Globalization Standardization vs. Local Adaptation

Subject: Strategy
Pages: 2
Words: 384
Reading time:
2 min

Global standardization is a strategy that entails uniformity of production standards, processes, quality, materials, documentation, and other variables in order to deliver a standardized product. This strategy helps simplify and standardize not only the production, but also the logistical and supply chains in order to save costs, streamline and speed up any entailing processes, and ensure the replaceability of all and any components of the industry. As a result, the customers always know what to expect from a product, no matter where it was produced. Examples of companies that adhere to global standardization strategy are McDonald’s and Coca-Cola, which provide similar services and products to different countries across the globe.

Local adaptation, on the other hand, is a strategy that revolves around catering to the domestic market and making alterations in order to appease their customers based on religion, local traditions, cuisine, and other factors. This approach allows ensuring that the product fits the domestic market and its intended customer base. On the other hand, such diversity in production processes inevitably increases costs and reduces the export value of the products. Examples of companies that use local adaptation are Red Bull, which bases the design of its cans on cultural perceptions of different colors. For example, in America, Red Bull cans have a red and blue color scheme, whereas in China they are red and golden. Nokia, on the other hand, pursues local adaptation in terms of prices, selling cheaper phones in poorer countries and supplying its high-end products to the rich western markets.

As it is with most business strategies, there is no ‘fit-all’ approach. Neither standardization nor local adaptation is strictly better than the other. It all depends on the nature of the business, the state of the market, and the competition. McDonald’s is doing well because they are selling sandwiches – a kind of product that does not require any cultural adaptation. At the same time, a company such as Nokia could not expect to have success selling expensive smartphones in poor countries of Africa. In general, it is recommended to adapt to the situation – standardize some processes while taking a case-by-case approach to domestic markets, determining the most important national and cultural factors in order to account for them.