Two Examples of Localization With Differing Results: Starbucks and Uber

Multinational companies grant vary degrees of independence to regional teams. One reason for increased independence is to enable the company to best adjust to local conditions. One piece about how this can work out and one piece about how this can go awry:

1. Keeping with the recent Starbucks theme here . . . Russell Flannery shares some thoughts from Belinda Wong, the country CEO for Starbucks in China, about the freedom they have to localize the Starbucks experience there:

Overall, the localization effort seems more subtle than overwhelming, making its approach "similar but not so similar" to what the company does in the U.S., Wong says. "I have to think about where you live, where you work and how you travel," she says. "This has to speak to you and not to folks in other countries. I like the fact that we are not the kind of the company that enforces what has to be done in the U.S. to be in China, and I think that forms part of why we are successful in China: because we are able to make sure that everything is developed in China with the Chinese consumers in mind."

2. In a in-depth story of how Uber knowingly rented unsafe recalled vehicles to many of its drivers in Singapore (link briefly goes through Twitter*), Douglas MacMillan and Newley Purnell detail how the desire to localize headed in the wrong direction:

Singapore in 2013 was Uber’s first Asian city, a beachhead for expansion. Uber however struggled to find enough drivers, documents show. The cost of owning a car there is among the highest in the world.

Uber created a unit, Lion City Rentals Pte Ltd., or LCR, in February 2015 to rent Uber-owned cars to drivers for about $50 a day. Buying a fleet of cars was new for Uber, whose business model relies on not owning assets. . . .

Rather than buy most new vehicles from authorized Honda and Toyota Motor Corp. dealers, Uber’s LCR unit bought new sedans and SUVs from more than a dozen auto importers, the emails show. These small dealers operate in the gray market—a legal channel outside manufacturers’ authorized networks—where safety, service and legal contracts are difficult to enforce. The Singapore team calculated it would be able to buy cars for 12% less than at authorized Honda dealers, according to the emails.

The fascinating piece captures how things went downhill from there in a variety of ways.



*I used a Twitter generated link because the Wall Street Journal offers free access to its articles if visited from there and some other sites as well. Otherwise, a paywall may appear for some readers. I could achieve the same effect by embedding a tweet here. I will share some thoughts about this practice in a later post. The tweet that generated the link is here. The direct link to the article is here.