If companies lean too much toward the risk of using global consistency, they run management procedures poorly suited particular countries' markets, cultures, and to employees (i.e., a lack of local adaptation). Unlike the United States, this has widely shared tastes in fashion from state to state, in Europe Tommy HILFIGER found highly fragmented consumer tastes that differed significantly across countries. Consequently, while Hilfiger sells most of its products the same large department via and discount stores throughout the United States, in Europe it has taken the opposite strategy by signing sales agreements with 4,500 small boutique stores in 15 countries.
If companies focus too much on local adaptation, however, they run the risk fling the cost efficiencies and productivity that result from using standardized rules and procedures throughout the world. For example, to keep these 4,500 small retailers happy and wanting to sell more Hilfiger products, the company opened 21 regional showrooms, each featuring at least 25 clothing lines, many of which are adapted to particular markets. While this leads to much higher costs for Hilfiger, those higher costs also produce larger sales. And with profit margins 50 percent to 100 percent higher in Europe, those higher costs still produce much higher profits.