By: Andreas Fried, Director of Business Development & Senior Advisor 

What is glocalization? Glocalization is the concept of developing a product or service strategy that takes the benefits of a global product platform and integrates it with the advantages of product localization.

Just 10 years ago, it was widely believed that the future of global business lay in ever increasing levels of standardization of products and processes. Business-schools taught future leaders to ‘globalize the international strategy and assess the speed of internationalization’. Countries neighboring each other were presumed to assimilate each other’s cultures (Europe treated as a single culture). Companies would develop a global concept that fit a global customer-base which was converging, becoming homogeneous.

Even though this strategy has economic advantages and has worked for some companies – it often backfires or hampers growth potential in many markets. Today, many companies are learning that it pays to have a global product platform to reduce costs married with a local customization of the products and processes to appeal to a cultural demographic. Globalized but localized – glocalized. Global business is moving towards what has been called “mass customization”. New technology will aid in the development, with new production process such as additive manufacturing which will make mass customization truly economically viable.

Getting the feel for glocalization is now seen as an efficient approach to build brand image and a way to generate long-term brand loyalty. As global competition grows fiercer, it’s not enough to have a product that is at 75% of its full potential due to unsuccessful glocalization. KFC is a great example of successful glocalization. While KFC retain its core Kentucky fried chicken concept as a global product platform – in China, it has successfully localized its product portfolio (i.e., its menu). Warren Lui, one of the members of KFC’s management team in China outlines the importance of cultural knowledge and product localization in his book KFC in China: Secret Recipe for Success. Liu states that you need an understanding of China and the Chinese cultural context “so deep that it is intuitive,” to understand the Chinese peoples’ “mixed feelings, of love and hate about the West, to understand Chinese history, language, the influence of Confucianism, Buddhism and Taoism, this is especially important if you are in the consumer goods industry.” KFC’s menu contains many items tailored to the Chinese consumer palate and it has paid off –  the number of KFCs in China has grown to over 3,000, in 650 cities, with one new restaurant opened a day. KFC has even penetrated smaller cities in the interior of China.

The ROI of successful glocalization is significant. In KFC’s case – their Chinese operations now contribute a significant portion of their revenue, around 20%.

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