Hi guys, welcome back to global business environment course two. We are in module three, and this is part two. We're talking about adaptations that cust companies have to make for foreign customers and foreign markers. We're talking about customizing products or services to meet the needs of local consumers. And we've mentioned that these adaptations might be based in a whole variety of factors. From religion to language, to culture, to politics, to regulations. So I'm going to give you another example of that by talking about something that we mentioned in Global Business Environment course one. And that is the fact that, in different parts of the world, we see some countries and some regions that tend to have more historical beginnings that have many centuries of existence. Many cities, for example, in Europe that have been around for a very long time. And the types of business that might exist in those types of markets where people live in very urban perhaps long standing cities compared to other areas of the world like the United States where suburban living is more common, and where there aren't many businesses around. If you think about that type of living, we, we showed you in that other course, in that other module that there are lots of different ways people live. Some people in, in urban settings live in much smaller apartments. Don't have their own yard et cetera. Now let's take that a little bit further and, and think about foreign companies entering those types of markets, that may have grown up or been born in other markets that aren't so urban. I have here, an image of McDonald's in France, and this is an urban McDonald's that is in a building that's not brand new. It's probably been around for a longer period of time, and you might see in some other places in the world. And one thing that stands out to me is that this McDonald's does not have a drive through. And in the United States one of the things that's common for many individuals is to purchase breakfast or a lunch on the go, in their car, and eat it in their car on the way to work, or on a quick break from work. And so the drive-through is very important. In fact I'm always amazed at the efficiency of McDonald's at doing that. Now I may not love the food of McDonald's, and it may not be very healthy for me or others, but many people still frequent the restaurant because it's still growing and succeeding. And so people find value in that convenience. I would note that, the first time that my wife, who is from Mexico, ate in the car, was with me in her twenties. And she thought it was different or odd, because she wasn't used to that being from Mexico. In her culture, it was much more common to sit down to eat and enjoy the meal. I take time to visit. And so we're, we're seeing the types of things that might drive differences in in customization needs for companies. McDonald's when it first entered some urban markets even the United States needed to adapt to preferences. People are more used to in some places to sitting down and eating, and so they might need to have more sit down space. They may need to cut out the drive through. It may not be possible in some urban settings. People may not even have cars. Most of them are travelling by metro or subway, or bicycle. And so these are, these are very key adaptations that need to be made. We see that given that this is true, that in some markets of the world, cars are different than others. Certainly there are lots of automobile manufacturers from lots of different companies around the world. But in some markets where urban living is much more common, we see a tendency for most people to drive smaller cars. Like the one I have here on the screen or this car in this very narrow street in a European city. This might be compared to the large Cadillac Escalade that you see on the screen, which is a large sport utility vehicle that seats eight or nine passengers and uses a lot more gas. Why is it that in some parts of the world, it's quite rare or uncommon to see this size of a vehicle and much more common to see very small vehicles? Well if you think about it, there are a variety of factors. In some places in the world, there are very high taxes on gasoline for example, in Europe. And so it's much more difficult for individuals to have the income to purchase gasoline. And when they do they need ga cars that are very fuel efficient, that don't use gasoline to the same degree. Also in these urban cities, this is an extreme example with this narrow street. There are not as many opportunities for parking. The McDonald's that we looked at doesn't even have a parking lot that we can see. And so the individuals that will be frequenting the restaurant are coming on foot or on bicycle, or from the subway. And so if you don't if you don't have parking lots available in urban settings for customers to use you probably aren't going to have spots. For the few spots you do have perhaps on the street, they're probably not big enough for a large sport utility vehicle to fit in. It's hard to navigate these urban streets that were built many, many centuries ago and weren't designed to accommodate car traffic. So, there are lots of different factors that can affect how companies enter foreign markets and adapt. In some places people have smaller families and so they don't need bigger vehicles. In other places people tend to have larger families and so bigger vehicles are, are preferred. Some places have other regulations related to pollution that would regulate the degree to which smaller vehicles would be more commonly purchased. Going back to adaptations. Think about the companies that make these vehicles. It's very, very expensive to build different cars for different markets. The production process for assembling vehicles, designing them all the way to the final assembly is very expensive. The car companies would love to be able to design one car for the whole world. And they would achieve greater economies of scale and vehicles would probably be less expensive. But because of these unique needs and preferences around the world they have to adapt their production processes, they have to adapt their design process etc. Lots of different parts, lots of different regulations, lots of different requirements depending on the market. Even within a market we see different regulations. For example, in the United States, in the state of California, they have much strict, stricter emissions polluting emissions regulations compared to other states in the United States. And so the car manufacturers have to adapt the parts involved in production at that point. And so it's a very complex world we live in, with lots of different tastes and preferences. The car example is just one and it's one as an example of a lot of adaptation being made for lots of different customers around the world. And their needs and preferences. So this will end part two of module three. We'll pick it right back up in part three, and talk about another example of adaptation in foreign markets. Thank you very much. We'll see you next time.
