The Globalisation Of Markets

The critical analysis of Theodore Levit's approach on standardization in ‘The Globalisation of Markets' (Harvard Business Review 1983)

Theodore Levitt's 1983 article about the globalization of markets is one of the most discussed essays on this subject; Theodore Levitt was one of the first scholars to write a high-impact article on globalization aimed at business managers. Now, two decades later, “The Globalization of Markets” is still widely read. Rather than agreeing with Levitt, however, most observers today believe that his arguments were flawed and his predictions have not been borne out, His Article “The Globalization of Markets” in which he claimed that marketing can be standardised across culture, reshaped the debate on globalisation and consumer marketing, and particularly the strategy of advertising of products which are sold worldwide. The increasing amount of research was done that contradicts to Levitt's claims and suggests that advertising is strongly influenced by local culture (Working knowledge editors, 2003).

Theodore Levitt is often considered to be the first to recognize the trend towards globalization and states that: “companies must learn to operate as if the world were one large market - ignoring superficial regional and national differences...” In addition, he argues that the companies that do not adapt to the new global realities will become the victims of those that do. Furthermore, in his article about the globalization of markets which could be argued to be one of the most discussed essays on this subject, does the emphasis on homogenization and standardization of Global market and the marketing technique needed for that. He argued that with the trend of globalization and the speed of its happening one must presume that marketing for certain products can be done without having into account the local culture and the difference in the market depth. He believed that technology had become a powerful force that drove the world toward a converging commonality (Jin, 1999).as the discussion grew more and more resistance to this approach came into light from many other business academics and a debate between standardization and adaptation came into limelight , for both arguments countless examples were given but ironically all the examples of standardization also became strong argument for adaptation, Yoram Wind, (1986) an keen supporter of adaptation, warned that one should not ignore the differences that occur in different markets and the need to adapt to them. He said that most international blunders started from instances of cultural insensitivity - lack of awareness of values, and attitudes - that caused a strategy which was extremely successful in one country to prove wrong in another. Wind believed that the trend toward a homogenization of the peoples' wants did not exist and standardization was one of several possible strategies, along with differentiation and mixed strategies. Wind recommended “think globally, act locally”.

Other researchers, such as Philip Kotler (1986), believed the “mixed approach” or the combination strategy - partly standardized and partly localized - was the most effective strategy. It was also called the contingency approach (Agrawal, 1995) because the strategy varied depending on the situation (Jin, 1999).

To understand it deeper and to appreciate the complexity of standardized versus adapted products, one needs to understand how cultural influences are interwoven with the perceived value and importance of market places on a product .A product is more than a physical item :it is a bundle of satisfactions(or utilities) that a buyer receives ,these includes its form,taste,color,odor , and texture ,how it functions in use, the package the label; the warranty ;the manufacturers and retailers servicing , the confidence or prestige enjoyed by the brand the manufacturers reputations, the country origin, and any other symbolic utility received from the possession or use of the goods .In short, the market relates to more than a product's physical form or primary function (C.K Parhalad 2005). The values and customs within a culture confer much of the importance of these benefits. In other words, a product is the sum of physical and psychological satisfactions it provides the user.

Here the levit approach starts to show cracks as in many cases it's been proved that implementing bluntly the strategy of standardizing a product in all cultures failed completely or failed to make a desire results company wanted to . Disney and the famous case of failure of euro Disney gives us the insight in the fault lines of this approach as American companies in their famous arrogant tried to implement the formula of standardization while establishing the 1st Disney land in Paris (Euro Disney) and adopted the same marketing and strategic policies they saw successful in original Disney land in USA, but the cultural difference rose its head during the first year of the launch of it ,as French day out turned out to very different then what American managers thought it will be and crushed the hopes of booming profits of its managers, who were then force to look into local culture and Adopt accordingly rather the implementing there own product on the local culture , this is the case with many American companies who have universalistic philosophies about people's values, assuming that their own values are valid for the whole world and for companies as McDonald's and Coca-Cola their standardisation has been a success (Theodosiou and Leonidou, 2003)

This argument given by a pro standardization Academics is a defender of adoptability in itself as in reality Coca-Cola, frequently touted as a global product found, that it had to change Diet Coke to Coke light when introduced in Japan s Japanese women do not like admitting that they are going on diet and further the word diet implies sickness or medicine in japans psychological culture .same was the case when a low context culture or a fast food culture product Mc Donald was introduced in high context cultures it failed to made the same impact for example mc Donald in Pakistan were introduced in a total opposite role then there western chains as the food culture of Pakistan and many other countries like India and middle east is anything but fast for a success full branch it was a must for the place to have a very large sitting area parking place and it was more presented as a outing restaurant rather than a fast food supplement which is the main purpose of the food chain in western countries , same was the case when it introduced more healthy and vegetarian option as more and more people became health conscious and vegetarian in Europe.

The argument between standardization will always be a topic of debate between people pro and against standardization but one thing nearly all the academics agree that in today's diverse markets a strategy of total standardization marketing will not be as successful as the adoptive one examples of these have been seen many times even in same country different location might need to have some localization done .

References :-

  1. Dahl S. (nd) “Cross-cultural advertising research: What do we know about the influence of culture on advertising?” Middlesex University Business School, London
  2. Hite, R. & Fraser, C. (1988) “International advertising strategies of multinational corporations” Journal of Advertising Research, August/September. 9-17.
  3. Kotler, P. (1986) “Global standardization - courting danger” The Journal of Consumer Marketing, Vol.3 No.2 Spring 13-15
  4. Levitt, T. (1983), “The Globalization of Markets,” Harvard Business Review, 61 (May/June), p 92-102.
  5. Tai, S. H. C. (1997) “Advertising in Asia: Localize or regionalize?” International Journal of Advertising, 16, 48-61.
  6. Theodosiou M. and Leonidou L. C. (2003) “International Business Review”, Volume 12, Issue 2, April 2, Page 141
  7. Wind, Y. (1986) “The Myth of globalization” The Journal of Consumer Marketing, Vol.3 No.2 Spring. 23-26
  8. Working Knowledge editors (2003) “Researchers Contribute Globalization of Markets Papers” retrieved 4 December 2009
  9. Yin J, (1999) “International Advertising Strategies in China”AEJMC Conference Papers

Cautions during intercultural communication (High context, low context)

Culture is a integrated pattern of human behaviour beliefs and knowledge that depends upon the capacity for symbolic thoughts and social learning .when dealing with different cultures the first hurdle that one has to go through is communication There is no comprehensive way to understand culture and its relationships to communication and conflict.

In modern time though telecommunication and technology development made it easy to transfer information though the Globe and eventually made this era globalise, but the cross cultural gap still exists and people raised in different cultures have been taught different values and norms of behaviour - and this leads to different communication patterns and beliefs.. Interactions between people of different cultures can be fraught with difficulty and misunderstanding, particularly when the participants fail to recognize that they effectively occupy different realities (Kimmel, 2000), cultural communication is also categorised into the normal two types of culture the high context and low context culture.

First used by author Edward Hall, the expressions “high context” and “low context” are labels denoting inherent cultural differences between societies. High-context and low-context communication refers to how much speakers rely on things other than words to convey meaning. Hall states that in communication, individuals face many more sensory cues than they are able to fully process. In each culture, members have been supplied with specific “filters” that allow them to focus only on what society has deemed important. In general, cultures that favour low-context communication will pay more attention to the literal meanings of words than to the context surrounding them.

All of us usually engage in both high-context and low-context communication. There are times we “say what we mean, and mean what we say,” leaving little to be “read in” to the explicit message. This is low-context communication. At other times, we may infer, imply, insinuate, or deliver with nonverbal cues messages that we want to have conveyed but do not speak. This is high-context communication. Most of the time, we are somewhere nearer the middle of the continuum, relying to some extent on context, but also on the literal meaning of words. Edward Hall says that every human being is confronted by far more sensory stimuli than can possibly be attended to. Cultures help by screening messages, shaping perceptions and interpretations according to a series of selective filters. In high-context settings, the screens are designed to let in implied meanings arising from the physical setting, relational cues, or shared understandings. In low-context settings, the screens direct attention more to the literal meanings of words and less to the context surrounding the words.

Seemingly similar business terms in English and Japanese often have different meanings in fact Japanese language is so inherently vague that even the well educated have difficulty communicating clearly among themselves according to a communication study it shows that only 85% of times Japanese totally understand when communicating with even each other that why Japanese prefer to write their contract in low context English language because of words having specific and clear meanings.

Many academics believe that just emphasising on high context and low context communication style can be harmful to the organizations global businesses Kimmel cautions against inappropriate reliance on theoretical models of essential human needs. “The greatest danger in being oblivious to the impact of one's own culture when building a theory to explain human behaviour lies in promoting one's own cultural beliefs to the status of formalized ‘scientific knowledge'.

Novelist Amy Tan describes the differences in cultural communication this way: “An American business executive may say, ‘Let's make a deal,' and the Chinese manager may reply, ‘Is your son interested in learning about your widget business?' Each to his or her own purpose, each with his or her own linguistic path.”

When individuals from high-context and low-context cultures communicate, there will face difficulties during the exchange of information. The three problems that arise can be separated into differences concerning “direction”, “quantity” and “quality.” For example, employees from high-context cultures like China and France share very specific and extensive information with their “in-group members” (good friends, families, close cookers, etc). In comparison, low-context cultures like the United States and Germany prefer to limit communication to smaller, more select groups of people, sharing only that information which is necessary.

An individual from a high context culture has to adapt, and/or be accommodated when shifting to a low context culture. High context cultures expect small close-knit groups, where professional and personal life is interrelated. Therefore, a high context individual is more likely to ask questions than attempt to work out a solution independently.

.According to Copeland & L. Griggs (1986) a high and low context culture can even exist in an organization structure where department being the lowest Accounts and Human resource being the highest context organizational culture.

Many academics also believe that just emphasising on high context and low context communication style can be harmful to the organizations global businesses Kimmel cautions against inappropriate reliance on theoretical models of essential human needs. “The greatest danger in being oblivious to the impact of one's own culture when building a theory to explain human behaviour lies in promoting one's own cultural beliefs to the status of formalized ‘scientific knowledge'.

The fact is that Communication is the key behind inter cultural communication. The two types of culture which Edward T Hall explained are determined as high context culture and low context culture. high context cultures some time use low context communication for contract making and legal requirement for its quality of having words with specific meaning while as high context culture is used to low context communication for more detailed conversation .Having a understanding of high context communication is very critical for people from low context culture and vice versa ,there are many cautions which needs to be taken when intercommunicating i.e high context culture expect close tight knit groups and reliance on that group having understanding of this is very important for a manager who belongs to low context culture but is working a country of high context culture ,and for a manager of high context culture needs to understand that when working with low context culture he must allow them to solve their problem individually and give individual attributes as this is the way that goes in a low context culture .one this is also clear that according to many academics physical calculation of how to deal with low or high context culture could be more damaging t a organization then befitting . so the best way forward is the way in the middle allowing a mix to high and low context culture mix in a Global organization .


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