Every story must come to an end. Businesses too are perishable commodities that live and die within the business lifecycle. However, in 1983 Theodore Levitt coined the word Globalisation, and with it outlined how multi-national companies could escape their own death by participating in the global market (Levitt 1983). Indeed, technology would soon allow previously unimaginable exponential growth compared to old-world style business (Ibid.). Suddenly, saturated domestic markets weren’t a death sentence, and marketing turned globally to create demand for Western products in foreign lands. As a result of globalisation, companies began to recognize that early market entrants carried a significant advantage, and soon global invasions around the world began as companies were forced to compete within the international arena. Today, Mcdonaldization (selling the same product everywhere) has given way to glocalisation and companies are constantly changing their products to meet market need (Steger 2009). Of course, if you want to know why companies compete in foreign cultures, it comes down to three main reasons, profits, competitive advantage, and survival. Survivors of globalisation go on to write their next chapter of the story and redefine the world with their products and services.
Today we live in a world where blurred lines extend to once impenetrable geographic borders. Since the Second Great War and subsequently, the win of capitalism over the Cold War, even domestic monopolies are often at risk from foreign invasion from expanding international companies. The de-regulation of the eighties in Western cultures like the United States and the United Kingdom opened markets for competition without government oversight (in most sectors) and provided strong opportunities for foreign investment as well as new fears of alien competitors within domestic markets. Simply put, a company has no choice but to now compete in global markets because of Economies of Scale, or they risk becoming swallowed up by the larger fish in the sea.
A popularized example of the globalized risks on a micro (to macro) level is often Walton’s, a small retail store in the 1960s located in Bentonville, Arkansas. Sam Walton, the owner, was faced with a dilemma in the early days of his company. He noticed large national chains like Sears and the now defunct Montgomery Ward expanding into cities and towns, often bankrupting smaller private family businesses such as his. Walton decided the only way to protect his company and employees would be to diversify through expansion. Today, Walton’s company, now called Wal-Mart, is the world’s largest retailer. Indeed, what was true for the in the 1960s, across state-borders, is now valid in the global context across international boundaries.
The life-cycle of a company is typically modelled by a single bell graph to illustrate the exact life and death of a company (Gomme et al. 2005). The ascending curve of the rapid growth of an organization assumes that during this period, perpetual growth must be maintained through continuous expansion and innovation (Ibid.). Obviously, a failure of growth will result in the curve slowing to maturity, then moving into decline, indicating the possible expiration of the company. Occasionally, a cycle of rebirth can be achieved, but only after great monetary loss (Ibid.). Often companies choose to perpetuate their rapid growth through selling their products in external markets, thus extending the life of the company.
Indeed, we can see such examples of this decline in what was the world’s second largest retailer, Tesco. A series of serendipitous economic conditions such as the 2008 Global Economic Crisis, along with poor planning in international ventures, have placed Tesco firmly in decline compared to its competitors. Stock value has halved from its previous highs and investors are debating whether this phoenix can rise from the ashes, or become as defunct as former retailers like Woolworth’s. Tesco presents an interesting case to exemplify the risks of promoting a brand in foreign markets. Tesco’s decline has been criticized as mostly a failure to translate culture in the international arena, often attempting to apply British flavoured preferences to cultures unfamiliar with its method of retailing (Edelstein 2012). In the United States, shoppers were annoyed by the lack of selection and Euro style checkouts, and in China where Tesco expected to use their Clubcard approach to leverage themselves against competitors, they found consumers generally rejected the notion (Ibid.). Now that Tesco has partially or completely withdrawn from these markets, it’s clear that the company’s exit upon the world stage has left competitors with blue(r) seas to be fished with less overall competition. By the time Tesco attempts to re-enter these markets, they may not have the liquidity or endurance as an entity to compete against earlier, more successful global companies.
Tesco is not alone in the matter; Wal-Mart has struggled in China as Chinese shopping habits have conflicted with Wal-Mart’s traditional business model. While World System Theory provides companies a basis for analysing new markets, often overlooked are the nuances beyond the face-value culture (Chirot and Hall 1982). The proverbial ice-berg metaphor is oft forgot when considering that purchase habits are commonly driven less by tangible aspects like the way the experience, product, or brand feels. In China, companies like Wal-Mart and Tesco discovered that the Chinese preferred shopping in outdoor markets with the foods displayed openly on tables that focused on the local flavours, and tastes that defined a particular geographic region (Lutz 2012).
Commonly, American based companies forget how culturally different America is from the rest of the world. The United States, which is very inwardly focused, is heavily based on individualism and isolation, while many Eastern cultures are more community based. “Americans tend to build fences around yards, gates around communities, mostly drive alone in cars rather than public transportation, and work in cubicles surrounded by security guards to keep others out.” (Jones 2010) It’s no surprise that the American (and British) hypermarket concepts are unappealing to cultures where human interaction is more common. Yet most Westerners (including communications experts) have failed to recognize that their failures lay in their ethnocentric expectations for others who don’t think like the West. Zaharna agrees, quoting LaRay Barna “…many of us naively assume there are sufficient similarities among peoples of the world to enable us to successfully exchange information and/or feelings, solve problems of mutual concern, cement business relations, or just make the kind of impression we wish to make”, that “people are people” and that “deep down we’re all alike” but quite often these are our “blind spots” (Zaharna 2001).
Probably the most well-known case of a global company expanding into different markets, and which best exemplifies the six categories of Zaharna’s synthesised Country Profile is Coca Cola in France. Coke which has been described as “the most American thing in America” worried French politicians who saw it as an invasion of Americanization on French soil. On 28 February, 1948 the French National Assembly met to decide if Coke would be allowed to sell in their country. The Deputy at the time asked if the Minister would permit Coke to “poison” French citizens with their product declaring safety and political reasons behind his motives (Hd. and Kuisel, 1994). However, it’s not without precedence, as in both Belgium and Sweden breweries filed lawsuits against the product saying it contained unsafe levels of caffeine that was purposely added and not natural to the drink like coffee (Ibid.).
Yet in France, the marketing was completely the opposite of the political concerns, suggesting consumers Buvez Frais or Drink Fresh (La Boite Verte 2011). In a country that was accustomed to drinking wine with meals, and where the Health Ministry of the National Government recommended a litre of wine a day, the iconic image of an unpatronised Coca Cola wagon in a square in Paris best depicts the lack of popularity for the product during the early 20th century (Hd. and Kuisel 1994).
Coke was socially and culturally disfavoured in France, often seen as low-culture despite Coke’s attempts to advertise how successful and fashionable people consumed the product. Major infrastructure issues stood in Coke’s way, even if it could develop a new market through advertising. It was in need of a French based factory to produce its secret recipe rather than import it from America which was both costly and limited production. Time after time, the government blocked permission for Coke to establish a factory in Marseille, citing it felt the money would not stay in France (Ibid.). To combat worry, Coke implemented institutional advertising of how it would contribute to France’s forward-thinking society. Today, Coke tries to maintain its image as a responsible corporate citizen of France, rather than a profiteering American parasite, mostly through public education campaigns. However, many of critics at the time, such as the Communist Party in France equated Coke’s intentions to that of America’s colonisation of France, and labelled it Cocacolinisation (Hd. and Kuisel, 1994). Coke turned to guilt, noting that if their product were good enough for American soldiers who saved and rescued France from two World Wars, then it should be good enough for the grateful people of France (Ibid.).
Meanwhile, France had started an embargo on Coke’s ingredients which were quietly being imported via legal loophole through Morocco (Hd. and Kuisel, 1994). Eventually, Coke requested assistance from Washington, who in turn advised France through its channels that their hostility towards American imports (such as Coke) may endanger their post-war economic aid. Shortly thereafter the embargo was lifted, the political dispute forgotten, and Coca Cola began its invasion into French society. Today, France remains one of a handful of countries where cola consumption is minimal. However the company has managed to bridge France’s unique social structure, which at times is polychromatic, for instance with multi-tasking Metro riders traveling to work, reading their papers, shopping etc., and monochromatic like that of l’art de ne rien faire or the art of doing nothing, café culture, or sitting in a park (Zaharna, 2001). Coke remains a part of that relaxed culture of France, where one must take a significant amount of time to focus on relaxation while enjoying the product, whereas in other cultures, habits are less formalized.
While some may be shocked to find America’s threatening actions as frightening as the French’s fear of colonization, the ideology of capitalism, as set forth by the United States is the result of a similar sense of self-entitlement shared by European colonisers of the New World. In 1900, a U.S. Senator combined his sentiment for religion and world domination by stating that America would “redeem the world” (Beveridge 1900, cited in Steger 2009). Today, that same mind-set perpetuates capitalism under the guise of democracy and freedom to expand American interests around the world. Presidential candidate Mitt Romney has stated “God did not create this country to be a nation of followers” (Bacevich 2011). Therefore, even Europe is a potential enemy of Western Capitalism if they fail to adhere to “freedom’s triumph”, or the global marketplace led by the United States (Steger 2009). Under the Bush Presidency, America asserted this ideology through publications like the Defence Planning Guidance which detailed the United States’ willingness to use military power against “even Western European allies”, should they wish to compete against the United States globally (Steger 2009). It would appear the Cold War has become a war of neo-colonialism through capitalistic venture into foreign markets. Walls may have come down, but the battle for economic glory via corporate conquest creates deadly global consequences.
Yet if you want to know why global companies promote themselves across borders and cultures, you only need to see the payoff for Coke’s diligent persistence, as now Coke outsells their competitor (Pepsi) almost six-to-one in France, and international profits now represent 29% of the company’s bottom line (Sellars, 2014). In contrast, Wal-Mart who claims it’s in a long-term investment in China has profited very little from Asian markets, while Tesco is now in decline according to many business models with millions lost from its bottom line. In fact, many in the media have expressed the end is nigh for the company that failed to not only recognize that Chinese culture is hidden below the ice-berg, but then chose to ram this large immovable object head on like the Titanic (Metro 2014).
Indeed, “International Markets are strewn with the carcasses of global adventurers.”, as Jennifer Vessels suggests. Similar to this paper’s case studies, she puts-forth five major reasons companies fail to globally launch. These include poor motives, false assumptions, under-estimating international costs, late entry into the market, and failing to seek expert advice (Vessel 2014).
However, the consequence of not trying appears to be as brutally lethal as trying and failing for numerous western companies. Indeed, many U.S. retailers which were household names twenty years ago have ceased to exist in a globalized world. Brands like the American television company Zenith who prided itself in being an American brand for Americans was swallowed by Korea’s LG electronics in 1999 (Felix 2012). The U.S. company, Circuit City which originally had an international presence in Canada decided it was a “strain” upon the company, and based on Goldman Sach’s recommendation, sold their international operations (Camacho 2007). Subsequently, the company as a whole was liquidated just a year later, and today, Best Buy, the company’s then rival, has went on to become a multi-national company with locations as far away as China. Though it should noted that Best Buy was unable to succeed in the United Kingdom and withdrew in 2012, proving success in one foreign market does not guarantee success in others (Mirror 2012).
One factor that continues to separate the winners from the losers is persistence or ride. Cheryl Calvery, marketing manager for the British brand Marmite, and whose product often receives reactions of disgust in foreign markets, suggests companies should embrace failure and recognize that there are times a company must recede from a market rather than persist with blind hubris. Sometimes it’s glocalization or adapting a product to the market rather than expecting the market to embrace a new concept. Calvery uses the example of how Marmite is offered as a drink in powdered form in Sri Lanka where it has been a success (Paphitis 2012).
In conclusion, global companies existing within this technological era no longer have to see the business life-cycle as a death narrative. Much like pop-culture mantras that recycle the Latin phrase carpe diem, the story of globalisation is an allegory against apathy. By adapting to a shrinking world through global diversification, a company, product, or brand can survive the harsh environment of the international market. Today, these opportunities if not seized will be stolen by competitors, and if businesses don’t adapt, they risk becoming obsolete. It’s a thin line between success and failure, but the reason companies choose to promote themselves in foreign cultures is as simple as this, to perpetuate their place within the global narrative, for profit, for competitive advantage, and for survival. The consequence of not competing globally is waking up one day and discovering that your story has come to an end, with the final chapter written by those who survived globalisation.
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