The Globalization
of Markets
Theodore Levitt
Harvard Business Review
1983
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A New Commercial Reality
• Gone are accustomed differences in
national or regional preference. Gone
are the days when a company could sell
last year’s models-or lesser versions of
advanced products-in the lessdeveloped world. And gone are the
days when prices, margins, and profits
abroad were generally higher than at
home.
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Why does it happen?
• The ubiquity of desire for the most
advanced things that the world makes
and sells - goods of the best quality and
reliability at the lowest price
• The world’s needs and desires have
been irrevocably homogenized.
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What should firms do?
• Multinational Corporation vs. Global
Corporation
• the Hedgehog vs. the Fox
– The fox knows a lot about a great many things
– the hedgehog knows everything about one great
thing
• Aggressively seek opportunities to create the
global market
– Do not accept the national differences as given.
– Standardization + low price + modern technology
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Discussion
• Key assumption
– If the price is low enough, they will take highly
standardized world products, even if these aren’t
exactly what they want to buy.
• Good implications for the global strategy
– Warning against an excessive pursuit of product
and service customization
• However, we must be careful not to
overemphasize this trend.
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Case: Microsoft Office
• Microsoft develop its software programs in Seattle and sell
them worldwide
– Global integration and standardization strategy
– Economics of scale / efficient R&D
– Protection of software engineering technologies
• It began to sell the Office software in Korea in late 1980s, but
its market share remained less than 10% for several years.
– The Korean word processor software market was
controlled by a local software house, Hancom.
– Hancom’s software HWP was fully customized to the
needs of Korean users
• e.g. special characters, typing error correction, document format, etc
• Microsoft had to include many new functions in its software
which were originally developed by Hancom for HWP
software.
• Since then, Microsoft’s market share has risen sharply. Now it
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controls over 80% of the market
in Korea.
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Case: Microsoft Office
• HWP still provides better customized functions for
Korean users. Then, why did it lose its market leadership
to Microsoft?
MediaIT’s survey in November 2012
Respndents: 957 university students who tried both products
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