GLOBALIZATION OF MARKETS

Globalization of Markets

Globalization of Markets

Part A

Introduction

“The world's needs and desires have been irrevocably homogenized. This makes the multinational corporation obsolete and the global corporation absolute.” —Theodore Levitt (1983)

They were bold, even breathtaking words at the time. Two decades later, their echoes are still heard at corporate strategy sessions and throughout the halls of academe. They have always sounded with particular resonance at HBS, where, at a two-day colloquium last May, some sixty academics and practitioners gathered to assess the status of globalization and of global corporations, marketing, and brands — the intellectual fiefdom of the School's legendary marketing professor emeritus, Theodore Levitt. The colloquium was pegged to the twentieth anniversary of Levitt's seminal article, “The Globalization of Markets” (Harvard Business Review, May-June 1983), from which the epigraph above is taken.

Still relevant today, Levitt's article caused a minor sensation when it first appeared. Apart from its insightful specifics, its language (“globalization” was a novel term) and expansive vision offered a hopeful alternative to the bleak reality of a world economy locked down in an unproductive Cold War standoff. Levitt argued that advances in communications technology were increasingly inspiring consumers around the world to want the same things. Therefore, he declared, international companies should cease to act as “multinationals” that customized their products to fit local markets and tastes. Instead, firms should become “global” by standardizing the production, distribution, and marketing of their products across all countries. Sameness meant efficiency and would be more profitable than difference. From economies of scale would flow competitive advantage (Kotabe, 19-33).

Much of the framework of the May conference — also titled “The Globalization of Markets”— recalled these and other ideas and developments first discerned by Levitt, now universally hailed as a “marketing guru.” Although he was unable to attend the conference due to sick health, his influence was palpable (Kochan, 41-8).

Virtually all colloquium participants acknowledged a debt to Levitt, pointing to elements of his 1983 article that were prescient then and still useful today. At the same time, however, they noted that marketing and the nature of globalization have changed in the last two decades, to a point Levitt could hardly have imagined. Thus, some of his ideas seem to have been overtaken by time, while other important phenomena, so powerful today, are absent from his article. Yet there was no disputing the significance of Levitt's contribution to the theory and practice of global marketing and to the ongoing assessment of its impact (Jain, 40-45 ). As HBS professor Richard S. Tedlow noted of Levitt's work, “It's all in the question, and Ted Levitt asked the best questions about marketing of anyone.”

The conference, which was cochaired by HBS professors Rohit Deshpandé and John A. Quelch, kicked off with a dinner keynote speech by Sir Martin Sorrell (MBA '68), chief executive of WPP Group. Ranking Levitt's article “among the classic works of marketing literature,” Sorrell nonetheless pointed to what he believes was a principal misjudgment: its view of “the globalization of products as ...