Local Responsiveness and Global Integration (Essay Sample)

Local responsiveness and global integration
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Introduction
The level of competition in the global and domestic markets has substantially increased over the years. Improved funding mechanisms have made it cheaper for new companies to compete for positions in the market with already established organizations. Globalization has provided an incentive for companies to increase their market share by enabling entities to occupy new markets in different countries other than just that one occupied by the parent company. Multinational enterprises have a greater advantage compared to other organizations due to the huge market share and economies of scale. However, such organizations still face strategic and management challenges.
One of the challenges faced by such organizations is attaining a balance between local responsiveness and the pressures of global efficiencies. Such a challenge arises when the company has to ensure that it meets standards set at the global market. At the same time, the entity has to ensure that it meets the needs and preferences for local stakeholders. Pressures to attain global efficiency include global management and integration challenges. MNEs always face the challenge of ensuring that they meet the global standards and local needs. This study assesses this challenge and the role of international human resources in attaining an effective balance between the two needs.
Local responsiveness challenges
Generally, local responsiveness calls for autonomous MNE subsidiary to commit all its resources towards ensuring that the needs of the local market are met in a bid to respond to competition. According to Hill (2005), when a MNE addresses the concept of local responsiveness, it has to look at it in different dimensions. The first dimension is the impact of history and culture on consumer needs. Differences in culture and history have greatly contributed in variations in consumer preferences and needs. Therefore, when settling in a market, a company has to ensure that its products suit the respective consumer profiles if it intends to attract a huge number of consumers. The concept of centralization makes it harder to develop products that suit the needs of the respective foreign markets fully. This calls for a change in global integration strategies to address the issue of varying consumer needs and preferences (Hill, 2005).
Another dimension that local responsiveness takes is traditional practices and infrastructure. The fact that a company operates in different regions makes it vital to come up with services and products that suit the market’s infrastructural and traditional makeup. Lack of proper product or service planning may result to lack of proper synchronization between the product or service and the available infrastructure (Phatak, Bhagat and Kashlak, 2005). Other than just the infrastructure, the MNE has to ensure that the marketing and management strategies are in line with the traditional practices of the market. Switching distribution channels and other modes of operations could be vital in ensuring that products and services are in harmony with the market’s traditional practices and infrastructure (McGarrity, 2007).
Global efficiency challenges
A company that chooses to ‘go global’ faces the challenge and need to bring together all its subsidiaries. An MNE faces the pressure of needs and costs to ensure that all its subsidiaries are well connected. One of the major advantages of global integration is that the company gets to enjoy economies of scale. The company is able to offer uniform products and services throughout the globe. This means that, global integration translates to globalization. However, it will have to endure challenges such as variation in culture, consumer preferences and government directives. Global integration involves harmonizing research and development activities and commodity prices in the different markets. The company has to do this by ensuring that it protects its position in respective global markets (Phatak, Bhagat and Kashlak, 2005).
Ways of striking a balance between global efficiency and local responsiveness
Interactive marketing
Trying to ensure that consumer needs are adequately addressed is a very complex and challenging task. The task is also costly and may affect the performance of a company negatively. Therefore, MNEs have to use the most efficient and cost effective methods to try and ensure that the needs of the local market are adequately addressed. The first step in doing this is establishing consumer needs. One way of doing so is through interactive marketing. Interactive marketing allows consumers to communicate directly with the business entity (Phatak, Bhagat and Kashlak, 2005). Consumers are offered the opportunity to give their views on how services and products can be changed in order to address consumer needs. Depending on the type of business and the marketing channels available, the entity can choose which ways to approach interactive marketing. Interactive marketing is an important strategy in improving the ma...