Levitt, T. (1983) Flashcards
The globalization of Markets
What is Levitt main argument?
Levitt argues that consumers-driven by the force of technology-are becoming increasingly “homogenized”. According to him it does not make sense to keep tailoring products to multiple markets, but rather to standardize them for economies of scale to come into full effect.
Standardization vs Customization
Standardization:cost efficiency and brand consistency.
Customization: Tailoring products to local markets based on cultural, economic, or infrastructural differences.
Multinational Corporation
The multinational corporation operates in a number of countries, and adjusts its products and practices in each - at high relative costs.
Global Corporation
The global corporation operates with resolute constancy at low relative cost - as if the entire world (or major regions of it) were a single entity; it sells the same things in the same way everywhere.
Convergence of consumer preference
He claims that customers will prefer high-quality, reliable, and cost-effective standardized products over local or customized alternatives.
The ‘Hedgehog’ vs ‘Fox’ Analog
Multinational corporations (foxes) know many things, but global corporations (hedgehogs) know one great thing: the power of standardization.
The Republic of Technology
A concept borrowed from historian Daniel Boorstin, suggesting that technology creates a world where everything becomes more alike.
Global Homogenization vs. Cultural Persistence
Global Homogenization → The idea that global brands and products reduce cultural differences.
Cultural Persistence → Some markets still resist full standardization due to deep-rooted traditions and preferences.
The Role of Marketing in Globalization
Traditional marketing focuses on identifying consumer needs, but in a globalized world, companies should shape consumer behavior through pricing, promotion, and product availability.
What is a major mistake companies make when entering global markets?
a.)Assuming global consumers have different preferences
b.) Failing to develop high-tech products
c.) Ignoring local competitors
A
According to Levitt, what is driving global market homogenization?
a.) Advances in technology and communication
b.) Trade agreements between nations
c.) Government incentives for multinational companies
A
What is the key economic and competitive benefit of providing standardize consumer products to global market?
a. Inclusion
b. Economies of scale
c. Decreasing economic inequality
Economies of scale - The cost advantages gained when production increases, leading to lower costs per unit.
What aspect of the article did Levitt himself critique after publishing ?
a. Excessive exaggeration
b. Insensitivity towards group who cling to “ancient attitudes and heritages”
c. Repetitiveness
A
What argument was brought up that opposes globalization?
a. Economic inequality
b.Cultural erosion
c. Possibility of economies of scope
c. Possibility of Economies of scope-
Economies of Scope (as mentioned in Levitt’s article) refers to the cost advantages that a company can achieve by producing a variety of products using the same resources, facilities, or technology. Unlike economies of scale, which focus on reducing costs by producing more of the same product, economies of scope reduce costs by efficiently producing different products.
What does Levitt believe is the main driver behind consumers’ choice of standardized products in a global market?
a) Cultural convergence and universal values.
b) The desire to belong to a global community.
c) Low prices and high quality
c
How does technology affect companies’ production costs, according to Levitt?
a) Technology increases the costs of adapting products to local markets.
b) Technology reduces the costs of large-scale production of standardized products.
c) Technology has no significant impact on companies’ production costs
b
According to Levitt, what are the two main forces shaping the world in terms of commerce?
a) Culture and tradition.
b) Technology and globalization.
c) Politics and economics.
b
According to levitt, what is driving global market homogenization?
Advances in Technology and communication
