In what kind of industries does a localization strategy make sense? When does a global standardization strategy make most sense? The industry that localization strategy would make sense would be the automotive industry, manufacturing factories, and I want to stay the big chain grocery stores. By these firms customizing the products they offer to local demand, the firm increases the value of that product in the local market.
But on the downside, it involves some duplication of functions. The strategy may make sense, however, if the added value associated with local customization supports higher pricing, which enables the firm to recoup its higher costs, or if it leads to substantially greater local demand, enabling the firm to reduce costs through the attainment of some scale economies in the local market.
When global standardization strategy make most sense is when the firm try not to customize their product offering and marketing strategy to local conditions because customization involves shorter production runs and the duplication of functions, which tends to raise costs. Instead, they should prefer to market a standardized product worldwide so that they can reap the maximum benefits from economies of scale and learning effects. Licensing propriety technology to foreign competitors is the best way to give up a firm’s competitive advantage. Agree or Disagree?
Discuss. I would agree, companies who develop useful proprietary technologies in-house are rewarded with a valuable asset: they can either use it exclusively or profit from the sale of licensing of their technology to other parties. But if companies profit from selling their licensing they lose out on so much more. For example, let’s say a company successfully develops a new drug to treat a major disease. By patenting the process, method and end result of the drug, the company is able to reap substantial rewards from its efforts to develop its proprietary technology.
This reminds me of how cellular companies operate without selling the company, cellular companies patent there products for a long time before another cellular company can reproduce this product, by doing this cellular company A can make plenty of money on the product before competition comes in. But if you sell your license to the product you only get what you accepted and the other company could make plenty of money. What are the main advantages and disadvantages of the ethnocentric, polycentric and geocentric approaches to staffing policy? When is each approach appropriate?