Standardization Vs Differentiation in International Management

INTRODUCTION

The terms of standardization and differentiation have been a subject of debate in the past decades. Economists, managers and social scientists have been trying to find the right terms which will include the exact meaning of standardization and differentiation (Medina and Duffy, 1998)

Additionally, this paper is going to focus on how standardization and differentiation became a management strategy and how they interact with each other within the framework of international management. In order to understand what the well known phrase "think global act local" (Vignali, 2001) really means.

The elements of management functions as well as the 4Ps' analysis will be our basic tool in order to understand whether standardization or differentiation helps the global brands to establish their products and therefore work effectively through international management.

MANAGEMENT FUNCTIONS

In order to achieve their goals and objectives, organizations have to implement certain management concepts. No matter whether an organization is small or big, local or international, it needs to focus on the basic management functions which are: Planning, Organizing, Leading and Controlling.

Figure 1: The Functions of Management

Source: http://ollie.dcccd.edu

MANAGEMENT FUNCTIONS

STANDARDIZE or DIFFERENTIATE

PLANNING

When an international organization implements standardization tactics, then the objectives and means in the planning process coincide. For example one of the aims of Mc Donald's, as Vignali stated (2001) "is to create a standardized set of items that taste the same whether in Singapore or Spain".

The question is whether a company prefers standardization or differentiation, and also how and in which areas of the management functions do they implement it to.

Their preference to standardization "… is built on the assumption that customer needs and interests as well as market structures are becoming increasingly homogeneous worldwide" (Schuh, 2007) and this allows them to standardize not only their products but also the marketing elements. (Schuh, 2007)

In order to achieve standardization, managers of Multinational Companies take under consideration the benefits of standardized processes, which mainly are:

- Lower costs of production through economies of scale and lower product variety