Organizing for Global Marketing

Chap

ter

18

© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Outline

Implementing Global MarketingOrganizational StructuresCoordination in Global NetworksTools for CoordinationManagerial RolesConflict ResolutionTakeaways.

1. The firm is already present in many markets.

2. The firm is successful in at least some of the major markets.

3. There is a history of successful operations with local autonomy.

4. Country managers have experience at home. For administrative & control reasons, subsidiaries may be run by expats. Local marketing is run by a local marketing manager.

5. The legitimacy of the global marketing “imperative” is not all that obvious in the organization – unless competitors have forced the issue.

6. The global advantage derives from cost savings, demand spillover effects & serving global customers.

7. In a global strategy, there will be less autonomy for the local subsidiary.

8. The initiative for a global strategy comes from the top.

Implementing Global Marketing: The Context

1. Communication

2. Motivation

3. Flexibility

1. Creating new organizational units (e.g. global teams)

2. Creating new positions (e.g. global marketing director)

3. Changing the reporting lines

4. Creating new systems

5. People adapting

The needed coordination involves:

Via these organizational tools:

Implementing Global Marketing: Achieving Coordination

Organizational Structures

EXPORT DEPARTMENT INTERNATIONAL DIVISION GEOGRAPHICAL/REGIONAL

STRUCTURE GLOBAL PRODUCTS DIVISION MATRIX ORGANIZATION TRANSNATIONAL ORGANIZATION HORIZONTAL NETWORKS

President Central staff

MarketingExport Production R & D Finance

Export Staff

Planning Personnel

Country 1Representatives

Country 2Representatives

Country 3Representatives

Export Department Structure

Executive Vice President Domestic

Executive Vice President International

Division StaffDivision Staff

Country 1. Sub. GM

Country 2. Sub. GM

Country 3. Sub. GM

Subsidiary staff

Marketing LogisticsManufacturing

Product BDivision

Product ADivision

Corporate Staff

President

Note: Sub. GM = subsidiary general manager

International Division Structure

Executive Vice President

Domestic Market

Executive Vice President

Western Europe

Executive Vice President

Latin America

President

Corporate staff

UKsub. GM

Germanysub. GM

Scandinavia sub. GM

Note: Sub. GM = subsidiary general manager

Regional Structure

Product 1 division Executive Vice President

Product 2 division Executive Vice President

Product 3 division Executive Vice President

President Corporate staff

Home country sales

manager

Country 1 sales

subsidiary

Country 2 sales

subsidiary

Homecountry

plant

Brazilplant

Malaysiaplant

Japanplant

Manufacturing Sales

Global Product Structure

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Subsidiaries (manufacturing,

sales, R & D)

Motorcycleheadquarter

Automobileheadquarter

Power productheadquarter

Regional headquarters

Europe, Middle & Near East,

Africa (Reading, UK)

Regional headquarters

Americas (Los Angeles)

Regional headquarters

Asia & Oceania (Tokyo,

Bangkok)

Regional headquarters

Japan(Tokyo)

Honda Motor Co., Ltd.HondaR&D

(Tokyo)

Global Matrix Structure: Honda Motor

Distributed specialized resources and

capabilities

Coordination and cooperation in an environment of shared

decision making

Flows of components, products, resources,

people and information

A Transnational Network

• Many companies view their global network as an “invisible resource” or “hidden asset”. The network is an FSA, making it feasible to attack and defend in different countries.

• This makes local units more strategic, countering feelings of compromised authority when shifting to a global strategy.

• Treating the network as an asset allows a global strategy to become a “win-win” proposition for both headquarters & subsidiaries.

• The “network theory” stresses that the linkages within a global network can constitute the true source of competitive advantage for the firm.

The Advantage of a Network

Complex networks facilitate direct exchange of information

between subsidiaries, but makes coordination difficult.

Global Marketing: Coordination is Key

Global Marketing: Coordination is Key

Strong centralization facilitates coordination but reduces direct

knowledge sharing.

Global Marketing: Coordination is Key

Simplified networks attempt to facilitate coordination

without limiting knowledge sharing.

• To implement global marketing projects, the most common organizational change is the creation of global teams.

• The teams consist of members from different country subsidiaries and from different functional fields.

• Responsibilities vary from launching specific programs or activities, such as the advertising campaign for a new product, to more wide-ranging responsibilities, including the whole marketing mix.

• The European integration has spawned many examples of global teams (e.g. 3M’s global teams)

Global Teams

• GLOBALLY STANDARDIZED PLANNING SYSTEMS

• GLOBALLY STANDARDIZED MANAGEMENT SYSTEMS

• GLOBALLY STANDARDIZED SALES REPORTS

• COORDINATING COMMITTEES, STAFF

• CROSS-FUNCTIONAL AND CROSS-COUNTRY TEAMS

• INFORMAL COORDINATION, PEOPLE-TO-PEOPLE

Tools for global coordination

• Organizational culture is defined by a company’s informal routines & procedures for problem solving & decision making.

BUILDING A STRONG CORPORATE CULTURE GLOBALLY

HELPS COORDINATION

BECAUSE LOCAL SUBSIDIARY MANAGERS

CAN MAKE AUTONOMOUS DECISIONS IN LINE WITH THE GLOBAL

STRATEGY

Organizational culture and coordination

• Strategy:Strategic planning, budgeting, and implementation with functions and

regions

• Systems: Design, creation, and maintenance of global marketing control systems

• Coordination: Coordination of all functions affecting business and major product lines

• Performance evaluation: Participation in performance evaluation of functional and regional managers

• Profitability: Profit accountability for individual lines of business and major product lines

The Global Marketing Director’s Job

Apart from being the headquarters' envoy, the expatriate country manager must fill the following roles:

• CUSTOMER REPRESENTATIVE – a high-level contact with customers, prospects, & suppliers in the local market

• LOCAL CHAMPION – a champion for the local office at headquarters, airing local requests and justifying the need for additional resources

• NETWORK COORDINATOR – one who provides linkages with the firm’s other offices in the worldwide network of the firm

The Expatriate Manager

In B2B, where a customer might be a large multinational, the global account manager (GAM) serves a coordinative function for this

one single global customer.

The GAM’s tasks include:

• Coordination of customer orders from different countries

• Providing uniform prices

• Coordination of communication within headquarters

• Provisions of consistent after-sales services

The Global Account Manager

Conflicts between headquarters and local subsidiaries are almost unavoidable. A few practices can help minimize them:

1. Let local managers retain local brands and marketing budgets

2. Solicit country managers’ input for new product development

3. Give country managers lead roles in global teams

4. Provide international transfers for country managers

5. Involve country managers in formulation of global marketing strategies.

Conflict Resolution

The global network of the multinational firm is a marketing asset that can be leveraged with a global strategy only if

the appropriate organizational linkages to the local market are created.

Takeaway

The most important aspect of any organizational solution is to make sure that local motivation is not diminished,

negatively affecting a global strategy.

Local managers need to be consulted early in the strategy formulation process.

Takeaway

Local managers not only have better knowledge of the local market but can also assume a more global view given the

chance.

In the “transnational” company, local subsidiaries become centers of excellence, with global responsibilities for a

particular product line – local globalization.

Takeaway

Coordination mechanisms that companies use range from creating a common global culture, sharing information, &

establishing personal relations, to the creation of new organizational units such as global account managers and

global teams.

Takeaway

The organizational structure & the systems need to be designed to serve one common purpose:

to bring the global company closer to the local customer – global localization.

Takeaway