Editor's view, Inside Track, July 2010
How 'glocal' is your organisation?
What does it mean to be “glocal”? It’s a truly ugly word, but aesthetics aside, “glocalisation” is important for the success of multinationals today. Simply put, the term means to “think globally and act locally.”
More than ever global organisations are having to ask themselves, “What do we keep central, what do we keep local? Where do we allow one thousand flowers to bloom?” Entering a new market has always been a cultural minefield, but with the increased affluence, choice, and market sophistication of developing countries, companies have to be able to adapt to local markets’ product tastes, and buying preferences in addition to any unique local supply chain, regulatory or infrastructure challenges. The trick is to do this whilst still maintaining economies of scale and the core of the company brand and culture.
Wal-Mart’s expansion overseas created a sharp learning curve for management, which, over time, has created interesting examples of adaptation. In China, they learned that they could not hold on to their core concept of centralised buying. Chinese consumers demanded twice as much fresh produce as their American counterparts. That, combined with China’s transport infrastructure, forced Wal-Mart to increase dramatically the amount of goods sourced locally. They also realised that in addition to their multinational brands, they would need to provide traditional Chinese items such as chickens’ feet and whole pigs hanging from a hook. Yet they were able to drive their core brand identity of value for money, as well as their branded store concepts.
Wal-Mart entered Germany through acquisition, so had the task of introducing their culture and ways of working to an already existing grocery network of employees and customers. They had to abandon the company’s iconic Greeters, who welcome every shopper as they came into the store, because the Germans felt they were superficial and looked upon them with distaste. By successfully introducing their core value of listening to employee suggestions, however, they were able to create innovations such as Singles Nights shopping, on which night profits rose 25%.
Every company has to wade through the “think global, act local” challenges on their own, but the driving force for decision-making should always be about responding creatively to local consumer preferences whilst identifying which core areas of brand, business model and culture they can and should maintain.
