Friday, October 3, 2008

To homogenize or not to homogenize - that is the question.

Today many companies "expand" internationally simply by buying foreign companies. The foreign company is seen as a good strategic investment, either for its success, or for its potential. These mergers and buyouts happen in corporate boardrooms. Only afterwards is serious thought given as to how the buying company "brings the new products into its fold". Many times the foreign companies purchased produce similar products to the buying company. In this way the buying company reduces foreign competition and gains a readymade foothold into a new foreign market. Typically the new multinational seeks to homogenize its branding and products, but much confusion exists as to what limits, if any, should be established for this homogenization process.

Here are just some of the issues:
1) The indigenous brand is recognized and associated with a certain quality image. To what extent is the new overseas brand recognized and appreciated? Very often Western companies imagine that foreign nationals perceive the company with the same admiration as the Multi-National's Chief Marketing Officer. Furthermore, Western companies in particular are liable to forget that in a foreign national's mind, the Multinational's country of origin and its history of interaction are closely linked with the brand image itself.
2) Homogenizing publicity sounds great as it might reduce overall marketing costs, but do you know for sure that all the material is as desirable, as effective or even as acceptable in the new country?
3) Any homogenization process essentially imports significant amounts of the buying company's culture onto the brand image in the new country. To what extent may you lose national brand loyalty and identity in this process? This may also affect planned expansions into new same/similar language countries.
4) What are the differences between the buying country's products and the new country's products. Should they be kept distinct? If they are unified will a significant functionality be lost? Could that functionality be added to the buying company's product?

With these and many other questions, companies often purchase and act, then seek to "clean up". How much time, money and energy could be saved if some of these questions were answered before going ahead with operational decisions?

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