THE GLOBALIZATION OF MARKETS

ASSIGNMENT-3

Intro to International Business: MGT-321

Semester –1 [2018-2019]

Assignment Workload:

· This Assignment consists Critical Review.

· Every student is to submit the assignment individually.

· Word limit is given only for the 1st question. Rest Q/Ans word limit is up to the students.

Assignment Purposes/Outcomes:

After completion of Assignment-3 students will able to

· Give Critical Review considering some basic points given as questions.

Assignment Regulation:

· All students are encouraged to use their own word.

· Student must apply “Times New Roman Style” with 1.5 space within their reports.

· A mark of zero will be given for any submission that includes copying from other resource without referencing it.

· Assignment -3 should be submitted on or before the end of Week-13.

· If the assignment shows more than 25% plagiarism, the students would be graded zero.

Assignment Structure:

A.No Type Marks
Assignment-3 Critical Review 5
Total 5

Assignment-3

· Instruction to search the Article:

1. Via your student services page, log in to the Saudi Digital Library.

2. After your login with your student ID, search for the following article:

a. Levitt, T. (1983) ‘Globalisation of markets’, Harvard Business Review, May–June, 92–102.

b. You may filter results to find articles for the years between 1982-84 so that you could find the article easily.

· Assignment Questions:

Download the article, read it carefully and answer the questions below.

1. In your own words, summarize the article (minimum of 300 words). (Marks: 1.5)

2. Levitt’s paper is considered one of the most significant articles in International Business. Why do you think it is the case? Elaborate. (Marks: 1.5)

3. The article is about 35 years old, do you think the author’s recommendation for standardization is still valid today? Or has advancement in technology altered the sphere the of international trade. Defend your answer with suitable examples. (Marks: 2)

· Due date for the submission of Assignment-3:

Assignment -3 should be posted in the Black Board by 11th week.

The due date for the submission of Assignment-3 will be in the 13th Week.

· Instructions for the students:

1. First page of the assignment should be filled with

· Course Code [MGT-321] and Course Title [ Int.to Intl. Business] and CRN-

· Student Name and ID. Number

· Date of Submission

2. Second page should be Assignment question

3. After the question page then present your answer by clean and neat layout

4. Finally your file should be saved as Word Doc like ID.NO- MGT-321 A-3 STUDENT NAME.doc [only CAPITAL LETTERS]

[Example.] 140158361-ECON-490 A-2 AREEJ ALGHAMDI.doc

&&&&&&

projects put the accent more particularly on the need to

create new sources of financing for the economy, since one of

the coiranon characteristics observed in the 1960s and 1970s in

the majority of northern European countries was a very marked

drop in the rate of investment.” Well organized trade union

efforts are being made to exert political pressure for projects

in this region but, little real tangible action has been

taken yet.

In France and Germany public authorities have been the main

source of initiative. In the face of reservations by both

business and unions, the French government has acted to tiry to

improve the climate of industrial relations. The 1967 ordincince

established a compulsory system for employee sharing in

benefits of industrial expansion and a 1980 act encouraged

distribution of 3% of capital to employees. The 1970 German

act has been broadened over time with the intent expressed by

public authorities to promote accumulation of capital.

In the Anglo-Saxon countries where government action is

limited to establishing a legal framework some tax incentives

for worker participation are provided, but adoption of schemes

by companies is slow. By contrast, obligatory systems like the

1967 French ordinance may achieve quick changes. In these circumstance,

participation becomes a right enforceable by law.

In a number of the northern European proposals “participation

breaks all links between the individual employee and his

employers.” For example, under a Dutch scheme excess profits

would be allocated to retirement pension supplements for the

entire workforce of the country. Likewise in a Swedish plan a

portion of profits would be placed in a central fund in the

form of non-negotiable shares.

Three reasons are noted for the increase in activity in this

area in the last ten years. The slowing rate of economic

growth has led to a search for new methods of financing investment

and broader distribution of benefits; there is an

increasing tendency even in liberal countries to legislate in

the field; and the role of trade unions has moved beyond wages

and working conditions to concern with the way undertakings

are organized with the aim of establishing a “social market

economy.”

THE GLOBALIZATION OF MARKETS

Theordore Levitt, Professor, Harvard University. Abstract from

Harvard Business Review, May-June 1983, p. 92.

“A powerful force drives the world toward a converging commonality,

and that force is technology Almost everyone

17

everywhere wants all the things they have heard about, seen,

or experienced via the new technologies. The result is a new

commercial reality – the emergence of global markets for standardized

consumer products on a previously unimagined scale of

magnitude. Corporations geared to this new reality benefit

from enormous economies of scale in production, distribution,

marketing and management. By translating these benefits into

reduced world prices, they can decimate competitors that still

live in the disabling grip of old assumptions about how the

world works.”

Prof. Levitt goes on to argue vigorously that benefits to

consumers from lower cost standardized products will outweigh

localized preferences so that the aggressive pursuit of a

standardization strategy is possible. He makes a distinction

between multinational corporations which tend to cater to

national preferences and global corporations which tend to

treat the world as a unified market. “The globalization of

markets is at hand. With that, the multinational coiranercial

world nears its end, and so does the multinational corporation.”

The trend toward globalization is observed both in high-tech

products and in “high-touch” ones like McDonald’s hamburgers,

Coca-Cola and Revlon cosmetics. These products “exemplify a

general drift toward homogenization of the world and how companies

distribute, finance and price products The most

effective world competitors incorporate superior quality and

reliability into their cost structures. They sell in all national

markets the same kind of products sold at home or in

their largest export market. They compete on the basis of appropriate

value – the best combination of price, quality, reliability

and delivery for products that are globally identical

with respect to design, function and even fashion. That,

and little else, explains the surging success of Japanese

companies dealing worldwide in a vast variety of products.”

Companies are not presiamed to standardize everything they

make. They have product lines and multiple distribution

chcuinels. Products destined to serve each market segment in

one nation are sold in similar niches elsewhere. “Even small

local segments have their global equivalents everywhere and

become subject to global competition, especially on price.”

While local preferences are assumed to persist, the author

argues that consumers may be persuaded to abandon them. “If

the price is low enough, they will take highly standardized

world products, even if these aren’t exactly what mother said

was suitable, what immemorial custom decreed was right, or

what market-reseach fcibulists asserted was preferred.”

18

Prof. Levitt does “not advocate the systematic disregard of

local or national differences.” His pitch is against the

observation that, “most executives in multinational corporations

are thoughtlessly accommodating.” He feels that management

should be sensitive to differences but not ignore the

possibilities of doing things differently. An illustration is

cited of Hoover’s washing machines in Europe. The firm found

distinct differences among countries in desired features to

which it sought to conform with consequent cost effects. But

evidence suggests that concentrating on a low cost, simple

machine preferred in Italy would have been effective all over

Europe if the cost advantage had been employed for aggressive

advertising and price competition.

Basic strategy should be geared to fundamental consumer

goals, not their apparent manifestation at a given moment.

“The global corporation accepts for better or for worse that

technology drives consumers relentlessly toward the same common

goals – alleviation of life’s burdens and the expansion of

discretionary time and spending power.” Again the Japanese are

cited. “They have discovered the one great thing all markets

have in common – an overwhelming desire for dependable, worldstandard

modernity in all things, at aggressively low prices.

In response, they deliver irresistable value everywhere, attracting

people with products that market-research technocrats

described with superficial certainty as being unsuitable and

uncompetitive.” -yfiiike the “aging multinational corporation”

which adapted to superficial and even entrenched differences,

the global corporation “will seek sensibly to force suitable

standardized products and practices on the entire globe.”

OI

New books of especial interesl

for international executives.

TRANSNATIONAL CORPORATIONS IN WORLD DEVELOPMENT

United Nations Centre on Transnational Corporations. New York:

United Nations, 1983, 385 p.

Ten years ago the UN published a comprehensive analysis of

the role of TNCs in the world economy, especially their effect

on LDC development. The report was up-dated in 1978 and the

present volume is a third version. The successive reports have

been notable for the improved statistical data and especially

for the quality of the analysis. The initial strong bias toward

LDC viewpoints and relatively shallow analysis have matured

into a quite balanced presentation with thorough and

thoughtful consideration of the complex conditions surrounding

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