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What is Globalisation? – Page 5 of 5

Supply-chain marketing

Marketing is based increasingly on three interacting supply chains; product/service, information and money. Transfers of information and money are relatively easy, since these are two elements of business that became globalised most easily and most rapidly. The product/service supply chain is more difficult because it is less homogeneous and remains subject to local (mainly cultural) variances. Because of (a) constant migration of value under conditions of competitive supply and (b) decision-making under conditions of asymmetrical information, the scope of the concept of marketing is moving gradually beyond the classical 4Ps (product, price, promotion, place) that have framed the discipline for so long.

What is happening, quite simply, is that customer value can be derived from any element or combination of elements in the total supply chain, not just on the final product package. Marketing is about identifying (a) where value-adding conversions can take place and (b) how and why customers develop and change their views as to what constitutes value. This takes place against a background of increasingly collaborative relationships rather than the traditional arm’s length dealings. It can be usefully summarised as a holistic and integrated business process, as follows.

When the above concept of the full business process is considered it is not difficult to see how the decoupling of value creation from the country of location of the resources and activities that are restricted to the 4Ps necessitates a redefinition of the activity we term ‘marketing’. Globalisation accentuates this tendency.

Knowledge-based marketing

It follows from the two sub-sections above that global marketing is essentially rooted in knowledge acquisition, processing and application. The nature of market research and marketing is changing to take this into account. How we discover what brings a buyer (consumer or business/industrial) to a choice is increasingly complex. It is no longer sufficient to build a brand and promote it on the basis of techniques and propositions that made an impact twenty to thirty years ago in an American/European demand context.

The basis of a brand now involves commonality and consistency of key factors in the product package coupled with local details in final specification that appeal to the experience sought by the target buyer group(s).

Globalisation cannot remove the aspects of the marketing mix that are set to remain internationally heterogeneous. Therefore the question of managing the information supply chain is becoming more critical in marketing as business becomes increasingly global. Asymmetry of information is often the critical factor that gives rise to competitive advantage, at least over the short-term period.

We also bear in mind that “time compressionâ€? is a fact of marketing life – in terms of product life-cycle, innovation, time-to-market and other potential order qualifiers and order winners. The quantity and quality of information and the speed and creativity with which such information can be processed are central to 21st-century marketing. Market research is responding to this challenge by developing and refining cost-effective techniques of data mining and data manipulation – increasingly on a global basis.

What we are seeing is a new “currency� of marketing that is part of the essence of globalisation. The true differentiators are increasingly located in “intellectual� rather than “physical� capital. Thus high-value work gets done in locations where access to intellectual capital is most favourable (the high-cost developed world) and manufacturing/assembly gets done where raw materials, physical capital and labour are most favourably accessed (the low-cost developing world). Order winners are found in the former: order qualifiers are shifting increasingly to the latter. It is in the long run pointless to interfere in this rational economic process.

Cohesiveness and consistency

If globalisation affects organisations, then it varies by function within a business. The final challenge is to maintain cohesiveness and consistency in presenting a company and its offerings to the world.

It is unlikely that markets will converge entirely because of differences in history, sociology, culture, physical and legal environments, and many other micro-aspects. This makes issues such as branding more, not less, important. But the concept and purpose of a brand is changing: it serves only to make a statement about a company’s core values and position. The ability of a customer to reach a “segment of one� (or realistically a “segment of few�) on the basis of a cohesive and consistent marketing platform will be the key to global success.

This is the true nature of Sony’s principle of “global localisation�.

Competencies in the new market environment

The new market environment is characterised by significantly greater organisational fluidity. All this gives rise to an additional set of challenges that are faced by business leaders generally, but especially in the marketing function. These translate readily into a comparison of core competences, as follows.

Former competence (declining) Contemporary competence (growing)

Getting ahead Adding value
Individual self Teamworking
Personal space, status Interpersonal effectiveness
Personality-driven Process-driven
Subject expertise Multidisciplinary
Initial qualifications Continuous updating/extending
Lifetime commitment Cohesive but mobile career
Project management Business management
Predominantly deductive thinking Increasingly inductive thinking

The move towards globalisation requires marketing (and other) managers to abandon national allegiances and this can be come only when top company management modifies its own views and installs a set of processes and structures that relate to the emerging reality of the business and not to past practice. Globalisation extends choice – on both the supply and demand sides of business relationships. It not only opens up more markets to us, it simultaneously opens our markets to more competitors. This provides a more fluid marketing environment in which an organisation can “hedgeâ€? its markets and customers in order to maximise returns and minimise risk and uncertainty.

As a response to this “empowerment� is not enough on its own: it must be accompanied by executive development. Periodic organisational reshuffles that find jobs for the existing hierarchy are no longer effective. As we move ahead in the 21st century we must acknowledge more than ever before that structure follows strategy, and this now means delayered, cross-border, multifunctional teams led by senior managers who do not spend their life travelling the world but who communicate electronically and interactively with an extended or “virtual� team.

This is why globalisation can never be about selling in each region of the world. It is why the global company will be distinguished by its capabilities not simply by the number of markets it serves or the number of countries from which it sources its inputs. Globalisation can be uncomfortable for ‘dirigiste’ governments, particularly those that prefer to influence economic forces for the narrow purposes of protectionism in the face of change. Properly managed at inter-governmental level, globalisation will level the playing field to a very significant extent and will change the nature of opportunity and competition. This constitutes the true and emerging essence of globalisation. It will challenge and alter our concepts and practices in marketing and more generally in strategic and operational management.

References

Coulson-Thomas, Colin “Creating the Global Company� London: McGraw Hill 1992. (Coulson-Thomas 1992)

Ohmae, Kenichi “The End of the Nation-State� New York: Simon & Shuster 1995. (Ohmae 1995)

Park, Daniel “Differentiation: Are Product, Brand and Service Still Enough?� B2B International Ltd White Paper, April 2003 (Park 2003)

Stiglitz, Joseph “Globalisation and its Discontents� New York: W W Norton 2002 (Stiglitz 2002)

Daniel Park
Copyright © J D Park

Dr Daniel Park is an economist, specialising in business strategy and international marketing. He is an Associate of B2B International Ltd. He would like to thank Mike Dunckley, President (Europe and Americas), HBL-NIFE Inc and Paul Hague, Managing Director, B2B International for their critical comments in discussion.

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