Last modified on 28 April 2012, at 21:14

Strategy for Information Markets/Globalization

Globalization is the process of accelerated growth, interaction, and integration of economic, cultural, and political activities across different nations. Although globalization has touched most populations, it has spread unevenly. Regionalization is the integration process that builds concrete patterns and networks within a regional space and creates a transition into the global market. It emerges as a response to globalization and can be mutually reinforcing [1]. Regions throughout the world are known to be as diverse as the inhabitants that occupy them. Technological advancement has helped integrate regionalization by creating the ability to transport and alter goods with lower costs to different regions. This is especially true with information goods [2].

One of the main components that arise from globalization and regionalization is price discrimination. Price discrimination is when a provider sells identical goods or services to different buyers for varying prices, which exists because of the assumption that people are willing to pay varying prices for the same product. By use of price discrimination, companies can increase their profit potential while maximizing their share in their market. International price discrimination involves the process of the sellers pricing products differently depending on country or region.

By having varying regions it is tremendously important for companies to specialize their products for each different region. This process is better known as localization. Relating localization to information goods is one of the most pertinent aspects to consider when expanding products to different regions across the world. There are many aspects to consider when localizing a product, including legal, cultural differences, graphics, language, and overall themes. Costs of localization can differ based on how much time and work is put into the process [3]. This leads to price discrimination when the company is able to identify the different groups who desire the product, and then permits different prices for varying regions based on the consumer’s willingness to pay. localizing products additionally helps to avoid arbitrage, which happens frequently when suppliers price discriminate.

Positives aspects of Globalization:Edit

  • As more money is spilled in to developing countries, people living in those countries are stated to have a greater chance to succeed economically, and have a greater standard of living.
  • Globalization increases competition, which helps maintain low prices in theory.

Negative aspects of Globalization:Edit

  • While outsourcing creates jobs for one population and lower costs, it eliminates jobs from another country, often leaving people unemployed and without opportunities in certain specializations.

sources http://geography.about.com/od/globalproblemsandissues/a/globalization.htm

LocalizationEdit

Localization is a very important component of globalization. It is the process in which a business adapts their product or service for use in the specific market being targeted. Sometimes referred to as “L10N”, localization follows internationalization as the second phase in the globalization. Although there is no concrete definition of Internationalization, it is viewed by many as increasing the participation of businesses in international markets[4]. As globalization reaches new places, the idea of localizing goods specifically for that region based on language, culture, and overall desired look are equally important. Localization of technology goods, such as video games or software, has become an area of specialization in development industries to the point where it is an essential activity of production[2].

Brief HistoryEdit

The following explains a brief history of localization and how it became a multi-billion dollar professional industry [3]. Before localization started companies did not have the time to create the same products for different regions. In the mid-1980’s, the first multi-language vendors were formed. INK, which is now Lionbridge, focused in the management and translation aspects of the software industry. Extended outsourcing began in the early 1990’s which enabled companies to tests multiple language versions of their products to see if they worked. This created a positive aspect to localization which made the idea of localizing products to specific regions very attractive. In 1990, the Localization Industry Standards Association (LISA) was founded. It brought together IT industry and localization service providers [3].

CostsEdit

In the localization process the developer not only needs to consider the common requests from specific regions, but also the costs of localizing its good or service to ensure that it is worthwhile. The costs of localization for a company can be reduced or dramatically increased depending on the time taken to localize a product. Developing a product in a means that guarantees a streamlined localization process will reduce a company’s cost. Costs for the localization of a product are primarily dependent on two constraints: desired turnaround time, and the desired quality of the completed localized product. The cost drivers of this localization process are translation, publishing, engineering, and project management. Engineering costs, being the costs incurred during software changes, can be compounded depending on the amount of languages or areas the company plans to target. Engineering can also help the long term costs if a company externalizes all components of a software application to ensure they can be translatable.

Translation and publishing costs include translation, editing, and proofreading the source text into the targeted language, in which the costs are incurred on a per-word or per-page basis. An example of this is ensuring that accented characters are displayed correctly if producing a text enabled game or software. If accents are on the wrong characters it creates extra costs as well as time to go back and correct. The translation process requires a lot of time to review the translations and improve their quality. A problem with showing text on a product is text truncation. This occurs when sentences are written in English, which is the original language for many games, DVDs and more, are on average 30 percent longer in another language. If a company judges the characters wrong and during testing realizes the sentences are too long and do not fit, it will increase costs for the resizing of the text. This is why project management costs might be the most important. An experienced management system can be expensive, sometimes 10-15% of the total localization costs, but can successfully guide the localization to be more efficient and minimize additional costs for later changes [5]. Overall, simple sentence structures are easiest to translate and reduce costs, while project management can successfully guide the localization process to be more efficient and minimize additional costs. [3].

Regional LockoutEdit

This is the programming practice, code, or physical barrier used to prevent the playing of media designed for a device from the country where it is marketed on the same version of the device marketed in a different country. The video game industry, more specifically Nintendo, was the originator of regional lockout. For instance, an American Nintendo unit would not be able to play a Japanese game because the games are shaped differently, depending on the region it originated in [6]. It has spread to different industries as technology increases, such as the film industry with DVDs. The region code for DVDs is a method that allows movie studios to control many aspects of the release of a movie. For instance, a studio is allowed to control when they release certain movies to different regions and the price that movie is able to sell at in a specific region. Some argue this is not good for certain regions of the world where movies may not even be shown in there area. An example of this is Australia. In Australia, movie studios tend to charge a higher price because the consumers are willing to pay those prices there [7]. This may also lead to piracy as consumers may discover alternatives to prices they are willing to pay.

Examples of localizationEdit

Examples of localization can be seen in many different information goods. Video games, movies, magazines, websites and the fast food industry, are all considered information goods that can be localized in order to appeal to a specific market. Changing the language of the good is the most obvious way to appeal to multiple areas, but other adaptations are also very important when it comes to customizing a good for a certain region. Cultural differences, legal differences, packaging, and graphics are all things that can be modified, as well as language in order to make the product seem more localized.

Localization may seem easy for some information goods, but it can be costly if it is not localized properly. Creating a product to meet the global demand would be a sound strategy for submitting your product into the globalization strategy, however sometimes localizing the good or service is the more profit-maximizing choice for firms. Listed below are a few examples of successes and failures of localization.

Microsoft Windows - Microsoft adapted its versions of Windows operating system specifically for certain countries and emerging markets. There are 25 fully localized versions and over 33 multilingual user interfaces. The localized versions are language specific and create new opportunities for others to use Microsoft’s service. The Multilingual User interface is made up of files that are language specific which can be downloaded to create a more adaptive English version of Windows [8].

World of Music - Certain artists localize their product while other artists globalize them. The United States and Europe tends to have more globalized music which is what other artists follow if they want a larger audience. In Spain the artists localize their music to particular areas or where they are from instead of globalizing their music to the Western standards. Latin America on the other hand, tends to create a more global product. Shakira and Juanes are from Columbia and they tend to have a more westernized sound. Even though these artists localize a few songs to their country, many of them use beats and styles as music that are normally globalized [9].

Video Game Localization It would be ideal for the developers of a video game to keep a similar feel when distributing their product to other locales. However in order to make it more appealing to the customer and maximize satisfaction, many firms alter each international version to make it more appealing and pertinent to the consumer’s culture. The first two aspects to change when localizing a video game are translating the language and possibly altering cultural references if possible. Linguistics for a video game includes packaging, the manual, subtitles, dubbed scripts and other types of texts in format only similar to utility software such as a word processor or an Internet browser. The culture differences between the eastern and western worlds are quite drastic. When games are driven more by story than action, adjusting the cultural aspects of the game can be challenging because of all the premises the designers are taking for granted in the expansion of the plot. Another interesting trend that has presented itself to videogame producers is that Asian gamers seem to prefer more child-like characters, while Western countries seem to enjoy more realistic adult features on their characters. A clear-cut example of this is the popularity of anime culture in Japan. Cartoon-like video games have had success in the United States to some degree, however the influence is nowhere near the impact it has on the Japanese. In the United States games such as Call of Duty and Halo have proved to be extremely popular, gathering somewhat of a cult following.

Fast Food Industry The fast food industry is very adept to customizing their advertisements, marketing strategies, menus and restaurants to fit into certain cultures. McDonalds and Pizza Hut are great fast food examples that are prone to localization. McDonalds for instance in Malaysia has a billboard advertising a beef “Prosperity Burger” sold during Chinese New Year. The burger is made to please local tastes with spicy black pepper sauce and sliced onions on top. As with all major fast food chains in Malaysia, the beef and chicken is Halal to ensure that all customers, including those of Islamic faith, can dine there. In the United States, fast food chains provide quick, inexpensive meals. Eating there is no special occasion for the average customer and often merits little marketing strategy suggesting that it is a place to spend time with family. However, dining at an establishment like McDonald’s or Pizza Hut is a special occasion in Malaysia, as it is in many other countries around the world. The menu is more expensive offering different items than most local options and these venues usually have waiters and nicer interiors to entice local customers into eating a meal for a Western dining experience. http://advocacynet.org/wordpress-mu/mskouras/2011/03/18/fast-food-advertisements-localization/

Specific regional concernsEdit

Background on Asian CensorshipEdit

Information censorship in Asia, especially in China, has been a growing concern for the countries, foreign governments and for human rights organizations. As Asian economies become increasingly more important and influential in international trade, many are viewing media and Internet censorship in these countries as a potential problem and barrier to free trade. The Council for Foreign Relations argues that China and many of the other Asian countries who participate in strict censorship are simply using information censorship as a means to maintain power. As China’s economy and the economies of many other Asian countries, such as India, grow larger, it is apparent that there is pressure on their governments to loosen the barriers they place on media and other information outlets.

China’s obvious influence over the region and their emergence as a leader in the global economy makes it a particularly interesting and important country to focus on. Certainly most of the work that has been done on censorship in the region has focused on China; more specifically, its restrictions and regulations on the Internet. Their strict regulations and policies, coupled with their increasing proportion of real global output - as well as China’s influence over other governments in the region - merit observing China as an example.

Many sources have cited China as having some of the “most rigorous” Internet censorship in the world. Jongpil Chung writes in an article for Asian Survey:

“… [China] employs strong, sophisticated control over what its people read, see, and hear. The Chinese government has been obsessed with ensuring that its people have access to “correct” information that supports the state’s propaganda.”

An example of the scale in which China censors information involves several American companies. Toward the end of the technology boom "Amnesty International" (a human rights organization involved greatly in researching this particular subject) cited many companies as participating in knowingly providing China technology which they knew would be used to restrict information. This accusation was made in a report published in November 2002. Although many companies denied that they actually “knew” about how the technology would be used, the accusation sparked further investigations into the level of censorship in China and how exactly they were acquiring and using technology to restrict information.

China repeatedly denies that it censors information to the degree others claim, and denies Amnesty International’s claim that it imprisons violators of media or Internet censorship laws; although Amnesty International refutes this. There is strong evidence, however, to suggest that China has used tools to censor information and media. One example of this is the Golden Shield Project, nicknamed “The Great Firewall of China.” China openly admits the ongoing existence of this project, which happens to block IP addresses at Internet gateways, making it impossible for one to access the site. The project is also claimed to survey information on the Internet to ensure it is suitable for viewing by citizens.

Most of China’s censorship laws can be attributed to the political structure of China and the ongoing debate between the countries two leading political parties. The opposing parties frequently discuss the role of the internet, as one party sees it as a threat to central power within China, and the other sees it as a required tool for modernization and economic development. This important debate will impact China in the future economically, and the future of censorship, particularly internet censorship, within the country. The result of this debate thus far is the loosening of some laws and a better flow of non-censored information in the country. However, given the remainder of the world’s adherence to the relative freedom of information, how much China adheres to its basic principles of government; even though many have been quick to point out the potential that lies with opening up channels of information. If any more progress is made beyond this point in opening up China’s tight restrictions, it will be due to the growth of China’s economy and their gradual openness to free trade policies.

Although China provides the most prevalent example of Censorship in Asia, and certainly a model for how many other Asian nations censor information, it is still important to consider other countries. As different countries have various background and economic systems, only appropriate strategies will help improve the development of globalization.

Strategies for Successful Business Involvement in AsiaEdit

Current trends in international trade have certainly made it increasingly important for individuals, especially those involved in business, to be well educated on how to conduct themselves in the global environment. The globalization of many American industries and businesses has increased the demand for individuals who can optimize results in interacting with other nations in ethical ways. This section will use the information presented in the previous section to recommend how exactly American businessmen and women can maximize their respective company’s potential in dealings with Asian countries with regards to their laws and customs on censorship. This will not, however, be a comprehensive guide by any means. Many other factors have to be taken into account above how to comply and work around Asian censorship laws in order to maximize success in dealings in Asian countries and business environments.

Companies who manage to find success in Asia’s political and business environments are typically well aware of their censorship laws and work under the assumption that they need to change their business practices in order to incorporate them into the Asian system. Whether the company is looking to outsource jobs to Asia, or plans on selling a product in there, or even plans on setting up a portion of their business in Asia, respect for their censorship laws is a contributing factor to the success of that company.

Groups of "internet giants" like Google, Yahoo, and Microsoft are coming together with organizations such as the Center for Democracy (CDT) and Business for Social Responsibility in order to answer some of the questions involving international business with countries that censor their web content. Firms operating in countries such as China, India, and many other Southeast Asian countries may question such as how far they are permitted to go in challenging local laws and orders. In order to answer these questions, the organization looks to produce a set of principles guiding company when it comes to dealing with a country that faces laws, regulations, and policies that threaten human rights. Indrajit Basu (10/1/10). "Internet giants to tackle China's censorship". http://www.atimes.com/atimes/China_Business/IB13Cb01.html. Retrieved 1 December 2010. 


ReferencesEdit

  1. Oman, Charles (1996). "The Policy Challenges of Globalisation and Regionalisation". OECD Development Centre Policy Briefs. 
  2. a b Thayer, Alexander (2004). "Regional follows global: strategy mixes in the world automotive industry". European Management Journal. 
  3. Susman, Gerald (2007). Small and Medium-Sized Enterprises and the Global Economy. 
  4. Soloduk, Judith (2007). "A General Discussion of the Translation and Localization Cost Drivers". Language Technology Center. 
  5. Kent, Steven (2001). The Ultimate History of Video Games: The Story Behind the Craze that Touched our Lives and Changed the World. Prima Publishing. 
  6. Hu, Brian (2006). Closed Borders and Open Secrets: Regional Lockout, the Film Industry, and Code-Free DVD Players. 
  7. Schäler, Reinhard (2003). Making a Business Case for Localisation. 
  8. Spyridakis, Irini (2009). "Multimedia and culture: Globalization vs. localization of world music videos in the internet age". International Professional Communication Conference.