Knowledge has been the foundation of all development and every age and era has seen some product or service that became a standard or benchmark for that time. This was always a general trend to follow and adopt a popular product or behavior but after the Industrial Revolution of 18th century it became possible to offer products made through different technologies that that offered alternative methodologies for producing the same product. An everyday example would be of soap that has remained a cleansing product for over two centuries. The end-use remains same despite change in technologies. It has become a dominant standard for cleansing.
But in case of more complex products like software totally different technologies compete for space for same or similar value added end uses. An example is that of Microsoft Office that is based on Windows based technology while a similar product the Open Office that is based on Linux. Office was offered as a method of writing and recording. In this case the dominant trend is being impacted as the end-use is changed substantially by technological dexterity and Office is now used beyond its original simpler usage.
Competitive advantage (Porter, 1980) has been the strategic reason for adoption of different technologies but this was until now product-centric. Competition has now moved to a different level. It is the different technologies that are now competing for producing the same product. This has been termed as differential generic strategy (Porter, 1996) that now attempts to corner niche markets or even carve out a new niche from the old one. A good example of this is the Southwest Airline that carved a niche for itself by offering low -cost no-frills flying to consumers and beat the dominating trend of flying with fully loaded services offered by traditional airlines. The competing methodology in this case was creating a new consumer who could now switch from driving or taking a train to flying short hauls at competitive or even lower price within a far shorter time.
But can it be said that new alternatives, technological or strategic practices, can upset or change the dominating trend and set new standards or benchmarks? (Hofstede, 1991) said that a person is a product of his/her environment and what he/she learns/absorbs in the early part of his/her life after birth is embedded in the mind of the child and has great bearing on decisions in later life. This is even true when the same person moves out of his country of birth and changes the environment. The change may change his behavior but when it comes to crunch decision the ‘software of the mind’ (Hofstede, 1991) takes control and clouds the decision. The last few decades have seen enormous changes as the adoption of free market economies has brought countries and people closer to each other.
Under new global environments a new life cycle that can be called the Market Life Cycle has become the dominant factor in determining the Product Life Cycle that was created by (Vernon, 1966). Current thinking is that a new convergence is now in place that drives globalization (Sanz & Valazques F, 2006) and it is the combination of the Market Life Cycle and the Product Life Cycle that are now getting together for meeting competition at global level. This results in alternatives that are new drivers of products and services.
On the other hand cultural beliefs that nurture ideologies and assist in vision building have been acting as a barrier for standardization; hence in that sense while they become a catalyst for alternatives they also act as deterrents for standardization. The ‘software of the mind’ is the real agent here. It allows freedom for adoption of alternatives yet rejects the alternative of others when they clash with their cultural beliefs. The most recent example is the failure of Google in China which is being prevented by Chinese Government as it does not allow freedom of expression and reach that Google offers its Chinese customers. Yet China is promoting the Internet in a big way as it understands that this is the modern way to reach out to the world. The cultural influence is however preventing the Chinese to allow a foreign entity uncontrolled and unedited access to its population.
Not until recently has culture been given any importance in the economic development; it was always considered as a social phenomenon. A Harvard historian, (Landes, 1988) points out that historically culture has always played a prominent role in the economic development but it has been overshadowed by emphasis on factors like need and greed. Looking closely it will be seen that even these two traits are the product of culture proving that indeed it is the undercurrent of culture that affects the alternatives offered against main dominating trends.
In a multipolar world, which is increasingly become market-led, each center or location of an enterprise succeeds because of its unique ecosystem, skills and infrastructure. Indeed the location is advantaged by the local culture in a significant way as explained above in the Google/China example. Therefore Cultural imperatives should be considered on the same plane as traditional business inputs, such as raw materials, capital or energy costs. To this list alternatives must be added with separate emphasis as they offer a new option for serving or servicing a new market.
Origins of Alternatives
Global markets have peen penetrated mostly through subsidiaries that have been given some sort of independence to decide local strategy. (Bartlet & Ghoshal, 1989) were the premier supporters of those companies which have followed the doctrine of think globally, act locally. (Taylor, 1991) and (Maljers, 1992) have also observed that balancing the opposite factors of organizational integration and differentiation has paid rich dividends to companies. This is where alternatives come to play a major role as standardization gives way to local preferences. This capability can be developed or sustained through manipulations of alternatives as it requires far sighted strategies and the ability to overcome fear of loss of control.
The fundamental point is that cultural capacity, which differs between groups of people, should be recognized as the new competitive advantage (Porter, 1980). This is why culture matters and that this culture forms the knowledge base that eventually percolates in eventual decisions. This is what makes alternatives acceptable.
Another outcome of globalization was the increase of the Purchasing Power Parities (PPP) of the new markets. The producers of goods found that the new markets were too enormous and inviting to wait for the maturity of a product. As a result production and marketing have come to the door of the consumer quickly while ignoring Vernon’s Product Lifecycle Theory. This has meant adopting of alternatives as they were necessary for conformity with the culture, ideology and vision of the new markets.
The pattern of production and marketing has brought the latest product to the doors of the new consumers but has been adapted to suit local requirements and preference influenced by Geocentric and Polycentric strategies (Schöllhammer, 1973) We therefore see Toyota adopting the geocentric approach for manufacturing a mini-van suited to the south-east Asian region, a first for them, and McDonald changing the taste of its burgers to suit local tastes with a Polycentric approach. There are numerous examples where companies have prospered by considering the culture factor and ha ve used alternatives for both a larger market share as well as sustained competitive edge over rivals.
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– S. A. Ferozie
The writer is a Pune based Businessman now an expert writer on business topics like management, marketing, HR and International Trade.