2001) The wages paid to employees get hampered due to multinational companies. This is especially the case with unskilled workers. Adapting to the local conditions and understanding the local responsiveness take a toll on the wage rate. It is seen that multinational companies prefer countries where the wage rate is low so that they can produce at the cheap rate thereby generating more employment (Klein, 2001) Multinational companies when respond to the local requirements are able to “create demand for a product among different target groups”. (Kenway & Bullen, 2001) This makes it easy for multinational companies to push their products. It was seen that in southern countries multinational companies created demand for tobacco products which was not prevalent there. (Kenway & Bullen, 2001) This helps companies to decide their future course of actions. Conclusion Thus, multinationals that have been able to understand the local responsiveness have been more successful. This takes into consideration the cultural differences. This is because they are better able to understand the local conditions and utilize those towards transforming themselves. This also ensures that they are better able to market. Multinationals like McDonalds, Adidas, Nike, Volkswagens, General Motors and many others have been successful because they gave utmost importance to the local responsiveness. They made strategies which were in line with those there by ensuring that they were able to grow and market well. While working in a global environment it is imperative that the global companies understand the local requirements and mould their behavior accordingly. This helps the multinationals to function as a local company and the technological advancements help the multinational in glocalization. The increasing nature of competition and decreasing customer base has made it important that companies instead of globalizing look towards glocalizing so that they are able to create a market where the brand their goods and ensure consistent return by taking advantage of the local surroundings. References Aharoni, Y. 1996. The organisation of global service of MNC. International Studies of Management & Organisation, Volume 26 Anderson, L. 2010. How the Internet has changed the face of marketing. Retrieved on April 18, 2011 from http://www.prospectamarketing.com/ArticlesAndCaseStudies/faceofmarketing.htm Bansal, D. 2009. Internet Marketing. 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