glocalization

Welcome In The Era Of Glocalization

Glocalization is a portmanteau of the words “globalization” and “localization.” It is a concept that describes a globally developed and distributed product or service that is also adjusted to be suitable for sale in the local market. With the rise of the digital economy, brands now can go global by building a local footprint.

Understanding glocalization

Fundamentally, glocalization is the adaptation of products and services to meet a range of global consumer needs – according to various influences in their local environment. 

The concept was popularized by sociologist Roland Robertson who himself borrowed the concept from Japanese economists.

An often-quoted example of glocalization at work can be seen in car manufacturers. Many of Ford’s left-hand drive American cars, for example, had to be adapted to certain right-hand-drive markets like Australia and the United Kingdom.

During its expansion into France, fast-food giant McDonalds dropped its Ronald McDonald mascot with the more celebrated French cartoon character Asterix. 

Coca-Cola also faced significant cultural and geopolitical impediments when they brought their brand to China in 1978. Faced with strong anti-American imperialist sentiment and a consumer base with a preference for healthier drinks, the company was initially unsuccessful.

Eventually, Coca-Cola was able to win favor in China through an aggressive marketing strategy and the lobbying of Chinese government officials. Then, with government support, Chinese citizens deemed it culturally acceptable to consume the beverage and Coca-Cola became a sensation.

Advantages and disadvantages of glocalization

Advantages

  • Global expansion. Glocalization is an effective way for businesses to enjoy high and sustained growth in a variety of cultural settings. Multinational companies, often disliked by consumers, can earn their trust by adapting their products to the needs of the market they intend to enter.
  • Economic benefits. In most cases, glocalization brings foreign revenue into countries and provides employment opportunities for citizens. Businesses themselves are also able to enjoy cost savings through economies of scale across large production and distribution networks.
  • Competitive advantage. Businesses who successfully research emerging markets are often the first to enter them. This increases the chance of gaining an insurmountable competitive advantage.

Disadvantages

  • Resource intensive – glocalization is not for the faint-hearted, requiring a large upfront investment of time and capital. 
  • High risk. Despite doing their due diligence, businesses engaging in glocalization can fail to establish a presence in new countries. Often, a company will release a product that is simply not profitable. 
  • In some cases, a poor understanding of the local culture with a successful product still leads to failure. For example, Walmart had to close its German supermarket operations because of an emphasis on warm and friendly customer service. This level of service was not culturally appropriate for German consumers, and many stopped shopping at Walmart as a result.
  • Negative consumer sentiment. Irrespective of whether a business is successful at glocalization, there will always be consumers with an anti-globalization stance who actively avoid buying from globalized companies.

Key takeaways

  • In the context of marketing, glocalization is the creation of products and services for a global market while adapting them for country-specific cultures, regulations, norms, or practices. 
  • Glocalization is a risky and resource-intensive strategy – but the rewards of successful global expansion are significant.
  • Glocalization has the potential to fail if due diligence on cultural and social impediments to success are not identified and managed accordingly.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"