In a short essay, discuss the impact of market globalization on consumer lifestyles and preferences around the world. Provide examples to illustrate your answer.
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COURSE: INTERNATIONAL BUSINESS (INE2028-E)
MID-TERM EXAM
Time: 60 minutes
Name: Luong Thi Yen
DOB: 30/09/2001
Class: INE2028-E * 1
PART I: SHORT ESSAYS (40 points)
In a short essay, discuss the impact of market globalization on consumer lifestyles and
preferences around the world. Provide examples to illustrate your answer.
PART II: CASE ANALYSIS (60 points)
Vodafone in Japan
In 2002 Vodafone Group, based in the United Kingdom and the world’s largest provider
of wireless telephone service, made a big splash by paying $14 billion to acquire JPhone, the number three player in Japan’s fast-growing market for wireless
communications services. J-Phone was considered a hot property, having just launched
Japan’s first cell phones that were embedded with digital cameras, winning over large
numbers of young people who wanted to send photos to their friends. Four years later,
after losing market share to local competitors, Vodafone sold J-Phone and took an $8.6
billion charge against earnings related to the sale. What went wrong?
According to analysts, Vodafone’s mistake was to focus too much on building a global
brand and not enough on local market conditions in Japan. In the early 2000s,
Vodafone’s vision was to offer consumers in different countries the same technology,
so that they could take their phones with them when they traveled across international
borders. The problem, however, was that Japan’s most active cell phone users, many of
them young people who don’t regularly travel abroad, care far less about this capability
than about game playing and other features that are embedded in their cell phones.
Vodafone’s emphasis on global services meant that it delayed its Japanese launch of 3G
phones, which allow users to do things such as watch video clips and teleconference.
The company, in line with its global branding ambitions, had decided to launch 3G cell
phones that worked both inside and outside Japan. The delay was costly. Its Japanese
competitors launched 3G phones a year ahead of Vodafone. Although these phones
worked only in Japan, they rapidly gained share as consumers adopted these leadingedge devices. When Vodafone did finally introduce a 3G phone, design problems
associated with making a phone that worked globally meant the supply of phones was
limited, and the launch fizzled despite strong product reviews simply because consumers
could not get the phones.
Questions:
1. Why do you think Vodafone was pursuing the global standardization
strategy in the early stages after purchasing J-Phone?
2. Why is this strategy ineffective in Japan?
3. What should Vodafone do differently?
ANSWER
PART I: SHORT ESSAYS
In a short essay, discuss the impact of market globalization on consumer lifestyles and
preferences around the world. Provide examples to illustrate your answer.
The development of the market economy, the continuing process of globalization,
technological progress, and rising living standards have created a kind of consumer
culture in which people strive to best meet their needs.
With market globalization, the consumers had a chance of not only buying quality
products from different parts of the world, but they were also able to choose the products
that they perceived as the highest quality. It also increases the level of consumption as
consumers are able to source cheap products from international markets that they can
afford in large quantities. For example, When the economy opened up and developed,
owning a smartphone was extremely easy and cheap. On the Vietnamese market today,
there are many different phone brands such as Samsung, Vivo, Apple, … with affordable
prices.
As globalization increases, the world is becoming smaller and the consciousness
of the world as a whole is intensifying rapidly. As a result of these global market trends,
a wide range of brands bring a variety of cultures to a consumer population that is also
growing culturally diverse. Another behavioural aspect that globalization changes is the
use of products such as the attire that is worn by the local population.
The impact of globalization can easily be deduced from the actions of consumers
who change their lifestyles post exposure to the global culture. For example, Young
people today have a western lifestyle or dress according to Korean trends.
PART II: CASE ANALYSIS
1. Why do you think Vodafone was pursuing the global standardization
strategy in the early stages after purchasing J-Phone?
Vodafone was pursuing the global standardization strategy in the early stages after
purchasing J-Phone because it wanted to focus on increasing profitability and profit
growth by reaping the cost reductions that come from economies of scale, pursuing a
low-cost strategy on a global scale.
Vodafone prefers to market a standardized product worldwide so they can reap the
maximum benefits from economies of scale. They created a global brand and cut costs
by introducing a large number of handsets that could be sold throughout the world.
Besides, Vodafone wanted to use their cost advantage to support aggressive pricing in
world markets.
2. Why is this strategy ineffective in Japan?
Vodafone’s mistake was to focus too much on building a global brand and not
enough on local market conditions in Japan. They did not research the Japanese market
well enough because instead of foreign products, Japanese consumers prefer to choose
domestic brands. They should have researched the wants and desires of the Japanese
consumers.
In Japan, Vodafone mainly sells to young people who don't travel a lot and don't
value the global portability of the company's phones. Instead, Japanese consumers are
more interested in other features like games and cameras. Similarly, Vodafone did not
bring 3g to Japan quickly enough. They should have realised the extent of their
competitor's abilities and paid more attention to the advanced communication
technology in Japan.
3. What should Vodafone do differently?
Vodafone Japan should also generate a trustworthy brand image in the Japanese
market and tailor their product to the needs of its customers, which is a major way to
lead a success in marketing and company survival.
Vodafone should have used J-Phone’s local knowledge of the market and
combined its experience to research the market, the culture and the competitors more.
The company delayed the introduction of a phone using 3G technology that would
allow users to watch video clips and conferencing remotely because it wanted to
introduce the technology only if there were phones operating inside and outside of
Japan.
