Understanding Globalization, Internationalization and Localization

As it is easier to understand light by understanding darkness first, so before we understand Globalization, let us understand what is not Globalization. However in no way one should assume that Globalization means light, as it can be other way round as well depending on situation. An enterprise doing its activities in a specific area, usually a city or a country, not having anything to do with other part of the world is said to be working in Isolation. On other hand a company doing its business activities in more than one country is achieving Globalization. Thus Isolation is a term opposite to Globalization.

 Some people think Localization is opposite of Globalization but that is not correct.  Actually localization is an enabler of Globalization, as Globalization can be achieved through various forms of Localization. When a company doing business in multiple locations, regions or countries customizes its process or products to suite the local conditions of specific area, region or country then it is called Localization.

Sometimes people also confuse Internationalization with Globalization, but they are quite different. In Layman terms, Internationalization means doing trade across international boundaries, however Globalization means doing business by Integrating processes across international boundaries such that boundaries virtually disintegrates and no more remains barriers to growth but helps in creating value for the company.     
     

Globalization can be achieved through various ways, three approaches being  

1. Adaptation
2.  Aggregation
3.  Arbitrage

Adaptation is the easiest one to understand but most difficult to implement. When we say adaptation, it means a company localizes its products or operations as per the environment of individual county or location.  For example Barbie doll wearing a Saree is Indian adaptation of Barbie doll. Similarly Airtel’s advertising campaign “her aik friend zaroori hota hai” is a campaign specifically for Indian market hence we can say that marketing division of Vodafone has adapted to Indian market in India.

Aggregation is very similar to Adaptation, but differs in a way that instead of doing localization of product and processes for individual location or country, localization is done on group of locations or countries on basis of some aggregation attributes like culture, economic status, political conditions etc. For example, a meat company producing only Halal meat in Middle East region but all kind of meats in Asian and European region is achieving globalization through Aggregation.

Arbitration is opposite to Adaptation. When a company exploits the differences between locations instead of adapting to them then they are creating value through arbitration.  For example Nike focusing manufacturing in East Asia because of low cost labor advantage, but selling worldwide is an example of a company reaping Globalization benefits through Arbitration.