Management Focus

Management Focus

Cost Reduction and Local Responsiveness Matrix

Different Companies and Their Strategies

Procter & Gamble would be in the center right-hand part of the figure. This is a position of high demands for regional responsiveness and average demands for price reductions. P&G provides personal and home maintenance systems, which do face demands for regional responsiveness. Although these items are not categorized as commodities, there is much competition in the industry, which indicates an average level of price reduction. The Procter & Gamble possesses the combination of both the transnational strategy as well as the localization strategy. This means P&G have moderate pressures for cost reduction whereas high pressures for local responsiveness.

IBM would be in the higher center part of the figure. This is a position of average stress for regional responsiveness and remarkable for price reductions. There is an average amount of stress for regional responsiveness for IBM items, due to technology variations and varying current specifications for electronic items across nations. IBM is in a very aggressive industry, and price pressures are great. IBM holds the mixture of global standardization strategy and transnational strategy. This explains that IBM has high pressures for cost reduction and moderate pressures for local responsiveness.

Nokia produces switch devices and products such as wireless handsets. Therefore, it must personalize its item providing according to the specialized requirements existing in a given nation and would be placed in the lower right hand part of the figure. Nokia has a pure form of localization strategy which determines low pressures for cost reduction and high pressures for local responsiveness.

Dow Chemical and U.S. Steel would both be in the higher left-hand part of the figure. Both Dow and U.S. Steel offer items that are commodity-like by characteristics. Consequently, cost demands would be high and regional responsiveness demands would be low for these items. Dow Chemical and U.S. Steel both depict the global standardization strategy. This shows high pressures for cost reduction and low pressures for local responsiveness.

Lastly, McDonald's and Coca Cola would be in the center left-hand part of the figure. Demands for regional responsiveness would be low because a promoting function for both organizations is the “American pleasure and experience,” and cost decrease pressures would be average. Coca Cola and McDonalds illustrate the combination of global standardization strategy and international strategy. This indicates moderate pressures for cost reduction and low pressures for local responsiveness.

Now, let us have a look on what these strategies actually are which the companies are operating in and in what manner these strategies differ from each other;

Global Standardization Strategy

A worldwide standardization technique may be appropriate in sectors where companies have to face powerful demands for cost decrease but with poor demands for local responsiveness. Therefore, it allows these companies to sell a consistent item globally. However, set expenditures (capital equipment) are significant. Nevertheless, these companies are able to take advantage of range financial systems and experience contour effects, because it is able to mass-produce a standard item which can be released (providing that need is greater ...