Globalisation fmcg industry structure

Globalization today

Whether at the Monterrey headquarters or on the road, the chief executive officer can tap into his computer to check kiln temperatures in Bali or cement truck deliveries in Cairo. In August , Fonterra announced a joint venture with Future Consumer Ltd which will produce a range of consumer and foodservice dairy products. An aggressively low price, combined with heavy promotion of this kind, would have overcome previously expressed preferences for particular features. How common needs, tastes, and preferences will vary greatly by product and depend on such factors as the importance of cultural variables, disposable incomes, and the degree of homogeneity of the conditions in which the product is consumed or used. The Earth Is Flat The differences that persist throughout the world despite its globalization affirm an ancient dictum of economics—that things are driven by what happens at the margin, not at the core. Data do not yield information except with the intervention of the mind. The world is becoming increasingly informed about the liberating and enhancing possibilities of modernity.

In cases of successful challenge to prevailing institutions and practices, a combination of product reliability and quality, strong and sustained support systems, aggressively low prices, and sales-compensation packages, as well as audacity and implacability, circumvented, shattered, and transformed very different distribution systems.

They are also relevant as a matter of public policy as governments attempt to shape effective policies to attract and retain the most attractive industries, and companies must anticipate changes in global competition and locational advantage.

Manufacturing and globalization

The system has a profound impact on the way companies operate throughout the world. Corporations sell standardized products in the same way everywhere—autos, steel, chemicals, petroleum, cement, agricultural commodities and equipment, industrial and commercial construction, banking and insurance services, computers, semiconductors, transport, electronic instruments, pharmaceuticals, and telecommunications, to mention some of the obvious. In North America, South America, Europe, Southern Africa, and Asia, regional parts production tends to feed final assembly plants producing largely for regional markets. They exemplify a general drift toward the homogenization of the world and how companies distribute, finance, and price products. A better question is how global an industry is, or is likely, to become. So why are some industries more global than others? Some are socialist, some monarchies, some republics. If a company treats the world as one or two distinctive product markets, it can serve the world more economically than if it treats it as three, four, or five product markets. The opportunities to win should be focused on two price tiers in the market—both low-priced offerings as well as premium products, with emphasis on the modern channel. This, in turn, attracts suppliers to the industry. Trouble increasingly stalks companies that lack clarified global focus and remain inattentive to the economics of simplicity and standardization. India has a large base of young consumers who form the majority of the workforce and, due to time constraints, barely get time for cooking. With more than half of its customers coming from outside Cemex, the operation has already become hugely profitable. The influence of governments in global markets is captured further in the fourth proposition.

For a more detailed discussion, see Exhibit 1. Even here, upward shifts in interest rates in other parts of the world attract capital out of the country in powerful proportions.

globalization in business

But the fact that an industry is not truly global does not prevent global competition. Instead of adapting to superficial and even entrenched differences within and between nations, it will seek sensibly to force suitably standardized products and practices on the entire globe.

globalisation of production and markets

Fiber optics link the system, and satellite communications are used to connect remote outposts. In contrast to regulated competition, in which government policy has a direct impact on individual companies, however, government intervention in political competition often pits one country or region of the world against another.

In Brazil, thousands swarm daily from preindustrial Bahian darkness into exploding coastal cities, there quickly to install television sets in crowded corrugated huts and, next to battered Volkswagens, make sacrificial offerings of fruit and fresh-killed chickens to Macumban spirits by candlelight.

Globalisation in international marketing

The opportunities to win should be focused on two price tiers in the market—both low-priced offerings as well as premium products, with emphasis on the modern channel. Selling a line of products individually tailored to each nation is thoughtless. The dominant location of global industries also poses interesting questions. How can they customize products for the demands of new markets? Gradually and irresistibly it breaks down the walls of economic insularity, nationalism, and chauvinism. Here, factor costs are a primary determinant of global competitiveness. The appliance industry illustrates this. Not only does it use more labor-intensive production processes—it also designs and builds the capital equipment for its plants locally. The Hoover case illustrates how the perverse practice of the marketing concept and the absence of any kind of marketing imagination let multinational attitudes survive when customers actually want the benefits of global standardization. Here, we look at trends in a few select countries.

Second, the commitments already made by industry participants and governments may spell opportunity or impose constraints for years to come.

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The Globalization of Markets