Release Date: 05 April, 2017

Factors Driving Globalization of Business and Markets

Professor Naresh K Malhotra, Georgia Institute of Technology Lecture at Wits Business School on 30 March 2017

One the world's most influential marketing research scholars spoke to faculty and students at the Wits Business School last week about globalisation in the current world context.  Noting trends toward protectionism in the United States and Europe, Prof Naresh Malhotra reminded the audience that the primary factors driving the globalisation of business markets remain unchanged.

Among these factors are slow growth and market saturation in traditional high-income countries.  The Georgia Tech professor illustrated the attractive potential of emerging markets quoting the results of a recent Coca-Cola corporate presentation.  Coca-Cola is the market leader in the USA and China.  However, while Americans consume more than 400 servings of Coca-Cola per year on average, the Chinese consume less than 40 servings.  As a nation however, China is growing much more rapidly economically and therefore the potential for higher growth in China is obvious. 

Technology is another important factor driving globalization.  The luxury goods manufactured Tiffany's found that, although Japanese consumers preferred products from their own country due to high quality, fashion preferences favored international luxury trends.  Tiffany's marketing strategy made careful use of technology, such as the Internet. 

Global competition is another marketplace globalisation driver.  Several firms such as Colgate-Palmolive and Unilever have had excellent success by pursuing globalisation and localisation as key marketing strategies. 

The importance of emerging markets is now illustrated the fact that American companies now conduct almost as much business overseas as they do in the USA.  For many leading firms there, more than 50% of production, sales and profits can be traced to overseas locations.  In fact, leading multinational American firms now pay more tax to foreign governments than the USA.  For South Africans, this means taking steps to learn more about international markets. 

Notwithstanding trends toward protectionism currently at play in the world economy, Prof Malhotra noted that there was the likelihood that the trend toward marketplace globalisation would be reversed. 

He urged the audience to think like global citizens, seeking to understand diversity around the world, and ways to effectively respond to it.  He outlined several ways to develop a global mindset, including internship opportunities with multinational companies, study abroad programs, social projects, foreign travel and keeping up to date with foreign news.  In this vein, he strongly endorsed the Wits Business School MBA programme requirement that every student take part in one of the School's overseas study visits. 

 Dr. Naresh Malhotra is Senior Fellow, Georgia Tech Center for International Business Education and Research and Regents’ Professor Emeritus at the Georgia Institute of Technology.  He is widely recognized as one of most influential marketing research scholars of all time.

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