Start-up ABC has just received its first round of funding. Its founders have hired bright geeks on generous salaries and a promise of stock compensations. The concept is simple: make global news, entertainment and information content available locally and make local content available globally. It is backed by a technology giant.
Now, you might ask: “Doesn’t social media do this already?” But ABC’s CEO says social media isn’t really geared to handle this. He has other ideas. He says ABC is the purest form of a ‘glocal’ play. But before we try and decode what he is aiming at, let us understand the terms local, global, and anything in between.
Local and global
Businesses were local to start with. They went after bigger markets, when opportunities in the local markets were exhausted. Some of them sourced their raw materials from other countries, while being local (catering to local markets); other global businesses went a little further by producing their wares in overseas markets, using locally sourced raw materials and labour. This gave them a labour and transportation cost advantage — they localised their products.
Local or global, what they sold remained almost identical, irrespective of where they sold it. The machinery industry is a good example — printing presses, machine tools and textile machinery designed and produced in Germany, Italy, the UK, Japan and many other industrialised countries, get exported all over the world. Eventually, some localisation takes place.
The passenger car industry is another example. Today, many countries have well-developed auto component industries to support local manufacture of cars that were originally designed in another country. They have localised their sourcing, manufacturing, and service, while using global product designs.
However, industries like food and beverages and media needed locally designed offerings to achieve growth in different markets, since consumption is driven by local tastes and preferences. Taboos specific to different regions also needed to be dealt with. Companies like McDonald and KFC developed local menus, which they pushed through their globalised delivery processes and store designs.
Unilever in India went in for sachets to sell shampoo at lower price points. Maruti Suzuki started designing their new cars in India, producing for local markets and exports. It relied on its global know-how, and used engineering and design resources in India. Such practices needed a new word — ‘glocalisation’.
Market forces and local regulations made their impact even on business models — Uber started accepting cash payments and incorporated more stringent driver verification processes. The advertisement industry is another example of glocalisation. Global advertising agencies convert their global campaigns into ones targeted at specific markets. They change the language, script, and even the models, while retaining the basic themes or messages.
Local: Products for local markets, produced near the markets, using local processes and mostly local sourcing.
Globalised: Near identical (with some local adaptations) products in global markets, produced in a limited number of locations, with local and global sourcing
Glocalised: Products designed for different markets, produced near these markets, using a hybrid of local and global processes and sourcing.
ABC’s CEO says, “People don’t like restrictions. They want to know what is happening locally as well as what is taking place in some remote corner of the world. They are not happy with local editions of global news sites, which miss important developments in both areas. Local news sites, like city or region specific sites, have some global content but it is dated. It takes multiple visits to different sites to get what one needs.
“Then there are the curated news sites — these too fail to meet the changing needs of consumers. We must design our glocalised business based on clear specifications so that we neither get trapped in local factors nor get blinded by global practices,” he concludes.
ABC is, in effect, aiming for ‘production’ and ‘sourcing’ in different locales for consumption in suitable ‘mixes’ anywhere in the world. This business design is not product-centric. In fact, it is doing away with ‘products’ and focusing on discovery at both ends of the chain.
A different take
Companies like ABC now have a different take on glocalisation. It has now come to mean a synthesis of market offerings, not just for specific markets or cultures but also for individuals in different situations. Global and local resources of products, design know-how, processes, people, sources and technology are brought together to come up with entirely new business models and achieve the best competitive advantage.