The effect of globalization on marketing strategy and performance in an organization

6 June 2016

Empirical studies
These studies explain on how globalization effects influence firm’s international marketing activities and performance. The empirical studies based on two studies which were investigated such as the effects of globalization on firm performance and examine the role of firms’ cooperation in alliances in enhancing their performance amid globalization by specifically focusing on co-marketing alliances and International marketing performance of firms. The two studies included in this dissertation are designed to study the relationships between these two effects of globalization on firms’ performance and their international marketing cooperation and performance. The following are the different scholars tried to explain on how the globalization affect the area of business.

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According to (Deardorff and Stern, 2002; Jones, 2002; Orozco, 2002; Richmond, 2002),dramatic changes in the business environment that cause shifts in business conduct and marketing activities of firms around the world include, for example, the emergence of global markets for goods and services, labour, and financial capital, advances in technologies, and a reduction in traditional barriers to trade and investment. These changes have resulted in two significant globalization effects such as the emergence of global market opportunities and threats which are the two most often cited effects in globalization related literature (Contractor and Lorange, 1988; Fawcett and Closs, 1993; Hitt, Keats, and DeMarie,1998; Molle, 2002).

Due to the emergence of global market opportunities and global market threats, firms have been forced to respond quickly to these effects. Unlike other environmental changes, the effects of globalization are far more pervasive affecting every individual, business, industry, and country (Garrette, 2000). The environment surrounding business today is characterized as a “hypercompetitive” environment a faster and more aggressive competitive environment (D’Aveni, 1994; Harvey and Novicevic, 2002). Major forms of business restructuring in response to the dramatic changes brought by globalization include, for example, investments in new technologies, downsizing and reengineering, the formation of strategic alliances and networks, and a shift from international and multinational to global and transnational strategies(Jones, 2002).

Since the effects that global market opportunities and threats have on firm performance are almost unexplored, on the one hand, it is suggested that global market opportunities enable firms to access worldwide resources and expand into many new overseas markets; thus, enhancing firm performance (Hafsi, 2002; Jones, 2002; Levitt,1983; Shocker, Srivastava, and Ruekert, 1994) and on other hand global market threats can be destructive to firm performance due to an increasing number of competitors and an increase in intensity of competition coupled with higher market uncertainty (Eng, 2001; Fawcett and Closs,1993; Hafsi, 2002; Jones, 2002; Levitt, 1983; Sanchez, 1997).

The fact that globalization is affecting business is undeniable since we have witnessed remarkable changes in the business environment that have caused transformations or alterations in business conduct and marketing activities of firms around the world. To achieve superior marketing performance in the globalization era, firms need to manage relationships with partners, customers, and different parties in the value chain (Webster, 1992). As a result, there has been an increasing trend towards more cooperation among firms (Evans, 2001; Hoskisson,Hitt, and Ireland, 2004).

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