3.3.1 Responding to global demand

Question 1

Define glocalisation?

Answer 1

Term used to describe the services and product which are developed and distributed globally however are adjusted to accommadate the local consumer. e.g MNC McDonalds in India do not produce beef burgers as majority of the population dont eat beef

Question 2

What are the different approaches MNC’s may take in global markets?

Answer 2

• Domestic/ethnocentric
• mixed/geocentric
• International/polycentric

Question 3

Explain domestic/ethnocentric

Answer 3

If a MNC takes this approach then they arent adapting to meet/satisfy the needs of the local consumers in the new global market they have entered or they are making very little changes. This may ruin brand recognition and tarnish its brand name as they fail to meet needs of locals due to the belief that their domestic culture/values are more superior.
However can benefit as helps maintain brand consitsitency.
Though lose out on the competitve advantage as if they enter the global market where other MNCs already have and those MNCs take the polycentric/international approach, then the locals will consumer their goods instead.
Also ethnocentric firms can act as a trade barrier towards each other as they will not want to trade with each other due to not sharing the same cultural beliefs.
Domestic frims will benefit from ethnocentric consumers as foreign imports will be reduced and instead bought from domestic firms helping them to survive helping the BoP too.

Question 4

Explain polycentric/international

Answer 4

This is where an MNC is fully willing to set up in a global market and adapt in order to satisfy their needs and will do this in each global market they set up in. This gives a good brand reputation and recongition as well as a competitive advanatge as those MNCs operating in the same global markets, but instead take an ethnocentric approach. Perhaps creates consumer loyalty from the local consumers. However can cause for diseconomies of scale to arise as the brand starts to lack consistency differing in each global market causing AC to rise.

Question 5

Explain mixed/geocentric

Answer 5

This is also known as the glocalisation approach where it is a mix of polycentric and ethnocentric. There are some adjustments made to suit the locals and satisy their needs but also keep brand consistency and the adjustemtns in each global market are not to the level of polycentric MNC’s.