Overview

A traditional global standardization strategy is when a company develops, designs, and creates a product specific to the needs of the market it's developed in (e.g. United States) and then offers the same product to emerging markets without customizing it to that market's target audience.

 

Vijay Govindarajan- https://onlinelibrary-wiley-com.ezaccess.libraries.psu.edu/doi/epdf/10.1002/gsj.23 (article link) 

argues that instead of pursuing this type of strategy, companies should differentiate their products to respond to the demands of the target audience(s) in these emerging markets. Surprisingly, when companies develop new differentiated products for these emerging markets, they have found applications back in the Western market (in the case of a U.S. manufacturer).

 

Consider the following example:

In India, 90% of the hospitals can't afford ECG machines; yet 90% of Indians who rely on those hospitals need this type of product. So a couple of years ago, GE responded to market demands in India and came up with a differentiated product, and developed a $500 ECG machine, which is portable, operates on battery, and is easy to use.

This machine has created enormous opportunity for GE in India, but the really interesting story is that now it's sold in 120 different countries, including the United States.

 

Directions

Thinking about Govindarajan's article, discuss the following questions 

1. What are the barriers for this type of strategy?
2. What does this approach require to be successful?
3. How different is this approach from selling the "lighter" version of the products developed in advanced countries to the emerging markets?
4. What are the risks associated with this approach?