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The gobalization of markets theodore levitt, Summaries of Economic Growth and Globalization

The globalization of markets in living in the republic of technology, vindication of model T and failure in global imagination.

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22
THE GLOBALIZATION OF MARKETS
Theodore Levitt
Many companies have become disillusioned with sales in the international marketplace as
old markets become saturated and new ones must be found
. How can they customize
products for the demands of new markets? Which items will consumers want? With wily in-
ternational competitors breathing down their necks, many organizations think that the
game just isn't-worth the effort
.
In this powerful essay, the author asserts that welt-managed companies have moved
from emphasis on customizing items to offering globally standardized products that are ad-
vanced, functional, reliable-and low priced . Multinational companies that concentrated
on idiosyncratic consumer preferences have become befuddled and unable to take in the
forest because of the trees
. Only global companies wilt achieve long-term success by con-
centrating on what everyone wants rather than worrying about the details of what everyone
thinks
they might like
.
A powerful force drives the world toward a con-
verging commonality, and that force is technol-
ogy
. It has proletarianized communication,
transport, and travel
. It has made isolated places
and impoverished peoples eager for modernity's
allurements
. Almost everyone everywhere wants
all the things they have heard about, seen, or ex-
perienced via the new technologies
.
The result is a new commercial reality-the
emergence of global markets for standardized
consumer products on a previously unimag-
ined scale of magnitude
. Corporations geared
to this new reality benefit from enormous econ-
omies of scale in production, distribution, mar-
keting, and management
. By translating these
benefits into reduced world prices, they can
decimate competitors that still live in the dis-
abling grip of old assumptions about how the
world works
.
Gone are accustomed differences
in
national
or regional preference
. Gone are the days when
a company could sell last year's models-or
lesser versions of advanced products-in the
Source
: Harvard Business Review
(May-June 1983), pp
.
92
.-102
.
Reading 22 / The Globalization of Markets
307
less-developed world
. And gone are the days
when prices, margins, and profits abroad were
generally higher than at home
.
The globalization of markets is at hand . With
that, the multinational commercial world
nears its end, and so does the multinational
corporation
.
The multinational and the global corpora-
tion are not the same thing
. The multinational
corporation operates in a number of countries,
and adjusts its products and practices in
each-at high relative costs
. The global corpo-
ration operates with resolute constancy-at
low relative cost-as if the entire world (or
major regions of it) were a single entity
; it sells
the same things in the same way everywhere
.
Which strategy is better is not a matter of
opinion but of necessity
. Worldwide communi-
cations carry everywhere the constant drum-
beat of modern possibilities to lighten and
enhance work, raise living standards, divert,
and entertain
. The same countries that ask the
world to recognize and respect the individual-
ity of their cultures insist on the wholesale
transfer to theet of modern goods, services, and
technologies
. Modernity is not just a wish but
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THE GLOBALIZATION OF MARKETS

Theodore Levitt

Many companies have become disillusioned with sales in the international marketplace as old markets become saturated and new ones must be found. How can they customize products for the demands of new markets? Which items will consumers want? With wily in- ternational competitors breathing down their necks, many organizations think that the game just isn't-worth the effort. In this powerful essay, the author asserts that welt-managed companies have moved from emphasis on customizing items to offering globally standardized products that are ad- vanced, functional, reliable-and low priced. Multinational companies that concentrated on idiosyncratic consumer preferences have become befuddled and unable to take in the forest because of the trees. Only global companies wilt achieve long-term success by con- centrating on what everyone wants rather than worrying about the details of what everyone thinks they might like.

A powerful force drives the world toward a con- verging commonality, and that force is technol- ogy. It has proletarianized communication, transport, and travel. It has made isolated places and impoverished peoples eager for modernity's allurements. Almost everyone everywhere wants all the things they have heard about, seen, or ex- perienced via the new technologies. The result is a new commercial reality-the emergence of global markets for standardized consumer products on a previously unimag- ined scale of magnitude. Corporations geared to this new reality benefit from enormous econ- omies of scale in production, distribution, mar- keting, and management. By translating these benefits into reduced world prices, they can decimate competitors that still live in the dis- abling grip of old assumptions about how the world works. Gone are accustomed differences in national or regional preference. Gone are the days when a company could sell last year's models-or lesser versions of advanced products-in the

Source: Harvard Business Review (May-June 1983), pp. 92.-102.

Reading 22 / The Globalization of Markets 307

less-developed world. And gone are the days when prices, margins, and profits abroad were generally higher than at home. The globalization of markets is at hand. With that, the multinational commercial world nears its end, and so does the multinational corporation. The multinational and the global corpora- tion are not the same thing. The multinational corporation operates in a number of countries, and adjusts its products and practices in each-at high relative costs. The global corpo- ration operates with resolute constancy-at low relative cost-as if the entire world (or major regions of it) were a single entity ; it sells the same things in the same way everywhere. Which strategy is better is not a matter of opinion but of necessity. Worldwide communi- cations carry everywhere the constant drum- beat of modern possibilities to lighten and enhance work, raise living standards, divert, and entertain. The same countries that ask the world to recognize and respect the individual- ity of their cultures insist on the wholesale transfer to theet of modern goods, services, and technologies. Modernity is not just a wish but

308 SECTION 5 / MARKETING

also a widespread practice among those who cling, with unyielding passion or religious fer- vor, to ancient attitudes and heritages. Who can forget the televised scenes during the 1979 Iranian uprisings of young men in fashionable French-cut trousers and silky body shirts thirsting with raised modern weapons for blood in the name of Islamic fundamentalism? In Brazil, thousands swarm daily from pre- industrial Bahian darkness into exploding coastal cities, there quickly to install television sets in crowded corrugáted huts and, next to battered Volkswagens, make sacrificial offer- ings of fruit and fresh-killed chickens to Macumban spirits by candlelight. During Biafra's fratricidal war against the Ibos, daily televised reports showed soldiers carrying bloodstained swords and listening to transistor radios while drinking Coca-Cola. In the isolated Siberian city of Krasnoyarsk, with no paved streets and censored news, occa- sional Western travelers are stealthily proposi- tioned for cigarettes, digital watches, and even the clothes off their backs.

. The organized smuggling of electronic equip- ment, used automobiles, western clothing, cos- m.etics, and pirated movies into primitive places exceeds even the thriving underground trade in modern weapons and their military mercenaries. A thousand suggestive ways attest to the ubiquity of the desire for the most advanced things that the world makes and sells-goods of the best quality and reliability at the lowest price. The world's needs and desires have been irrevocably homogenized. This makes the mul- tinational corporation obsolete and the global corporation absolute.

LIVING IN THE REPUBLIC OF
TECHNOLOGY

Daniel J. Boorstin, author of the monumental trilogy The Americans, characterized our age as driven by "the Republic of Technology [whose]

supreme law... is convergence, the tendency for everything to become more like everything else ." In business, this trend has pushed markets toward global commonality. Corporations sell standardized products in the same way every- where-autos, steel, chemicals, petroleum, ce- ment, agricultural commodities and equip- ment, industrial and commercial construction, banking and insurance services, computers, semiconductors, transport, electronic instru- ments, pharmaceuticals, and telecommunica- tions, to mention some of the obvious. Nor is the sweeping gale of globalization con- fined to these raw material or high-tech prod- ucts, where the universal language of customers and users facilitates standardization. The transforming winds whipped up by the prole- tarianization of communication and travel en- ter every crevice of life. Commercially, nothing confirms this as much as the success of McDonald's from the Champs Elysées to th& Ginza, of Coca-Cola in Bahrain and Pepsi-Cola in Moscow, and of rock music, Greek salad, Hollywood movies, Revlon cosmetics, Sony televisions, and Levi jeans everywhere. "High-touch" products are as ubiq- uitous as high-tech. Starting from opposing sides, the high-tech and the high-touch ends of the commercial spectrum gradually consume the undistributed middle in their cosmopolitan orbit. No one is exempt and nothing can stop the process. Everywhere everything gets more and more like everything else as the world's preference struc- ture is relentlessly homogenized. Consider the cases of Coca-Cola and Pepsi- Cola, which are globally standardized products sold everywhere and welcomed by everyone. Both successfully cross multitudes of national, regional, and ethnic taste buds trained to a va- riety of deeply ingrained local preferences of taste, flavor, consistency, effervescence, and af- tertaste. Everywhere both sell well. Cigarettes, too, especially American-made, make year-to- year global inroads on territories previously

3 1 0 SECTION 5 / MARKETING

Of course, large companies operating in a single nation or even a single city don't stan- dardize everything they make, sell, or do. They have product lines instead of a single product version, and multiple distribution channels. There are neighborhood, local, regional, ethnic, and institutional differences, even within met- ropolitan areas. But although companies cus- tomize products for particular market seg- ments, they know that success in a world with homogenized demand requires a search for sales opportunities in similar segments across the globe in order to achieve the economies of scale necessary to compete. Such a search works because a market seg- ment. in one country is seldom unique ; it has close cousins everywhere precisely because technology has homogenized the globe. Even small local segments have their global equiva- Gents everywhere and become subject to global competition, especially on price. The global competitor will seek constantly to standardize his offering everywhere. He will di- gress from this standardization only after ex- hausting all possibilities to retain it, and he will push for reinstatement of standardization whenever digression and divergence have oc- curred. He will never assume that the customer is a king who knows his own wishes. Trouble increasingly stalks companies that aack clarified global focus and remain inatten- tive to the economics of simplicity and stan- dardization. The most endangered companies in the rapidly evolving world tend to be those that dominate rather small domestic markets .with high value-added products for which there are smaller markets elsewhere. With transpor- tation costs proportionately low, distant com- petitors will enter the now-sheltered markets of those companies with goods produced more cheaply onder scale-efficient conditions. Global competition spells the end of domestic territoriality, no matter how diminutive the ter- ritory may be. When the global producer offers his lower costs internationally, his patronage expands ex- ponentially. He not only reaches into distant

ECONOMIES OF SCOPE

One argument that opposes globalization says that flexible factory automation will enable plants of mas- sive size to change products and product features quickly, without stopping the manufacturing process. These factories of the future could thus produce broad lines of customized products without sacrificing the scale economies that come from long production runs of standardized items. Computer-aided design and manufacturing (CAD/CAM), combined with robotics, will create a new equipment and process technology (EPT) that will make smalt plants located close to their markets as efficient as large ones located distantly. Economies of scale will not dominate, but rather econ- omies of scope-the ability of either large or small plants to produce great varieties of relatively custom- ized products at remarkably low costs. If that happens, customers will have no need to abandon special preferences. 1 will not deny the power of these possibilities. But pos- sibilities do not make probabilities. There is no con- ceivable way in which flexible factory automation can achieve the scale economies of a modernized plant dedicated to mass production of standardized lines. The new digitized equipment and process technolo- gies are available to all. Manufacturers with minimal customization and narrow product-line breadth will have costs far below those with more customization and wider lines.

markets, but also attracts customers who previ- ously held to local preferences and now capitu- late to the attractions of lesser prices. The strategy of standardization not only responds to worldwide homogenized markets but also expands those markets with aggressive low pricing. The new technological juggernaut taps an ancient motivation-to make one's money go as far as possible. This is universal-not simply a motivation but actually a need.

THE HEDGEHOG KNOWS

The difference between the hedgehog and the fox, wrote Sir Isaiah Berlin in distinguishing

between Dostoevski and Tolstoy, is that the fox knows a lot about a great many things, but the hedgehog knows everything about one great thing. The multinational corporation knows a lot about a great many countries and congeni- ally adapts to supposed differences. It willingly accepts vestigial national differences, not ques- tioning the possibility of their transformation, not rg ecognizing how the world is ready and eager for the benefit of modernity, especially when the price is right. The multinational cor- poration's accommodating mode to visible na- tional differences is medieval. By contrast, the global corporation knows everything about one great thing. It knows about the absolute need to be competitive on a worldwide basis as well as nationally and seeks constantly to drive down prices by standardiz- ing what it sells and how it operates. It treats the world as composed of few standardized markets rather than many customized markets. It actively seeks and vigorously works toward global convergence. Its mission is modernity and its mode, price competition, even when it sells top-of-the-line, high-end products. It knows about the one great thing all nations and people have in common : scarcity. Nabody takes scarcity lying down ; everyone wants more. This in part explains division of labor and specialization of production. They enabie people and nations to optimize their conditions through trade. The median is usu- ally money. Experience teaches that money has three spe- cial qualities : scarcity, difficulty of acquisition, and transience. People understandably treat it with respect. Everyone in the increasingly ho- mogenized world market wants products and features that everybody else wants. If the price is low enough, they will take highly standard- ized world products, even if these aren't exactly what mother said was suitable, what immemo- rial custom decreed was right, or what market- research fabulists asserted was preferred. The implacable truth of all modern pro- duction-whether of tangible or intangible goods-is that large-scale production of stan-

Reading 22 / The Globalization of Markets (^) S

dardized items is generally cheaper within a wide range of volume than small-scale produc- tion. Some argue that CAD/CAM will allow companies to manufacture customized prod- ucts on a small scale-but cheaply. But the argument misses the point. (For a more de- tailed discussion, see the insert, "Economies of scope.") If a company treats the world as one or two distinctive product markets, it can serve the world more economically than if it treats it as three, four, or five product markets.

Why Remaining Differences? Different cultural preferences, national tastes and standards, and business institutions are vestiges of the past. Some inheritances die gradually ; others prosper and expand into mainstream global preferences. So-called eth- nic markets are a good example. Chinese food, pita bread, country and western music, pizza, and jazz are everywhere. They are market seg- ments that exist in worldwide proportions. They don't deny or contradict global homogen- ization but confirm it. Many of today's differences among nations as to products and their features actually reflect the respectful accommodation of multinational corporations to what they believe are fixed local preferences. They believe preferences are fixed, not because they are but because of rigid habits of thinking about what actually is. Most executives in multinational corporations are thoughtlessly accommodating. They falsely presume that marketing means giving the cus- tomer what he says he wants rather than trying to understand exactly what he'd like. So they persist with high-cost, customized multina- tional products and practices instead of press- ing hard and pressing properly for global standardization. I do not advocate the systematic disregard of local or national differences. But a company's sensitivity to such differences does not require that it ignóre the possibilities of doing things differently or better. There are, for example, enormous differ-

Product customization in each country would have put Hoover in a poor competitive position on the basis of price, mostly due to the higher manufacturing costs incurred by short production runs for separate features. Because Common Market tariff reduction programs were then incomplete, Hoover also paid tariff duties in each continental country.

How to Make a Creative Analysis

In the Hoover case, an imaginative analysis of auto matic washing machine sales in each coun- try would have revealed that:

  1. Italian automatics, small in capacity and size, low-powered, without built-in heaters, with por- celain enamel tubs, were priced aggressively low and were gaining large market shares in all coun- tries, including West Germany.
  2. The best-selling automatics in West Germany were heavily advertised (three times more than the next most promoted brand), were ideally suited to national tastes, and were also by far the highest-priced machines available in that country.
  3. Italy, with the lowest penetration of washing ma- chines of any kind (manual, semiautomatic, or automatic) was rapidly going directly to auto- matics, skipping the pattern of first buying 'handwringer, manually assisted machines and 'then semiautomatics.
  4. Detergent manufacturers were just beginning to promote the technique of cold-water and tepid- water laundering then used in the United States.

The growing success of small, low-powered, low-speed, low-capacity, low-priced Italian ma- chines, even against the preferred but highly priced and highly promoted brand in West Ger- many, was significant. It contained a powerful message that was lost on managers confidently

Reading 22 / The Globalization of Markets (^313)

wedded to a distorted version of the marketing concept according to which you give the cus- tomer what he says he wants. In fact the cus- tomers said they wanted certain features, but their behavior demonstrated they'd take other features provided the price and the promotion were right. In this case it was obvious that, under pre- vailing conditions, people preferred a low- priced automatic over any kind of manual or semiautomatic machine and certainly over higher priced automatics, even though the low- priced automatics failed to fulfill all their expressed preferences. The supposedly meticu- lous and demanding German consumers vio- lated all expectations by buying the simple, low-priced Italian machines. It was equally clear that people were pro- foundly influenced by promotions of auto- matic washers ; in West Germany, the most heavily promoted ideal machine also had the largest market share despite its high price. Two things clearly influenced customers to buy : low price regardless of feature preferences and heavy promotion regardless of price. Both fac- tors helped homemakers get what they most wanted-the superior benefits bestowed by fully automatie machines. Hoover should have aggressively sold a sim- ple, standardized high-quality machine at a low price (afforded by the 17% variable cost reduc- tion that the elimination of £6-10-0 worth of extra features made possible). The suggested re- tail prices could have been somewhat less than £ 100. The extra funds "saved" by avoiding un- necessary plant modifications would have sup- ported an extended service network and aggres- sive media promotions. Hoover's media message should have been : this is the machine that you, the homemaker, deserve to have to reduce the repetitive heavy daily household burdens, so that you may have more constructive time to spend with your chil- dren and your husband. The promotion should also have targeted the husband to give him, preferably in the presence of his wife, a sense of

U.K. £

France 114 West Germany 113 Sweden 134 Italy 57

obhehi.wiovpa.Thprsemuerda.wr.wath.ucth.tino.wrno.niAgvoTr.

*34" height was (in the process of being adopted as) a standard work surface height in Europe. tMost British and Swedish homes had centrally heated hot water. ttWest Germans preferred to launder at temperatures higher than generally provided tentrally.

searching mind, Copernicus, like the hedgehog, interpreted a more compelling' and accurate re- ality. Data do not yield information except with the intervention ofthe mind. Information does not yield meaning except with the intervention of imagination.

ACCEPTING TIME INEVITABLE The global corporation accepts for better or for worse that technology drives consumers relent- lessly toward the same common goals-al- leviation of life's burdens and the expansion of discretionary time and spending power. Its role is profoundly different from what it has been for the ordinary corporation during its brief, turbulent, and remarkably protean history. It orchestrates the twin vectors of technology and globalization for the world's benefit. Neither fate, nor nature, nor God but rather the neces- sity of commerce created this role. In the United States two industries became global long before they were consciously aware of it. After over a generation of persistent and

314 SECTION 5 / MARKETING

Exhibit Consumer Preferences as to Automatic Washing Machine Features in the 1960s

Features Great Britain Italy^ West Germany^ France^ Sweden

Shell dimensions* 34"^ Low^ 34"^ 34"^ 34" and narrow and narrow^ and wide^ and narrow^ and wide Drum material Enamel^.^ Enamel^ Stainless^ Enamel^ Stainless steel steel Loading Top^ Front^ Front^ Front^ Front Front porthole Yes/no^ Yes^ Yes^ Yes^ Yes Capacity 5 kilos^ 4 kilos^ 6 kilos^ 5 kilos^ 6 kilos Spin speed 700 rpm^ 400 rpm^ 850 rpm^ 600 rpm^ 800 rpm Water-heating Not Yes Yestt^ Yes^ Not system Washing action Agitator^ Tumble^ Tumble^ Agitator^ Tumble Styling features Inconspicuous Brightly^ Indestructible^ Elegant^ Strong appearance colored appearance^ appearance^ appearance

3 1 6 SECTION^5 /^ MARKETING

areas of the Sunbelt, where farms are smaller, the soil sandier and easier to work. Here inex- perienced distributors were able to attract cus- tomers on the basis of Komatsu's product and price appropriateness. In cases of successful challenge to prevailing institutions and practices, a combination of product reliability and quality, strong and sus- tained support systems, aggressively low prices, and sales-compensation packages, as well as au- dacity and implacability, circumvented, shat- tered, and transformed very different distribu- tion systems. Instead of resentment, there was admiration. Still, some differences between nations are unyielding, even in a world of microprocessors. In the United States almost all manufacturers of microprocessors check them for reliability through a so-called parallel system of testing. Japan prefers the totally different sequential testing system. So Teradyne Corporation, the world's largest producer of microprocessor test equipment, makes one Tine for the United States and one for Japan. That's easy. What's not so easy for Teradyne is to know how best to organize and manage, in this in- stance, its marketing effort. Companies can organize by product, region, function, or by us- ing some combination of these. A company can have separate marketing organizations for Ja- pan and for the United States, or it can have separate product groups, one working largely in Japan and the other in the United States. A sin- gle manufacturing facility or marketing opera- tion might service both markets, or a company might use separate marketing operations for each. Questions arise if the company organizes by product. In the case of Teradyne, should the group handling the parallel system, whose major market is the United States, sell in Japan and compete with the group focused on the Japanese market? If the company organizes re- gionally, how do regional groups divide their ef- forts between promoting the parallel vs. the sequential system? If the company organizes in

terms of function, how does it get commitment in marketing, for example, for one line instead of the other? There is no one reliably right answer-no one formula by which to get it. There isn't even a satisfactory contingent answer.3 What works well for one company or one place may fail for another in precisely the same place, depending on the capabilities, histories, reputations, re- sources, and even the cultures of both.

THE EARTH 15 FLAT

The differences that persist throughout the world despite its globalization affirm an an- cient dictum of economics-that things are driven by what happens at the margin, not at the core. Thus, in ordinary competitive analy- sis, what's important is not the average price but the marginal price ; what happens not in the usual case but at the interface of newly erupting conditions. What counts in commercial affairs is what happens at the cutting edge. What is most striking today is the underlying similari- ties of what is happening now to national pref- erences at the margin. These similarities at the cutting edge cumulatively form an overwhelm- ing, eredominant commonality everywhere. To refer to the persistence of economie na- tionalism (protective and subsidized trade practices, special tax aids, or restrictions for home market producers) as a barrier to the globalization of markets is to make a valid point. Economic nationalism does have a pow- erful persistence. But, as with the present al- most totally smooth internationalization of investment capital, the past alone does not shape or predict the future. (For reflections on the internationalization of capital, see the in- sert, "The shortening of Japanese horizon .") Reality is not a fixed paradigm, dominated by immemorial customs and derived attitudes, heedless of powerful and abundant new forces. The world is becoming increasingly informed about the liberating and enhancing possibilities of modernity. The persistence of the inherited

THE SHORTENING OF JAPANESE HORIZONS One of the most powerful yet least celebrated forces driving commerce toward global standardization is the monetary system, along with the international invest- ment process. Today money is simply electronic impulses. With the speed of light it moves effortlessly between distant centers (and even lesser places). A change of ten basis points in the price of a bond causes an instant and massive shift of money from London to Tokyo. The system has profound impact on the way companies operate throughout the world. Take Japan, where high debt-to-equity balance sheets are "guaranteed" by various societal presumptions about the virtue of "a long view, or by government pol- icy in other ways. Even here, upward shifts in interest rates in other parts of the world attract capital out of the country in powerful proportions. In recent years more and more Japanese global corporations have gone to the world's equity markets for funds. Debt is too remunerative in high-yielding countries to keep capital at home to feed the Japanese need. As interest rates rise, equity becomes a more attractive option for the issuer. The long-term impact on Japanese enterprise will be transforming. As the equity proportion of Japanese corporate capitalization rises, companies will respond ti) the shorter-term investment horizons of the equity markets. Thus the much-vaunted Japanese corpor- ate practice to taking the long view will gradually disappear.

varieties of national preferences rests uneasily on increasing evidence of, and restlessness re- garding, their inefficiency, costliness, and con- finement. The historic past, and the national differences respecting commerce and industry it spawned and fostered everywhere, is now subject to relatively easy transformation. Cosmopolitanism is no longer the monopoly of the intellectual and leisure classes ; it is be- coming the established property and defining characteristic of all sectors everywhere in the world. Gradually and irresistibly it breaks down

Reading 22 / The Globalization of Markets (^317)

the walls of economic insularity, nationalism, and chauvinism. What we see today as escalat- ing commercial nationalism is simply the last vi- olent death rattle of an obsolete institution. Companies that adapt to and capitalize on economic convergence can still make distinc- tions and adjustments in different markets. Persistent differences in the world are consis- tent with fundamental underlying commonal- ities ; they ofen complement rather than op- pose each other-in business as they do in physics. There is, in physics, simultaneously matter and anti-matter working in symbiotic harmony. The earth is round, but for most purposes it's sensible to treat it as flat. Space is curved, but not much for everyday life here on earth. Divergence from established practice hap- pens all the time. But the multinational mind, warped into circumspection and timidity by years of stumbles and transnational troubles, now rarely challenges existing overseas prac- tices. More aften it considers any departure from inherited domestic routines as mindless, disrespectful, or impossible. It is the mind of a bygone day. The successful global corporation does not abjure customization or differentiation for the requirements of markets that differ in product preferences, spending patterns, shopping pref- erences, and institutional or legal arrange- ments. But the global corporation accepts and adjusts to these differences only reluctantly, only after relentlessly testing their immutabil- ity, after trying in various ways to circumvent and reshape them as we saw in the cases of Out- board Marine in Europe, SmithKline in Japan, and Komatsu in the United States. There is only one significant respect in which a company's activities around the world are im- portant, and this is in what it produces and how it sells. Everything else derives from, and is subsidiary to, these activities. The purpose of business is to get and keep a customer. Or, to use Peter Drucker's more re- fined construction, to create and keep a cus-