BS4S02 Resit: Critical Analysis of Global Strategy (Levitt's View)

This essay provides a critical analysis of Theodore Levitt's view on global strategy, examining the transition from multinational to global corporations. The essay begins by defining global strategy and its significance in the modern business environment, highlighting the impact of globalization on consumer behavior and market dynamics. It then delves into Levitt's argument for the standardization of products and marketing, emphasizing the importance of low prices and high quality. The discussion includes a comparison between multinational and global corporations, and the influence of technological advancements on global markets. The essay also evaluates the limitations of Levitt's perspective, considering factors such as local consumer preferences and the challenges of centralized decision-making. Various perspectives on global competition are also discussed, including the influence of branding and the role of product substitutes. Finally, the essay explores the concept of global products and the implications of globalization on international business operations, including examples of companies that are now multinational or transnational in their operations.

Running head: ANALYSIS OF MANAGEMENT THEORIES
ANALYSIS OF MANAGEMENT THEORIES
Name of the Student
Name of the University
Author Note

1ANALYSIS OF MANAGEMENT THEORIES
Introduction
According to Dabrowski (2017), global strategy can be defined as the approach that is
implemented by an organization in order to compete and expand in a global market. The strategy
of business organizations are able to pursue the strategy in order to conduct the operations on an
international basis. The global strategy mainly refers to plans that are developed by organizations
in order to target the consumers beyond the borders. Global strategy is considered to be a
shortened term that is able to cover three major strategies or approaches that include
multinational, global and international. The companies need to pursue the strategies in the three
areas if they aim at expanding the operations on an international basis. The detailed plans that are
developed for the purpose of conducting successful business processes in different parts of the
world are also considered to be a key part of the global strategy (Cordella and Ospino Rojas
2017).
International organizations are the firms which operate with the help of imports and
exports and they sell to the customers in different countries and also have foreign suppliers.
Multinational companies on the other hand have made investments in various countries and the
staff and premises are developed in the areas as well. The international firms have investments
and are present in different countries and the services or goods are offered to the customers with
the application of coordinated brands in different markets (Filatotchev, Bell and Rasheed 2016).
The essay will be based on the critical study of the global strategy that has been developed and
explained by Theodore Levitt. The study will be based on details related to the ways by which
global strategy is used by the modern that operate in various parts of the world.
Analysis of the literature related to global strategy

2ANALYSIS OF MANAGEMENT THEORIES
As discussed by Fırat (2016), globalization is mainly based on different forces that
include political, social, economic and technological aspects as well. The flow of information in
various parts of the world is able to play a major role in influencing the lifestyles of the citizens
in various countries. The individuals in different countries have started becoming global citizens
due to the flow information that has taken place in different countries of the world. Globalization
has thereby been considered to be a threat to ways of life and identity of people as well. The
factors related to globalization can have an impact on the advantages that are provided to the
consumers and individuals in diverse parts of the world (Gabrielsson, Seppälä and Gabrielsson
2016).
The advantages provided by global economy are based on the operations of various
international organizations that include Toyota, BMW, Zara, Nike, Coca Cola, McDonald’s and
IBM. The argument that had been developed by Levitt was mainly based on the implementation
of new technologies that have been able to influence transport, communication and travel related
activities. The demands and needs related to global products are considered to be quite high
among the consumers in various countries of the world. Levitt has also argued about the
differences that exist between the global corporation and the multinational corporation
(Gooderham, Grøgaard and Foss 2019). The multinational corporations have knowledge related
to different countries and they are able to adapt to the differences as well. The critical evaluation
has been able to depict that the strategies applied by firms are mainly based on the
transformation that takes place from the multinational to the global corporation. The global
corporations are provided with major levels of opportunities to enhance their growth in the
industry in an effective manner (Grigorescu and Zaif 2017).

3ANALYSIS OF MANAGEMENT THEORIES
The organizations can thereby adapt to the superficial differences by proper
standardization of the products that are offered to the customers. Another major concept that has
been suggested by Levitt is mainly based on the high quality based products that are provided to
the customers that are standardized in nature and are based on low prices as well. The consumers
prefer the standardized products so that the best deals can be made in order to gain effective
levels of profitability in the industry. Price had been considered to be the most important aspect
related to the strategy that has been proposed by Levitt (Gooderham, Grøgaard and Foss 2019).
The prices of commodities that are offered to the consumers can be low and the products can
also be standardized based on various demands and needs. The concept of standardization that
has been suggested by Levitt states that if the organizations force the reduction of prices and
costs and the quality of products are enhanced suitably, the consumers will prefer to purchase the
standardized products (Grigorescu and Zaif 2017).
The marketing based concepts that have been suggested by Levitt are mainly based on the
needs and wants of the customers and the knowledge that they have related to the market or
industry. The successful global organizations are not able to adhere to the differentiation and
customization for various requirements of the markets which are considered to be quite different
with respect to the spending based patterns, product related preferences and shopping
preferences The global corporations or firms are able to accept and adjust to the differences that
exist between the countries in which they operate (Guilloux-Nefussi 2020). The global strategies
and organizations have started becoming quite strong in the last few decades and this has an
impact on the consumers and their choice as well. Different perspectives have also been
proposed for the purpose of examining a particular issue that organizations can face due to global
competition. The diversity of different perspectives have been able to develop huge levels of

4ANALYSIS OF MANAGEMENT THEORIES
confusion and ambiguity about the levels of competition that is faced by the firms in different
parts of the world. The choice related to global strategy that is made by the organizations is
based on the implications of the choice made by the consumers (Hu 2016).
The advances that have taken place in processes of communication and transportation
based technologies have been able to influence the homogenized world markets in different
countries. The consumers in various parts of the world have demanded similar products and the
consumers also the similar preferences. In the new era different strategic imperatives have been
implemented by the business organizations so that they are able to compete on a global basis.
The multinational organizations that treat the markets of individual countries in a separate
manner and can also be replaced by the global corporations that sell the standardized products
(Jain 2016). The ability of producing high quality based products at low costs can provide major
competitive advantage to the organizations in various parts of the world. The recommendation
that is provided to the organizations that operate on a global level are based on the development
of a diverse portfolio of products and many different product varieties as well (Kato and Okubo
2018).
The investments that are made by organizations on the distribution channels and
technologies are shared in order to enhance the operations in different countries. The process of
cross subsidization across various markets and products can lead to the development of strong
distribution system all over the world. The global producers have offered lower costs on an
international basis in order to enhance the processes in an effective way. The lower costs of
products can help the organizations to reach the distant markets faster in comparison to the
higher priced products (Kolodko 2018). The strategy based on standardization is not able to
respond to the homogenized markets in different parts of the world and can also expand the

5ANALYSIS OF MANAGEMENT THEORIES
markets with the help of aggressive low pricing. Optimum global strategy is able to produce
single standardized products and can also sell them with the help of standardized marketing
programs. The arguments that have been raised in the essay is based on emergence of the global
markets for the standardized consumer based products that are provided to the customers in
different parts of the world (Kato and Okubo 2018).
The changes that have occurred in the modern business environment have led to the
transformation of Multinational Corporation leading to the development of global corporations.
Levitt had stated that the future of business was based on the operations of global corporations.
The global corporations were however not able to cater to the differences in tastes of the local
consumers who are a part of various countries. The new era based on homogenized demands has
been based on the appropriate operations of global corporations in different countries (Kuada
2016). The operations of global corporations are mainly based on the huge scales of production,
marketing, distribution, management and marketing. The efficiency of globalization has started
decreasing in the last few years due to changes that have taken place in the needs and demands of
the customers in various countries. The decision making process of global corporations are
considered to be centralized in nature and the consumers sometimes do not feel connection with
the standardized products that are offered in different countries. The individuals or consumers
are thereby seeking the low cost and high quality based products based on the implementation of
advanced levels of communication and technology (Li 2018).
Levitt had underestimated and overestimated the factors related to globalization. Levitt
was not able to anticipate that some of the markets can react against the globalization based
activities. On the other hand, Levitt had also underestimated the impact of globalization on
transforming the different nations so that they are able to embrace different elements that are a

6ANALYSIS OF MANAGEMENT THEORIES
part of global capitalism like that is happening in former Soviet Union, China and various other
parts of the world as well. Branding has been able to play a key part for the organizations so that
they are able to understand the preferences of consumers in an effective manner (McLaren
2017). The organizations like Starbucks, Coca Cola, Google and McDonald’s have provided key
levels of significance to the implementation of branding based strategies. The products can be
considered as global products if they are marketed in the different countries with the help of
virtual or minimal adaptation. The organizations are mainly focused towards serving the global
markets with the help of global products that can fulfil their demands and needs. The global
product is not able to sell in different markets and this is able to influence the sales of
organizations in a huge way (Milovanovic, Milovanovic and Radisavljevic 2017).
For some of the products Japan, the US and Europe is able to represent around 70% of
the total world market based demands. The advantages that are provided to the producers are
based on economies of scale and the lower costs that are related to production and management.
The benefits are mainly provided to the consumers based on lower prices, increased levels of
quality and better serviceability as well. The ability gained by a product to become global is
mainly based on the close substitutes that are present in the industry (McLaren 2017).
Globalization thereby refers to the growth of investment and trade and is mainly accompanied by
growth levels in the international business operations and the proper integration of the economies
of various countries in the world. The globalization based operations of different business
organizations can be recognized easily with the spread of different services and brands that are
offered to consumers in different parts of the world (Natal and Stoffels 2019).
For example, the automobiles and electronics based products that are offered by Japanese
organizations have become quite common in different countries. The organizations have thereby

7ANALYSIS OF MANAGEMENT THEORIES
started becoming multinational or transnational in its operations and are able to provide the
products to large consumer base. The example of Honda can be taken into consideration for the
purpose of understanding the concept of transnational or the multinational organizations
(Postolache et al. 2019). The largest factory of Japanese automobile organization Honda is
located in the United States and on the other hand the biggest production plant US based
organization Coca Cola is located in France. Coca Cola is able to gain around 80% of its total
profits from the overseas operations. The rapid growth that is depicted by the process of
globalization has been considered to be a major success based on the rapid growth of economies
of various countries (Nordman and Tolstoy 2016).
Professor Ghemawat has however provided a different view of the process of
globalization that is implemented by the various countries. According to Professor Ghemawat
the major drivers of globalization have been able to enhance the levels of economic
interdependence among the various national markets in the world. The major test in this case will
be to test the global nature of the MNEs and proper penetration of markets in different parts of
the world. Technology is considered to be a major force that is able to drive the operations of
different organizations and can enhance the levels of communication as well (Schlegelmilch
2016). The new levels of commercial reality are based on the emergence of the global markets
for the standardized global markets. The benefits can thereby be reduced to the economies of
scale in the production, marketing and distribution. The national or the regional preferences have
lost their importance in various parts of the world. The organizations need to upgrade their
products in order to enhance the operations and increase the profitability levels as well (Singh
2019).

8ANALYSIS OF MANAGEMENT THEORIES
The multinational organizations have thereby started losing their importance as the
organizations tend to offer the standardized products. The product quality and features are not
changed with respect to the needs and demands of the local customers in different countries. The
margins gained by the organizations in home countries are not higher in comparison to the other
countries in which they have the international operations (Tairi 2018). The multinational
corporations are however not able to continue their operations in various industries in the ways
buy which they used to operate earlier. The global corporations have started becoming more
prevalent in the last few years due to the changes in the external business environment. Global
corporations based in different countries have constant levels of operations in various countries
of the world (Vaso 2016).
The communications that are developed by organizations in different parts of the world
are able to enhance the awareness related to products and services that are provided to the
consumers. Modernity is not considered to be a wish of the organizations and the companies are
able to enter the global markets with the help of different kinds of international investments. The
companies that wish to maintain their operations in various countries of the world can choose the
foreign direct investments or FDIs that can allow the firms to control the assets (Tairi 2018). The
companies can also aim at making the portfolio investments by acquiring stock of the firms in
different countries and gaining control of the firms. Strategic alliances are also considered to be a
vital aspect that is able to influence the processes of global corporations in different parts of the
world (Vieira 2019).
Franchising is another major strategy that is applied by the global corporations in order to
expand the processes in various countries. The process of franchising is able to play a major role
in the ways by which a global organizations can offer the standardized products to consumers in

9ANALYSIS OF MANAGEMENT THEORIES
different countries. The example of Apple can also be taken into consideration for the purpose of
understanding the operations of global corporations. Apple aims at offering its standardized
products to the customers in different parts of the world. Apple has aimed implementing the
premium pricing strategy in order to provide the products to different types of consumers in
various parts of the world (Milovanovic, Milovanovic and Radisavljevic 2017). The decision
making activities that are performed by Apple are also considered to be centralized in nature and
this is able to play a key part in development of the product portfolio that is offered to customers.
The organization has not changed the product features with respect to the needs and demands of
the customers in various countries (Kato and Okubo 2018).
The examples of the US based fast food based organizations like McDonalds and KFC
are taken into consideration for the purpose of development of a standard approach in an
effective manner. The organizations have adopted the strategy based on preferences of the
regions or the countries like Japan, China and the Middle East. KFC has aimed at introducing
smaller pieces of the products for the purpose of catering to the needs of Japanese consumers
which has in turn enhanced the demands of its products in the industry. On the other hand,
McDonalds has aimed at implementing a perfect blend of local adaptation and global
standardization for the purpose of offering its products to the consumers in different countries.
For example, McVeggie Burger is a major product of the organization that is offered to the
consumers in India (Li 2018).
Conclusion
The essay can be concluded by stating that the implementation of global strategies in the
organizations can play a major role in improving their positions in the respective industries. The
analysis has been able to depict the differences that exist between global corporations and the

10ANALYSIS OF MANAGEMENT THEORIES
multinational corporations that operate in various parts of the world. The comparison has also
been made with respect to the definition of globalization and global strategies that have been
provided by Professor Ghemawat. The differences in definitions provided by the two scholars
have also been able to highlight the changes that have taken place in the external environment as
well. The examples of various global organizations have also been taken into consideration for
the purpose of understanding the ways by which changes in the external environment have
influenced the operations of modern firms.

11ANALYSIS OF MANAGEMENT THEORIES
References
Cordella, T. and Ospino Rojas, A., 2017. Financial globalization and market volatility: an
empirical appraisal. The World Bank.
Dabrowski, M., 2017. Costs and Benefits of Monetary Sovereignty in the Era of Globalization.
In Beyond Transition (pp. 25-36). Routledge.
Filatotchev, I., Bell, R.G. and Rasheed, A.A., 2016. Globalization of capital markets:
Implications for firm strategies. Journal of International Management, 22(3), pp.211-221.
Fırat, A.F., 2016. The dynamics of the local and the global: implications for marketing and
development. Markets, Globalization & Development Review, 1(1).
Gabrielsson, M., Seppälä, T. and Gabrielsson, P., 2016. Realizing a hybrid competitive strategy
and achieving superior financial performance while internationalizing in the high-technology
market. Industrial Marketing Management, 54, pp.141-153.
Gooderham, P.N., Grøgaard, B. and Foss, K., 2019. Global strategy and management. Edward
Elgar Publishing.
Grigorescu, A. and Zaif, A., 2017. The concept of glocalization and its incorporation in global
brands’ marketing strategies. International Journal of Business and Management Invention, 6(1),
pp.70-74.
Guilloux-Nefussi, S., 2020. Globalization, market structure and inflation dynamics. Journal of
International Economics, p.103292.

12ANALYSIS OF MANAGEMENT THEORIES
Hu, Z., 2016. Two perspectives of international marketing: standardization versus adaptation.
In Research Frontiers on the International Marketing Strategies of Chinese Brands (pp. 53-65).
Routledge.
Jain, V.K., 2016. Global Strategy: Competing in the Connected Economy. Routledge.
Kato, H. and Okubo, T., 2018. Market size in globalization. Journal of International
Economics, 111, pp.34-60.
Kolodko, G.W. ed., 2018. Emerging market economies: Globalization and development.
Routledge.
Kuada, J.E., 2016. Mindsets and Global Organizational Strategies. In Global Mindsets (pp. 1-7).
Routledge.
Li, X., 2018. The Costs and Benefits to China in Leading Economic Globalization within an
“Anti-Globalization” Environment. In Political Economy of Globalization and China's
Options (pp. 59-70). Brill.
McLaren, J., 2017. Globalization and labor market dynamics. Annual Review of Economics, 9,
pp.177-200.
Milovanovic, G., Milovanovic, S. and Radisavljevic, G., 2017. Globalization-The Key Challenge
of Modern Supply Chains. Ekonomika, Journal for Economic Theory and Practice and Social
Issues, 63(1350-2019-2767), pp.31-40.
Natal, J.M. and Stoffels, N., 2019. Globalization, market power, and the natural interest rate.
International Monetary Fund.

13ANALYSIS OF MANAGEMENT THEORIES
Nordman, E.R. and Tolstoy, D., 2016. The impact of opportunity connectedness on innovation in
SMEs’ foreign-market relationships. Technovation, 57, pp.47-57.
Postolache, A.G., Nastase, M., Vasilache, P.C. and Nastase, G., 2019. GLOBALIZATION AND
ENVIRONMENT. Calitatea, 20(S2), pp.517-520.
Schlegelmilch, B.B., 2016. Creating Global Product and Service Offerings. In Global Marketing
Strategy (pp. 83-103). Springer, Cham.
Singh, S., 2019. Global Imaginaries Beyond Markets: The Globalization of Money, Family, and
Financial Inclusion. In Revisiting the Global Imaginary (pp. 85-103). Palgrave Macmillan,
Cham.
Tairi, H., 2018. GLOBALIZATION OF ECONOMY-CHALLENGES OF THE GLOBAL
MARKET. Economic Vision, International Scientific Journal in Economics, Finance, Business,
Marketing, Management and Tourism, 5(9-10), pp.54-61.
Vaso, L., 2016. Globalization and Its Effects on the World Economy. Academic Journal of
Interdisciplinary Studies, 5(1), p.121.
Vieira, E.C., 2019. The Multiculturalility Issue on Globalization. In Global Campaigning
Initiatives for Socio-Economic Development (pp. 220-242). IGI Global.