International Management

A Case Study on Multinational Organisations

Strategic, International Human Resource and

Marketing Management

Author: Mark Staunton

Supervisor: Alan Murray

B.Sc. (Mgmt.)

DT365/4

APRIL 2014

Declaration

I hereby certify that this material, which I now submit for assessment as the final year project

on the programme of study leading to the award for B.Sc. (Mgmt.) in Organisation and

Management, is entirely my own work and has not been submitted in whole or in part for

assessment for any academic purpose other than in partial fulfilment for that stated above.

Signed: _______________________________ Date: _____________________

Mark Staunton. 10th April 2014

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Acknowledgements

I would like to thank Alan Murray for all the help he gave me in writing this Research

Project. His help during our meetings assisted me greatly in keeping my Project focused on a

specific topic and gave me great insight on the approach to writing this Project.

I would like to give a massive thank you to my parents and sister who helped me throughout

my 4 years in DIT and FH Aachen. They supported me both financially and morally and

encouraged me throughout the preparation, writing and even the proof reading of this Project.

I would not have been able to get where I am today without them and certainly not have been

able to complete this Project.

Thank you to Dr. Eoghan O’Grady for his guidance throughout the years and help when it

was needed.

I would like to thank all school friends, particularly Jonathan and Myles who supported me in

this endeavour; they encouraged me to keep going when I wasn’t sure if I would ever get this

Project completed, and they gave me good advice when I needed it most.

I would like to thank my GSM group members: Shauna Ryan, Leo Butt, Conor, O’Neill and

Ciaran Buggy who really helped with advice on Strategic Management and Planning. I would

like to thank my Consumer Behaviour group: David Gallagher, Ronan Brophy, Keith Brutton

and Ian Kelly who helped me with advice on the Marketing section of this assignment. And

also Philip Clarke and Colm Greenan who helped me last year on Erasmus and this year with

general advise on the project. All of them were very helpful and really made this year

enjoyable.

Finally to myself, I struggled when writing this Project and wondered if I would ever finish it;

but I put in a lot of hours and endured to finish the Project.

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Table of Contents

Declaration.......................................................................................................................................... i

Acknowledgements............................................................................................................................ ii

Table of Contents.............................................................................................................................. iii

Abstract.............................................................................................................................................1

CHAPTER 1: LITERATURE REVIEW..........................................................................................................2

1.1 Introduction..................................................................................................................................3

1.1.1 Strategic Management and Planning..................................................................................3

1.1.2 International Human Resource Management......................................................................4

1.1.3 Marketing Management......................................................................................................5

1.2 Strategic Management and Planning...........................................................................................7

1.2.1 Introduction........................................................................................................................7

1.2.2 Current Competitive Position...........................................................................................10

1.2.3 Political, Economic, Social and Technology (PEST) Analysis.........................................11

1.2.4 Porter’s Five Forces..........................................................................................................13

1.2.5 Key Success Factors..........................................................................................................15

1.2.6 Industry Life Cycle...........................................................................................................16

1.2.7 Driving Forces..................................................................................................................18

1.2.8 The Value Chain...............................................................................................................19

1.2.9 Conclusion.........................................................................................................................20

1.3 International Human Resource Management.............................................................................21

1.3.1 Introduction......................................................................................................................21

1.3.2 Employee Recruitment.....................................................................................................23

1.3.3 Impact on National Culture..............................................................................................25

1.3.4 Training for Expatriates in Multinational Organisations...................................................27

1.3.5 Culture and Organisational Life.......................................................................................30

1.3.6 International Human Resource Management (IHRM) Trends and Future Challenges......32

1.3.7 Performance Management & Rewards.............................................................................34

1.3.8 Conclusion........................................................................................................................35

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1.4 Marketing Management..............................................................................................................37

1.4.1 Introduction......................................................................................................................37

1.4.2 Market Segmentation, Targeting and Positioning.............................................................39

1.4.3 Marketing Plan.................................................................................................................42

1.4.4 The Marketing Mix...........................................................................................................45

1.4.5 Marketing Research..........................................................................................................47

1.4.6 Conclusion........................................................................................................................50

Chapter 2: Contextualisation................................................................................................................51

2.1. Introduction to Microsoft..................................................................................................52

2.2 Global Strategic Management and Planning....................................................................54

2.3 International Human Resource Management...................................................................59

2.4 Marketing Management..................................................................................................63

2.5 Conclusion and Recommendations....................................................................................65

Bibliography.....................................................................................................................................67

Books:...........................................................................................................................................67

Journal Articles:............................................................................................................................70

Online:..........................................................................................................................................73

Appendices:......................................................................................................................................78

List of Images:..............................................................................................................................78

Abbreviations:..............................................................................................................................79

Definitions:...................................................................................................................................80

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Abstract

The first Chapter will focus throughout on three specific management activities, these are:

1. Strategic Planning and Management;

2. International HR Management; and finally;

3. Marketing Management.

Each has its own section where I will go in depth to cover the definitions of each activity;

tools that can used for each activity; how these affect organisations today, and my conclusions

on each topic.

The second Chapter will focus on the modern approach taken by multinational organisations

and how they use the tools mentioned in Chapter 1. Does this form a major part of their

organisation or not; how each department is run; what is the style of management, and how it

affects the employees in the organisation?

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CHAPTER 1: LITERATURE REVIEW

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1.1 Introduction

1.1.1 Strategic Management and Planning

Strategic Management and Planning is crucial for all multinationals. Strategic Planning can

be defined as:

An organisational management activity that is used to set priorities, focus energy and

resources, strengthen operations, ensure that employees and other stakeholders are

working toward common goals, establish agreement around intended

outcomes/results, and assess and adjust the organisation's direction in response to a

changing environment. (Balancedscorecard.org, 2013, p.6)

I conclude from this that having a plan or defined strategy, where the organisation

understands its future objectives, and building the organisation around achieving that plan, is

highly important to organisations. I also note that unknown factors can adversely or positively

affect the organisation’s ability to adhere to their plan. The plan, while reflecting the strategic

goals of the organisation, must be adaptable over time. The long-term plan is the guide for

the short-term plan; the organisation takes the guide and uses it for their immediate

objectives, e.g. the current year budget and activities to achieve this budget.

Strategic Management can be defined as:

A process of information and decision-making, which is supported by the management

functions of planning, organisation, motivation and control. Its purpose is to rule on

key organisation issues, organisation's survival and development, with particular

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emphasis on environmental impacts and crucial factors of productive capacity.

(Encyclopaedia of Management, 2013, p.7)

This shows that Strategic Management is about analysing and making decisions on the factors

that influence the plan to ensure it is realistic and achievable, and thereafter implementing the

plan is supported by this analysis. Approval of the plan by all key stakeholders ensures buy-in

to its delivery.

I note, in order to effectively implement the plan, the organisation must have adequate levels

of resources to allow them to effectively carry out the plan. The organisation must also have a

contingency plan to mitigate unexpected changes that could adversely affect their ability to

deliver the plan, and in extreme circumstances continue operations. Hence every effective

plan must evaluate plan risks and identify the contingencies or mitigations in advance.

1.1.2 International Human Resource Management

International Human Resource Management can be defined as, “the function within an

organisation that focuses on recruitment of, management of, and providing direction for the

people who work in the organisation.” (Heathfield, 2013, p.6)

This observes firstly that HR Management team must select and vet potential employees for

specific jobs before recommending these applicants to the organisation. In the context of

multinational organisations, this also means that HR Managers are responsible for recruiting,

and / or relocating existing employees in the right geographical location. Recruitment in

multinationals, if not carried out selectively, can have detrimental effects, as studies have

shown that employees may work well in one type of setting, and not so well in another

setting.

In Germany, for instance, an organisation could be run in a more autocratic management

style, whereas in the USA it could be a more democratic management style, as explained

below. These approaches can be received completely differently by employees:

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In an autocratic management style the employees are told exactly what to do, how to

do it and when it should be done. This means employees do not make any decisions or

are empowered in relation to matters impacting their job. There is a clear divide

between managers and employees;

On the other hand a democratic management style means managers will give

instructions but equally allow employees to provide input to business decisions or

empower employees to make certain decisions that directly impact their own job.

Managers and employees work together for equal benefit.

If a HR Manager sends an employee from America to their German division, that employee

may be expecting the US management style and therefore may struggle to cope in a new work

environment. This is why expatriates require training for their roles abroad, specifically in

areas of cultural diversity. Many business people from the West initially struggle when

encountering the idiosyncrasies in Japanese culture, where simple things like handing a

business card to a counterpart is a ritual and where sliding a business card across the table is

seen as insulting behaviour.

1.1.3 Marketing Management

Marketing Management can be defined as “the art and science of choosing target markets

and building profitable relationships with them.” (Armstrong, 2011, p.9)

This explains that organisations must use available resources to establish an appropriate

marketing plan and take appropriate actions to reach out to customers, i.e. their target market.

Once this plan is developed, the organisation must take full advantage of the relationship they

have developed in order to entice this target market to buy their products, i.e. it is not good

enough to have sold the product concept; you have to close the deal.

I agree Marketing Management is crucial to all organisations; for multinationals having clear

strategies that address the needs in each country of operation is highly important. Strategies

that work in Japan may not work in America. Therefore, for a multinational organisation it

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may be better to use local employees to run their marketing campaigns, i.e. with the local

knowledge to appeal to the local preferences. Another option used by multinational

organisations is to outsource their marketing requirements to specialist marketing companies

that develop region specific effective marketing campaigns.

I note many organisations recognise the differences between markets and change their

marketing campaigns in small ways to work more appropriately.

Figure 1.1.3: Management (ColourBox, n.d.)

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1.2 Strategic Management and Planning

1.2.1 Introduction

Companies like Google and Microsoft are high profile organisations operating on a global

basis with, cutting edge approaches to business and therefore highly appropriate to use as

examples in this project. They employ people from around the world in multiple locations.

They are continuously growing, innovating, and having to constantly adapt their strategic

plans. They engage in a considerable amount of global brand management and marketing

through a multiple of various methods and channels.

Figure 1.2.1: Google for Businesses (CK Solutions, n.d.)

Thompson & Martin define Strategic Management as “Incorporates major changes of

direction for the whole business, such as diversification and growth overseas, it also involves

smaller changes in strategies for individual products and services and in particular functions

such as marketing and operations.” (2005, p.10)

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It can also be defined as, “the systematic analysis of the factors associated with consumers

and competitors (the external environment and the organisation itself (the internal

environment) to provide the basis for maintaining optimum management practices.” (Business

Dictionary

From this we can conclude Strategic Management and Planning includes:

Analysing the internal strengths and weaknesses of the organisation;

Analysing the external market forces affecting the organisation; and

Determining the mission and objectives of the organisation.

My analysis suggest this is important because organisations know, (a) where it is (self

realisation is often overlooked by companies operating in a single market and product), (b)

where it needs to go (its strategic plan), and (c) the possible effects from external market

forces.

Applying this to multinationals operating in Ireland, they must have clear research on the

target market, competition and brand loyalty, as well as the internal constraint of the strength

of their HR strategy. If Ireland is being utilised as a European hub, their brand appeal in

Ireland may be of secondary importance to that of their European target market;

notwithstanding this, evidence suggests they still seek an Irish identity simply because they

are operating here; Microsoft is a good example of this.

In terms of the external factors, I conclude there are clear strategic questions:

Concentration of their competitors in the same market / location;

Barriers to entry to the market; and

What type of help, if any, can they obtain from the host country government?

From this organisations can determine their mission statement and what and how to best

achieve their objectives.

The earlier definition considers international organisations dealing with global customers;

therefore they may not be able to utilise a generic strategy for each region. A recent example I

have observed was a Nike advertisement which insulted Muslims where Nike inscribed Allah

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on the sole of their sports shoes. The Nike example is a lesson on why it may be advisable to

hire employees from within specific countries or regions who will immediately recognise

what is acceptable to consumers.

Figure 1.2.1 (B): NIKE Air Runner (Nike Inc., 2014)

The definitions above also cater for the fact that many organisations outsource consumer

services, as it is cheaper, which can lead to problems due to cultural misunderstandings. That

said, there is a fine balance between the risk of losing some customers and the cost saving

from outsourcing; organisations maintain statistics on complaints and customer attrition to

help them assess this risk.

Tools that are usefully employed in strategic management include:

The Current Competitive Position;

A PEST (Political, Economic, Social and Technological) Analysis;

Porter’s Five Forces;

Key Success Factors;

Industry Life Cycle; and

The Driving Forces

These are just a few I have assessed for this Project.

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From what I have read Thompson & Martin and the Organisational Dictionary have given two

different meanings to Strategic Management and Planning. I admit both sources have given

exceptional definitions. The quote from the Organisational Dictionary says Strategic

Management and Planning is focused more on customers and competitors which aligns it with

Marketing Management and external influences. On the other hand the quote from Thomson

& Martin looks more at the internal factors. In this Section of the Literature Review, where I

consider the Strategic Management Tools, I will attempt to assess both of these definitions

using theories put into practice in organisations like Microsoft.

1.2.2 Current Competitive Position

Asch and Bowman said, “Porter suggests that there are three generic strategies that firms can

pursue to achieve competitive advantage: Cost Leadership, Differentiation and Focus.”(1996,

p.34)

In this section I am considering literature focusing on the internal perspective of an

organisation. Competitive positioning depends on Cost Leadership within an organisation and

its internal cost control. Porter relates this to differentiation and focus.

Analysis can highlight areas within an organisation that are fatally cost negative and allow the

organisation to decide on which survive. Since efficiency and profitability are key goals for

organisations, I would contend organisations need to perform a cost exercise at the start of

every year. However, I would assume in practice organisations carry this out more frequently,

e.g. monthly management accounts analysis, particularly at times when the organisation is

growing and most especially during economic downturns to maintain their competitive

position.

Cost saving is not always a solution, i.e. there is a base cost level to stay in business. Some

fixed costs are extremely difficult to reduce, e.g. premises, light, heat, etc. and the savings

achieved are often a zero sum game, i.e. less cost, less production, less profit. Employee costs

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are nearly always the key component of the cost challenge. Therefore, driving out efficiency

is one of the key strategic objectives of multinational organisations.

My analysis suggests that multinationals constantly focus on trying to establish their

competitive position relative to their rivals. Organisations need to consider the cost / price

equation of their goods; can improvements be made either technologically or

organisationally?

Bowman (1998) says the competitive environment in a particular market segment can be

defined as:

A group of consumers who have similar needs, and share similar values of use of

values that would meet their needs. Thus a segment of demand could span across

geographic boundaries: that is, there may be people with very similar needs ranged

across the Globe. (p.70)

From both of the above quotes I can conclude that creating a competitive environment is

centred on the customer and production proposition. From the first quote by Asch and

Bowman we can see it is focusing mainly on production and how the strategy of competitive

advantage should be based on optimising production to create greater efficiencies. On the

other hand, Bowman suggests the best way to create competitive advantage is to focus on

customer needs, as they can be similar across geographical regions. I will show in my

Contextualisation, focusing on Microsoft, which approach they use and if either approach is

more effective.

1.2.3 Political, Economic, Social and Technology (PEST) Analysis

According to Asch and Bowman (1996) a PEST analysis is:

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An approach that subdivides the macro environment into four broad areas. Each of the

sub environments impacts on the others, for example a downturn in the economy may

result in a shift in political priorities from controlling inflation to stimulating growth.

(p.27)

This analysis tool assesses the Political, Economic, Social and Technological impacts on

organisations. I observe this is an externally focused tool in that it considers the external

factors outside the organisation which may affect it both as opportunities and threats. I set out

below my findings from the literature on this tool.

Political analysis - the organisation will consider the different political changes and

developments that could have an effect on the organisation, e.g. changes in government

imposed tax rates, cross-border tariffs or environmental policies.

Microsoft, and many multinational organisations are good examples of a political

consideration in an Irish context; Google were attracted by the low Irish corporate tax rate

and the Irish Government commitment to this rate. This meant earning profits in Ireland and

retaining profits in Ireland significantly reduced its tax bill. This coupled with a stable

political landscape made Ireland a compelling opportunity. Of course there are threats to this

strategy in the form of US government amendments to its tax policies for offshore

multinationals, as implemented by Obama.

Analysis of political threats also permits multinationals to attempt to influence these through

government lobbying.

Economic analysis - the key factor is the economic climate in which consumers make

purchase. There can be no better example of this than Ireland over the past 7 years following

the collapse of the construction and banking industries leading to a deep recession.

Social analysis - multinationals approach this from the perspective of different global

consumer tastes and preferences (green products for example); the age profile and size of the

population they want to target, and national trends. These are major factors for certain

multinational sectors such as tobacco, alcohol, energy, etc. However, a ‘green’ agenda can

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offer opportunities in a social context for multinationals. Microsoft is an example of having a

social policy in Ireland where they have a number of community initiatives under their

‘Unlimited Potential’ programme which was “designed to help individuals and communities

to achieve their goals and dreams through relevant, accessible, and affordable technologies.”

(Microsoft Ireland Community, 2010)

Technological analysis - considers threats such as substitute products that would render

goods obsolete through technological advances, automation and technology incentives.

Technology is one of the areas that constantly offer up opportunities and remains a key focus

for multinationals.

I have concluded a PEST analysis offers organisations a very useful tool to analyse external

factors which may have an adverse affect and allows organisations to seize opportunities by

factoring this into their planning process. PEST is a good tool to use when comparing the

viability of a market.

1.2.4 Porter’s Five Forces

Asch and Bowman said, “Porter’s approach concentrates on the competitive forces operating

in the industry, the outcome of the analysis being an assessment of the attractiveness of the

industry (defined by how relatively profitable the industry is for the firms already in it).”

(1996, p.17)

As I interpret this, Asch and Bowman suggest that Porter’s Five Forces is an important tool

for organisations to permit them to observe if a market is sufficiently attractive to enter. The

required analysis is extracted from market intelligence and, to have an understanding of

competitors, through the use of published financial statements.

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Figure 1.2.4: Porter’s Five Forces (COMINDWORK, 2013)

I note each of the Five Forces is used to analyse the micro-environment; analysis of the

specific industry and not the whole market. Multinationals like Microsoft produce a variety

of products, for instance the Xbox and Xbox Games. They use Porter to analyse the computer

gaming market when they are preparing to bring out, say, a new Xbox. Each organisation

using Porter as an analytical tool can use the five Forces in different ways.

I consider the Five Forces are quite self-explanatory; it is the analytical ability to generate

meaningful results which is critical. Take Google and Microsoft for example; both

organisations use Porter by almost overpowering its analysis. Each firm seeks by force of size

and reach to marginalise new entrants, control suppliers by sheer purchasing power, ward off

threats of substitution by striving to be the market leader through constant innovation and

reduce bargaining power of customers by being the only tenable option.

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I have found, organisations often misunderstand and misuse Porters Five Forces. Dobbs

(2014) said as much in his article:

Many people only understand the 5 forces framework and its use in an inordinately

shallow way. At best, this leads to incomplete, inaccurate, and unhelpful analysis. At

worst, it can lead to misanalysis, poor decision making, and disastrous organisational

outcomes. (p.33)

1.2.5 Key Success Factors

Thompson and Martin say, “Some key success factors will be industry and sector specific. For

example, successful consumer goods manufacturers will need skills in brand management;

Charities need skills in fund raising and public relations.” (2005, p.103)

I agree the Key Success Factors (KSFs) are those that make an organisation successful in a

specific sector. In relation to Strategic Management, knowing these factors allows an

organisation to enhance and grow. It also allows the organisation to better understand where

other organisations are failing and this can provide a competitive advantage. A good example

of this is the mobile phone market, where branding is seen as a war game, IPhone versus

Android, etc.

I conclude organisations need to have a plan in place to ensure their KSFs are not replicable,

if possible. Retaining key highly skilled and knowledgeable employees in their industry may

be 1 of these. On a broader scale I see KSFs can often include, first mover advantage, e.g.

always being the first out with a new innovation; patenting unique designs; a marketing coup

that sets your product apart as unique , e.g. Coco Cola.

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Figures 1.2.5 and 1.2.5 (B): Coca Cola (Sa Photo Graphics, 2010) Twitter (Upcity, 2013)

Consider Google, this now associated with everyday language, i.e. “to Google”. This follows

a long tradition of naming KSFs such as Hoover, Biro, etc. and other new ones such as “to

tweet” associated with Twitter. Microsoft and Sony are almost synonymous with Gaming.

As I am describing software companies and my Contextualisation is based on Microsoft, I

think it is appropriate to quote Mingtao, “Successful innovation-driven firms always

endeavour to create innovative products and strive for excellence in product development.”

(2013, p.58)

I consider the quotes from Thompson and Martin and Mingtao as similar; they infer that each

industry has its own specific KSFs. As we explore Microsoft, I contend one of their biggest

KSFs is their HR strategy.

1.2.6 Industry Life Cycle

Bowman states, “The stage of an industry’s development can influence the nature of

competitive rivalry.” (1998, p.85)

I agree with Bowman, as an industry life cycle in decline is less likely to have many new

competitors, whereas an industry in the growth phase could have many rivals. The diagram

below is of the Life Cycle of a mature industry as referred to by Bowman, which I will now

discuss.

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Product Develop-

ment

Introduction Growth Maturity Decline0 0 0 0 00 0 0 0 00 0 0 0 0

Figure 1.2.6: Industry Life Cycle (Mark Staunton, 2014)

A new product can itself be the start of a new industry, take the first mobile phone; at this

point there may be few, if any, competitors. As we move across the diagram to Growth,

competitors observe the new market opportunity (subject to patent rights) and develop their

own products. Consumer recognition also begins to accelerate at this point and the market

increases. We then move to Maturity; consumers will have bought the product, organisations

have hit the peak level of demand and profitability. Finally is Decline, where the market is

flooded with suppliers and saturation begins to cause players to lose money. I consider the

Life Cycle as a good tool for organisations to measure if it is worthwhile to enter a market and

assess when to exit before it declines.

For strategically well managed organisations I note it is important for them to recognise their

place in the cycle, so they can move with the trends. Some products, that dominated the

world, have virtually ceased to exist including, gramophone records, cassette tapes,

walkmans, the corner shop (not as dramatically as the others), analogue devices, etc. Firms

that didn’t move with the times died.

I note and agree with Bowman, while I would contend it is common sense for businesses to

know where they are in the Life Cycle. I identified a second scholar with the same view;

Peltoniemi said, “Industry life-cycle research on firm survival commonly tests the effects of

innovativeness, early entry and experience from related industries. The bulk of the work

focuses on hazard functions of firm groups differing from the above-mentioned

characteristics.” (2014, p.223)

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1.2.7 Driving Forces

Driving Forces are what shape competition in specific industries. All latent issues that impact

competition are Driving Forces. Driving Forces are both internal and external to

organisations, e.g. trends – do people want sports cars or jeeps.

This is described as “Key internal forces (such as knowledge and competence of management

and workforce) and external forces (such as economy, competitors, technology) that shape the

future of an organisation.” (Business Dictionary)

I consider Driving Forces mirror aspects of PEST; they can be politically motivated, social

drivers, economic or technological. Take the current position in Ireland where both Lidl and

Aldi, as perceived low cost competitors, have thrived in an economic downturn.

Figures 1.2.7 and 1.2.7 (B): Lidl and Aldi (Daily Mail, 2014)

The Business Dictionary description I propose is not necessarily what drives every

organisation and I will consider this later when looking at the Driving Forces in Microsoft. I

agree external forces play a significant role but for some organisations innovation drives the

market.

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1.2.8 The Value Chain

The Value Chain refers to the activities within an organisation that create value which

exceeds the cost of providing a product and therefore increase the profit margin.

According to Wheelen and Hunger (2012) the value chain is,

A linked set of value-creating activities that begin with basic raw materials coming

from suppliers, moving on to a series of value-added activities involved in producing

and marketing a product and services, and ending with distributors getting the final

goods into the hands of the ultimate consumer. (p.191)

This is illustrated below by what I suggest are the activities included in the value chain:

Inbound Logistics;

Outbound Logistics;

Operational Efficiency;

Marketing and Sales; and

Services.

As we can see, these are the key processes from production to sales and are the areas that

afford an organisation the opportunity to increase their profit margins. Ensuring costs are

minimal and profits are maximised is essential for organisations long term success. I found

this links back to Porter’s view; it is a process based view of the organisation. According to

Edward Sweeney, “Most organisations engage in hundreds, even thousands, of activities in

this process of converting inputs into outputs. These activities can be classified as either

primary or support activities that businesses must undertake in some form.” (2009, p.13)

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Figure 1.2.8: Porter’s Value Chain (1985) (Mind Tools, n.d.)

1.2.9 Conclusion

In conclusion, I believe I have provided wide coverage of theorist views and given examples

in practice. I believe it is important to understand these views so I can connect this to my

Contextualisation. I think throughout I have shown that theories have pitfalls and many

theorists hold different opinions on planning and management tools.

I concede that no tool is ineffective, so it comes down to what is appropriate for an industry or

organisation. In reality, all tools can be used in one way or another. I will discuss further in

my recommendations in the chapter on contextualisation.

I would note there are other tools like a SWOT (Strengths, Weaknesses, Opportunities and

Threats) analysis that could also be used by firms in strategic planning.

Finally, I argue this quote sums up the rationale for appropriate Strategic Management and

Planning, “It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about

that, you'll do things differently” (Warren Buffett)

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1.3 International Human Resource Management

1.3.1 Introduction

Multinational organisations are generally major employers, operate across national borders,

sometimes in remote places, and will often require management practices that take into

account diverse cultures, religions and ethnicity. Employees are generally the main cost to a

business. As such, Human Resource (HR) Planning is a significant requirement for

organisations.

Resource Planning, i.e. observing employee gaps, reallocation of resources, etc. is crucial.

Failing to plan may diminish the overall operational effectiveness of the organisation.

HR Managers need a clear understanding of an organisation’s current and future plans. HR

usually has confidential access to key decisions made in organisation; decisions that can both

positively impact staff, e.g. expansion, and negatively impact staff, e.g. contraction and

potential staff layoffs. If an organisation intends to open a new subsidiary in a new country,

they need to plan precisely for its staffing requirements and the specific set of skills that will

be required.

HR Management includes integration across the organisations, challenges facing employees,

employee resourcing, selection of employees and ethics within the organisation. Global

employees can be defined as, “the critical issues faced by multinational corporations with

regard to the employment of home, host and third country nationals to fill key positions in

their headquarters and subsidiary operations.” (Storey, 2007, p.215)

This describes the challenges facing HR Managers in employing and deploying personnel

around the world, whether this be the home country, host country or a third country.

DeCenzo et al. says Human Resource Management (HRM) is: “The part of the

organisation concerned with the “people” dimension. HRM can be viewed in one of two

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ways. Firstly, HRM is a staff or support function in the organisation. Secondly HRM is a

function of a manager’s job.” (2013, p.32)

HRM can include cooperating with the business on deciding the employment needs of the

business, and specific business units, in line with the organisation’s strategy:

Training employees;

Relocating employees ;

Dealing with employee relationship issues;

Selection, Recruitment and even Dismissal of employees;

Performance management support to business line managers;

I maintain creating the capability to adapt management styles depends on the culture

requirements in an overseas country and ensures this works effectively. During recruitment

campaigns the organisation must go through the assessment and selection process.

Prospective staff must have the right skill sets and demonstrate the behaviours expected

within the organisation. Making these assessments can be difficult. The first challenge is to

ensure they understand the business requirement and the skills and behaviours required.

Recruitment decisions are not just about academic qualifications; college degrees are useful in

demonstrating a candidate’s aptitude for learning and the possession of knowledgeable skills.

Many organisations use assessment centres, not just for assessing new employees but also

existing employees; perhaps as part of talent identification and succession planning.

Staffing is such an important aspect of successful companies that there is continuous

assessment of their recruitment activities. Mistakes can be made and managing under-

performance is a costly process.

There are many tools organisations can use for recruitment and selection processes, for

instance, internal work culture studies or socio-cultural studies. Recruitment centres are often

best placed to carry out these studies, as it is a non-threatening place for staff.

My assessment of this section of, is there are two main approaches to HR; the first the

Harvard Model, and second the Michigan Model.

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The Harvard model focuses mainly on the human element, whereas the Michigan model

focuses more on the strategic resource element. According to Ozbilgen(2004):

These two classical models of HRM have later underpinned the “hard” and “soft”

variants of HRM, respectively. The “hard” variant of HRM considers employees only

as resources of the organisation. Therefore, it argues that human resources should be

used effectively in order to achieve organisational goals. On the other hand, “soft”

HRM considers employees first and foremost as human beings who contribute to the

organisation. ((Maund, 2001) p.208)

My intention is to consider how other theorists look at HR either as the strategic resource of

the Michigan model or the human element of the Harvard model. I have determined from my

research most organisations focus more on the human element and yet the theorists I have

looked at here have focused on the strategic resource element.

1.3.2 Employee Recruitment

For an international organisation the recruitment process can either be seen as a major

obstacle to doing business or an opportunity to acquire organisational assets. Growing

companies tend to see staff as an asset and declining companies as a cost burden. From my

perspective, multinational organisations see employees as an important pool of talent and

therefore focus on recruiting employees with the ability to bring a new perspective to the

organisation.

The organisation has to take into account that employees in global subsidiaries will have

different work ethics and performance methods. Organisations have central objectives and, to

a point, can accommodate different overseas approaches; but the host country manager must

ensure all targets are met so the organisation works effectively.

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DeCenzo et al. say, “Recruiting is a major human resource activity. Depending on the size of

the company, HR departments estimate that they spend between 50 percent and 70 percent of

their time on recruiting each year.” (2013, p.142)

I assess from this, based on those statistics, for large multinationals with large workforces in

multiple-locations, the sheer volume of people that apply for roles can be a major challenge.

Multinationals do obtain a benefit from large pools of applicants as they are more likely to

identify the most talented employees from around the world. This is some reward for the

massive amount of time they spend on recruitment and the high level of HR costs this incurs.

DeCenzo et al. also identify some factors that affect recruitment, “Obviously, size is one

factor; an organisation with 100,000 employees must recruit continually. So, too, must

organisations with high turnover, such as fast-food firms, smaller service organisations, and

firms that pay lower wages.” (2013, p.142)

Figure 1.3.2: McDonalds (CP Africa, 2014)

I see as an excellent example of a company with high staff turnover; mostly casual or seasonal

labour. One factor in this is because, as DeCenzo mentions above, an organisation like

McDonalds tend to pay minimum wage. Even though multinational organisations may appeal

to many people, it doesn’t mean everybody qualified for a job with them wants to work there.

This means there are some HR constraints on recruiters; they must sometimes narrow their

focus from the ideal candidate. DeCenzo et al. identified some of the constraints:

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Organisational Image – This can impact recruitment both positively and negatively. A

company with a positive image, like Microsoft, may attract ambitious graduates.

Organisations with a negative image detract graduates from applying.

Job Attractiveness – Certain jobs will not appeal to graduates; roles considered boring,

difficult and low paid. Internal Organisational Policies – For instance hiring people

from within which may make the pool of candidates smaller, but it may encourage

employees to work harder when they see the possibilities of internal promotion.

I observed DeCenzo is clear when he sees employee recruitment as key and as such follows

the Michigan model. He discusses recruitment in the context of multinational organisations

faced with volume of recruitment activities. There are exceptions, Google being the most

notable, as they look for people that fit the Google culture rather than academic qualifications.

McDonalds is on the other side in that DeCenzo sees theses as a strategic resource that come

and go. I agree with DeCenzo to a point.

Breaugh suggests that, “before making decisions concerning such issues as what recruitment

methods to use, an organisation should thoughtfully establish its recruitment objectives.”

(2008, p.104)

This confirms to me from my research that theorists see Employee Recruitment as a strategic

process and not from the human element.

1.3.3 Impact on National Culture

When we look at HRM national culture issues we are trying to determine how the home

nation’s (the organisation’s headquarters) culture and values align with a host nation culture

(a foreign subsidiary). Staff used to a formal workplace, suit and tie, may find the dress down

culture of, e.g. Google, a challenge. Managers used to operating on a “do as I say basis”, may

find it difficult to operate on a less formal and interactive basis, or vice versa.

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I observed that many theorists have varying opinions on culture of organisations. Schein has

his three level’s model; Hofstede has his Cultural Dimensions; Hall his High vs. Low context

communication, etc. As Hofstede is the most noted I propose to focus on him in this section.

I note this interesting quote from Hofstede, “Culture is the collective programming of the

mind distinguishing the members of one group or category of people from others”. (Geert

Hofstede, National Culture)

I consider this means cultures can be similar within nations and vary across them.

My analysis suggests that most organisations will attempt to recognise and modify the effect

of introducing home nation policies by adapting them to local culture. Many HR theorists

believe in-order to succeed in a host nation, they must adapt; if not there may be unforeseen

clashes.

Larsen, Rosenbloom and Smith (2002) say:

The basic question argued for decades, is whether management theories and practices

are transferable across cultures. Some assert that globalization and changes in

technology have led to standardization, increasingly similar cultures and universal

management practices. Others argue that despite the standardization of products and

services, cultures are resilient to change. Therefore the adaption of business practices

to different cultures is needed to reduce difficulties in cross-cultural interactions,

which in-turn should increase business performance. (p.2)

This quote confirms by contention an organisations need to adapt their policies for different

national cultures.

An example of religious belief constraints could be, that McDonalds serve burgers with cow

meat not been killed in the halal way; a Muslim employee might refuse to handle such

products. A similar issue arose in UK multiples in the last year when certain staff refused to

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handle goods, such as alcohol in Marks and Spencer. In Iraq, perhaps, McDonalds may

need to integrate with the national culture and only handle halal products.

The following quote supports by Dessler (2013) demonstrates the cultural issues:

When Google founders Sergey Brin and Larry Page visited India a few years ago, they

reportedly came across as “college backpackers”. They just seemed too informal,

given their responsibilities for managing Google. Their experience illustrates the fact

that countries differ widely in their cultures – in other words, in the basic values that

their citizens adhere to, and in how these values manifest themselves in the nation’s

arts, social programmes, and ways of doing things. (p. 604)

From my research I observed from different theorists there is no definitive way to say how

HR will be impacted by national culture issues. Hofstede recognises that other theorists

researching this subject are developing upon his cultural dimensions. I propose the best

method for observing the HR impacts on national culture is the use of Hall’s High vs. Low

context in communication; he gives a comprehensive view at many nations and how they

interpret messages.

1.3.4 Training for Expatriates in Multinational Organisations

General training requirements exist for all employees in an organisation and in each country a

multinational employs staff. There is a specialist training requirement to International HR that

focuses on employees who are about to become expatriates. This training can be referred to as

“getting on abroad”, but is also about the location specific skills an expatriate will require.

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I can support the statement above with this quote from Pucka et al. (2008):

It has been estimated that the first year costs of sending expatriates on foreign

assignments are at least three times the base salaries of their domestic counterparts

(Shaffer, Harrison and Gilley 1999). Expatriate failure is associated with significant

direct and indirect costs (Takeuchi, Yun and Russel 2002). These include not only

direct costs, but also possible indirect costs such as employee loss of personal self-

esteem, self-confidence or reduced motivation. (p.2182)

Employees are often unprepared for the challenges they face when overseas and in many

cases failure to prepare them for such challenges results in employees quickly seeking to

return home. This creates a high turnover of expatriate managers that can be unsettling for the

local workforce and needs tackling through better preparation and planning.

This quote from Rehg et al. (2012) shows how important training and selection is for

expatriates:

Because of the importance of success in overseas assignments, firms have focused on

areas such as selection and training to improve individual performance in foreign

assignments. Key aspects of selection and training focus on personality characteristics

and cognitive abilities related to successes in these types of assignments. (p.216)

I conclude the article by Rehg et al. with factors which expatriates must take in to account

before deciding to go overseas; for instance if they have a young family or their partner’s

career.

In addition, there are potential language barriers; prices of homes and everyday living issues.

Take for example assignments for middle managers in Ireland during the Celtic Tiger years;

living here was expensive.

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Above are a few important questions that need to be raised.

General employee training, which all employees require falls into 2 categories:

Job commencement training, such as induction, new systems, policies and procedures;

and

The continuous on the job training.

Firstly, looking at new employees Dessler said, “Employee orientation still provides new

employees with the information they need to function (such as computer passwords and

company rules); ideally, though, it should also help new employees start getting emotionally

attached to the firm.” (2013, p.270)

I agree with Dessler, orientation is crucial; without these fast paced inductions new employees

become cost absorbing and not as productive as they should be.

Secondly, continuous on the job training is equally important. If an organisation’s employees

are not kept up-to-date with new technologies or new organisational processes they will not

function effectively. It is paramount HR managers, as part of regular assessment programmes;

engage with business managers to understand the ongoing training needs of the organisation.

Dressler (2013 says:

Training means giving new or current employees the skills that they need to perform

their jobs. This could include showing new Web designers the intricacies of your site,

new salespeople how to sell your firm’s product, or new supervisors how to complete

the firm’s weekly payroll. (p.270)

I observe from my reading on Dressler, Rehg and Pucka they consider the Harvard human

element model is preferable. I concur the human element is important, but must be balanced

with the strategic element in line with the Michigan model.

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1.3.5 Culture and Organisational Life

HRM in organisations play an important role in helping the organisation to define its culture

and values. Both are ultimately owned by the Board.

Culture and values includes areas such as:

No blame, learning culture

Striving from continuous improvement

Ownership and responsibility by all staff of their activities

Leadership

Delivering what we promise, etc

I think organisations have to work hard to make sure different cultures in an organisation

work well together and to a common cultural objective.

Overall communication I consider is the corner stone of a successful cross-cultural

organisation. My analysis suggests Hall addressed this best with his theory of High vs. Low

context communication.

I think the following quote from Zhu et al (2005) concerning Hall is useful:

Edward T. Halls’ (1976) low and high context cultures are a very important dimension

for studying communication strategies. Low-context cultures tend to communicate in a

direct fashion. High-context cultures tend to function in an indirect fashion (Samovar

& Porter, 1991; Gudykunst & Kim, 1997). (p.65)

Hall also points to, “the polychronic nature of high-context communication, which is easily

interrupted, and the low-context communication, which is characterised by monochronic

styles.” This quote shows how he looks at communication and I think it supports my views

above. It expresses the need for organisations to understand culture and I feel that Microsoft

has one of the best understandings of cultural diversity.

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There are two aspects to this in multinational organisations. The first involves training

employees going abroad to manage and adapt the culture to the local environment without

compromising the overall culture of the company. The second is to work with the business

units to ensure no lack of efficiency arises due to the different work ethics and cultures.

Negotiation is a crucial part of business and dealing with cultures, both internally and

externally of the organisation, can be beneficial or disastrous if not done correctly. Theorists

believe in order to be effective in business in another culture you must first know some of the

customs and cultural pitfalls to begin with.

According to Gulbro and Herbig (1999):

When negotiating internationally ideas, exceptions, and behaviours can be culturally

unique. Discussion and communication may be impeded because two sides think and

act differently. When two people who think and behave differently attempt to

communicate, the potential for disagreement and misunderstanding is great. (p.47)

This quote from Gulbro and Herbig reiterates to me how important negotiation can be across

cultures.

I suggest this section 100% reflects the Harvard model; when talking about cultures every

theorist considers the human element. Theorists I have referred to, Trompenaars and

Hampden-Turner, Hofstede, Hall and Schein, all consider a more individualistic look at

national cultures. In other words, they assume no two cultures are exact matches. I agree this

is true, while there are similarities they are not close enough.

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1.3.6 International Human Resource Management (IHRM) Trends and

Future Challenges

As HRM is constantly changing and has an impact on an organisations business model, it is

prudent to understand emerging common trends. Dowling states, “Business ethics and, mode

of operation, non government organisations, and the developing role of HRM in contributing

to safety, security and dealing with global terrorism.”(Dowling, 2013, p.269)

Some issues, e.g. global terrorism, may have been low on the agenda in the past. In Ireland,

for example, “Tiger Kidnapping” was a recent trend; however in the not too distant past, para-

military kidnappings arose from time to time and at 1 least famous case, where a Dutch

industrialist (Tiede Herrema, MD of Ferenka) was kidnapped, it had an impact on

multinational’s security considerations in Ireland. Notwithstanding this, Ireland is seen as a

very safe place for multinational to set up when compared to more volatile places in the world

today.

In the context of security and dealing with global terrorism, it is therefore important

employees of multinationals feel their organisation is doing its upmost to keep them and their

families safe. At the moment in Mexico City there are approximately 12 kidnappings per

hour.

In countries such as Japan, HRM is seen as absolutely crucial to organisations continued

success and growth. Japanese organisations believe if employees feel like they are valued they

will perform better. Consequently, Japanese organisations tend to see HR as a constant

changing environment where they adapt to changing needs of their employees.

Having appropriate business ethics demonstrates to employees the business isn’t just driven

by profit. This creates a bond between the aspirations of employees and the organisation.

I have considered the evolving HR function and what it means for multinationals in the future.

In literature I reviewed they comment on the large number of difficulties in comparing

national to international methodologies. The literature refers to the fact that IHRM is

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relatively new and few business schools have this on their curriculum. It is difficult to form a

comprehensive view on the future direction of IHRM, as each multinational appears to have

developed different philosophies and strategies. Recruitment can be difficult for

multinationals, as they attempt to merge new employee’s philosophies to that of the

organisation’s. To achieve this, most major companies have defined their culture and value

statements; however, these are not homogenous in every location.

To summarise, I see the following as the evolving trends:

The casual rather than formal working environment; compare a Google to a

multinational Bank;

Openness and transparency;

Unions or no unions;

Formal HR performance methodologies rather than informal;

Government regulations that are overly employee friendly; a challenge for

multinationals where perhaps they have a hire and fire ethos in their home country;

Security, terrorism threats; and

Applying the highest standards of ethical behaviour in every country they work, e.g.

absence of child labour.

My research indicated that most theorists dealing with this topic are out-dated and not as

relevant today with the exception of Dowling. I found he gave excellent explanations of

the challenges facing companies today, as well as in the future and he described in depth

how multinational organisations need to cope with these issues.

I believe this section falls under the Michigan model. I think Dowling has done an

exceptional job of trying to find the human element of future trends.

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1.3.7 Performance Management & Rewards

Dowling says that Performance Management is “a process that enables MNE’s to evaluate

and continuously improve individual, subsidiary unit and corporate performance.” (2013,

p.151)

I consider that Dowling sees performance management as a key driver when appraising

employees to ensuring continuous development is occurring.

Performance Management has two principal aims:

Ensure continuous delivery and improvement; and

Formally manage performance.

Most organisations provide underperforming employees the opportunity to address the

reasons for this underperformance. There are times when underperforming employees must be

managed out of the business. Having a formal approach demonstrates to other employees the

organisation is willing to work to assist colleagues. The formal process is designed to

eliminate the risk of industrial action or legal challenges.

Providing employees with performance related rewards is an essential part of IHRM.

Employees usually go the extra mile when rewarded.

After analysing what Dowling, Radnor and Barnes have said in relation to performance

management, I note this is focused mostly on HR as a strategic resource under the Michigan

model.

Organisations performance management policies apply to subsidiaries. To achieve a

standardised approach to performance management there are potential obstacles like

incompatible data, difficult to interpret data or unreliable data coming from subsidiaries. This

is less of a problem today, as there is high speed internet allowing organisations to send and

receive data in seconds.

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Rewards are a significant part of performance management, as I stated above; rewarding

employees for doing a good job may increase the overall productivity of the organisation. In

order to reward employee’s performance there needs to be close management of targets,

which may not suit every culture. Even in well developed markets, employees can resent

close monitoring, monthly one-to-ones, precise and SMART objectives that control their

every activity.

Policies need to demonstrate to employees how they can achieve their goals and how they

will be monitored and managed. In a sales environment this might be considered more clear-

cut, as an organisation can monitor specific sales targets and can directly reward employees

who perform best or in excess of targets. On the other hand in service provision, such as

accounting functions, it is more difficult to gauge outstanding performance, as targets are less

clear. This means that organisations need to set different targets for each group and develop

appropriate reward schemes.

1.3.8 Conclusion

I believe that throughout this section I have given a comprehensive view of the IHRM issues,

current and future challenges and opportunities which may affect an organisation positively. I

think there are many issues that still need to be resolved, e.g. inappropriate practices such as

child labour. I concluded that there is no one correct or incorrect methodology for HRM.

From a multinational perspective, it is clear a certain amount of autonomy may be needed in

each subsidiary so they can manage local requirements. It allows organisation to monitor

progress whilst not making massive changes to the work culture that could have long-term

adverse affects.

The aim of this section was to analyse if, each part of the HR function, there are better ways

to utilise HR practices in a multinational environment. The argument of convergence versus

divergence springs to mind. Convergent theorists believe that cultures will become more

similar because of internationalisation; on the other had divergent theorists believe cultures

35

are becoming more different. I think, because each function of HR differs, there needs to be

unique strategies for each HR section, which I have tried to demonstrate using the input and

quotes from theorists and HR professionals.

I think that IHR managers should follow the divergent path for now; however, they should

also be aware of the possibility of a convergent society in the future.

Having strategically analysed each sections to attempt to determine if they follow the Harvard

or Michigan Models, I have come to the conclusion that HRM is predominately run under the

Michigan model. I think all the theorists recognise there is a shift leaning to organisations

defining their HRM under the Harvard model i.e. focusing on the human element. Microsoft

and Google are great examples of this and that is why I chose to focus on Microsoft in the

Contextualisation section.

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1.4 Marketing Management

1.4.1 Introduction

The strategy in creating marketing concepts requires the Marketing Management team

“packages and clearly communicates the best strategic thinking to meet the decision-making

needs of knowledgeable executives managing real-world organisations.” (James, 2013)

In a multinational organisation this means utilising the best people around the world in order

to create a marketing campaign that draws consumers to their products and convinces them to

buy the product. If the organisation wants to sell goods, the marketing campaign has to be

aimed at the right target market. There are a set of tools marketing managers use to create

successful marketing campaigns.

A SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a useful tool when

developing a marketing plan:

1. Strengths - The internal abilities which allow the organisation to attain its goals;

2. Weaknesses – The internal limitations that could limit the organisation from achieving its

goals;

3. Opportunities – Something outside the organisation they can take advantage of enabling

them to achieve another goal; and

4. Threats – External factors that may cause problems for the organisation either now or in

the future.

Successful implementation of a marketing plan is crucial. It “is the process that turns

marketing plans into marketing actions in order to accomplish strategic marketing objectives.

Whereas marketing planning addresses what and why of marketing activities.”(Armstrong,

2011, p.85)

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Marketing Management includes:

Deciding on the target demographic;

Creating an Action Plan to target that demographic;

Conduct a feasibility study; and

Implementing the plan.

Marketing Management is crucial for multinational organisations; this will determine if the

product will sell. A wrong move can put the organisation’s products and the organisation’s

reputation in jeopardy and result in consumer apathy towards the product and the brand.

Demographics are essential if the organisation is to avoid incorrect targeting, i.e. a product

suitable for college students but targeted at publications read by old age pensioners.

Doyle and Stern said that marketing and selling are often confused my managers; while

interesting I believe they are quite connected. They should be considered separately but sales

are only generated if consumers know about the product. I believe marketing must always be

focused on the sale. I agree sales has is not a part of developing a successful marketing

strategy, but it is the end-game.

Doyle and Stern also make some valuable points about two objectives set by companies,

profitability and sales. They argue these miss the main point of marketing, especially

marketing research, and that is customer satisfaction. Profits and sales are important but I

agree customer satisfaction is also a key end-game for products.

An organisation’s marketing department must know the product’s purpose and target market.

An organisation needs to create an action plan for each product launch and marketing

campaign:

Deciding when the product launch should take place to maximise sales; little point in

launching ice cream in the middle of the winter;

Deciding on how to launch the product, e.g. trade shows, mass media campaigns, etc;

Conducting an appropriate feasibility study; and

Implementation of the plan.

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“Generally, the concept views the world as one market and is based on identifying and

targeting cross-cultural similarities. In our opinion, the global marketing concept is based

on the premise of cultural differences and is guided by the belief that each foreign market

requires its own culturally adapted marketing strategies.” (Ram, 2013, p.3)

I conclude from this multinational organisations will find it difficult to target different

segments in different countries with one centralised marketing plan. I will consider this in the

section on Market Segmentation.

I think marketing management plays a huge role in strategies however from research I note

articles, such as one by Singer, that suggest marketing is losing its relevance in business

strategies. I disagree with that sentiment. I believe it is becoming more relevant.

Conducting market research is crucial no matter the product. There are many ways to carry

out research, for instance through online surveys, using the history of shoppers to identify

trends, or conducting focus groups. Research conducted can give varying results, e.g.

examining shoppers buying patterns may show they are buying a similar type of products but

it does not mean that they will switch to your product; this could be due to brand loyalty, local

preference, e.g. “Buy Irish”, etc.

Marketing departments need to ensure they develop the brand. A consumer might comment, if

they are good at producing one product, so maybe I should try this one; if you like Denny’s

sausages, you might try their rashers. If consumers don’t easily associate with the brand it is

less likely they will try a new product.

1.4.2 Market Segmentation, Targeting and Positioning

Market segmentation can be defined as selection of groups of people based on certain

characteristics or traits that put them in a certain position to buy goods. Market segmentation

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is, “how organisations decide on which segments of a market to concentrate their commercial

markets.” (Baines, 2011, p.206)

Having analysed Baines and Kotler I agree developing market segments is important both in

the long and short-term. They both believe some organisations do it correctly and those that

don’t have serious problems in the long-turn.

For instance, Vodafone supply phones and services globally; there is a global demand for

their products and services, therefore they must have a diverse marketing strategy. Certain

phones appeal to different market segments; take phones supplied to organisations where they

require both user friendly but also security tools to help protect confidential data, Blackberry

for example. Vodafone Multinational organisations must have wide ranging strategies due to

the differences that arise in the segmentation process. In the consumer era we live, it is a

challenge for organisations because of the global variability of consumers. Organisations

invest heavily in attempting to analysis the key differences in groups of consumers.

Theorists believe there are two approaches to market segmentation; they are referred to as the

‘breakdown method’ and the ’build-up method’. The first is that essentially all consumers are

the same, so organisations attempt to discover which segments share certain differences. The

second is that all consumers are different so organisations attempt to discover the similarities

between the consumers. Most organisations today use the breakdown method. Both of these

methods have one similarity though; they both attempt to analyse the differences between

consumer segments.

Market Segmentation is usually broken down into the STP process; three activities

multinational organisations usually undertake:

Segmentation

Targeting

Positioning

These three processes align with the Marketing Plan section below dealing with marketing

plan decision making for multinational organisations. Organisations use the STP process to

cope with the high level of diversification in markets today. This process provides

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organisations with the ability to target niche markets they previously struggled with. Baines

et. al (2011, p.207) shows three key benefits to using the STP process:

Enhancing a company’s competitive position;

Examining and identifying market growth opportunities through identification of new

customers, growth segments or product uses; and

Effective and efficient matching of company resources to target market segments

promises the greatest return on marketing investment.

“A company must identify the parts of the market that it can best serve and most profitably. It

must design customer-driven strategies that build the right relationships with the right

customers.”(Armstrong, 2011, p.202)

I see Targeting as aligning to Market Segmentation, as it is the next step having broken down

the market. Multinational organisations must analyse which of the market segments is best

suited for their product. The organisation then devises how they will target this market.

Finally I will discuss Positioning; this is linked heavily to the target market segment. “In

principle, we can describe the nature of spatial competition in a market either in demand

terms or in supply terms. Market segmentation represents the demand perspective on

structure, whilst competitive positioning represents the supply perspective.” (Baker, 2008,

p.64)

Positioning is the supply perspective that comes after the marketing plan. I consider

positioning is a crucial part of marketing management. If you position your product

incorrectly then you will miss your target market. Take Red Bull, for example; they have

positioned their product as appealing to a young adventurous segment and they back this up

by advertising and sponsoring Motor Racing, Air Gymnastics, Cliff Diving, etc; activities that

associate themselves with this market segment. Knowing what consumers are likely to find

appealing, allows managers to position products that associate to that market segment.

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Figure 1.4.2: Red Bull (Red Bull Brand Blogspot, 2011)

Kids, even though most won’t be buying items themselves, have a lot of pester power over

parents. It is not always possible to position products with adults that kids want, so the driver

has to be the other way round. Conversely, parents may be looking for healthier items

therefore organisations need to find a balance of appealing to both segments, e.g. a healthy

product but perhaps in child attractive packaging.

1.4.3 Marketing Plan

Having a marketing plan is crucial for every international organisation. Firstly, every country

is different; whether an organisation is outsourcing to a specialist marketing organisation or

developing its own campaign they need to know to cater for any cultural difference in a target

42

market. Take for example the Nike advertisement referred to earlier in the report. This is why

a good marketing manager will take steps to ensure their campaign does not offend any group.

Difficulties experienced by Nike are avoided when organisations develop more than one

campaign for its different target markets. Organisations can leverage off local experience for

more culturally sensitive marketing.

According to Jain (2000, p.25), “Marketing strategy is the creation of a unique and valuable

position, involving a different set of activities. Thus development of marketing strategy

requires choosing activities that are different from rivals.”

I conclude from this Jain is suggesting that organisations cannot have the same set of

marketing activities. I would not always agree with this; differentiation may catch the eye but

certain strategies work and therefore organisations work with these.

I explained above that SWOT is an important tool in the development of a marketing plan. It

shows both internal and external factors which affect an organisation. It also allows the

organisation to take measures to ensure the longevity of their products. For instance

Microsoft is constantly updating their software to ensure they stay ahead of their competitors.

Brassington and Pettitt say a SWOT analysis is, “The marketing audit is a major exercise

which ranges widely over all the internal and external factors influencing an organisations

marketing activity.” (Pettitt., 2007, p.436)

The marketing audit generally takes place before the organisation establishes its marketing

plan. It is a means organisation use to decide on the best approach for the marketing plan. One

of the best examples of a marketing audit is the BCG (Boston Consulting Group) matrix. It

analyses the growth and status of an organisation’s products in its markets (see below).

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Figure 1.4.3: Boston Consulting Group Matrix (Strategic Management Insight, 2013)

The optimum position for a multinational organisation is in the Stars bracket, where they

maximise profits and enjoy high growth rates. Most multinational organisations produce more

than one product and products can be spread across the BCG matrix. Being in the Question

Mark section does not mean the product is failing but it needs work to make it more profitable

and maximize the potential from the growing market.

These are a sample of tools used by marketing managers, some I have considered before and

found to give accurate results. I would struggle to say one of these approaches is best, as it

depends on the type of information an organisation is trying explore and the type of product.

I believe I have provided a reasonable insight into the above marketing plan tools. I will now

look at some elements that affect the type of plan an organisation creates. The marketing mix

involves marketing the product itself, i.e. packaging, placement, price and promotions.

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According to Brooksbank (1991, p.17) there are several characteristics to an effective

marketing plan, they are: “Strong top management support, compiled by staff, thoroughly

researched, external competitive focus, proactive/visionary, personalized/specific and

continually reviewed.”

From my analysis of effective marketing plans I concur with Brooksbank that these are

important. I believe Brooksbank complimented points raised in the Report. I note this is not a

tool for making a marketing plan but rather what needs to happen while making the marketing

plan.

1.4.4 The Marketing Mix

The marketing mix is a crucial technique used by marketing team to address the operational

aspects of the marketing plan, i.e. the practical requirement to be addressed. Eugene

McCarthy (1978) developed the Four Ps (listed below) from James Culliton’s original

marketing mix teachings, which McCarthy found to be a simpler way of describing the mix

concept. Some theorists say McCarthy’s marketing mix doesn’t go far enough and needs to

include both consumers and to acknowledge the role which research plays in determining the

‘ingredients’ (the Four Ps) to be used for the optimal ‘recipe’ (the use of the Four Ps). They

also argue that while the Four Ps can be used in most situations, organisations need to adapt

them for certain markets.

The Four P’s consists of:

1. Price – Setting the correct price ensures consumers will buy the product and protect the

profitability of the product;

2. Product – Creating a product that will fill demand. If there is no demand for the product

the organisation will not make profit;

3. Place – Placement, e.g. where and in what mode to best ensure consumers see and buy the

product; and

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4. Promotion – This refers to all the promotional options from advertising campaigns,

special offers, etc. to help get the product noticed.

Majaro (1982) surmised three processes to assist marketing managers in the choice of the

‘ingredients’, including:

1. How much is spent on each piece of the mix;

2. The apparent point of elasticity and consumer sensitivity; and

3. Allocation of responsibilities

Majaro is saying while organisations use the same marketing mix techniques, the individual

use of the techniques can apply differently, e.g. depending on the sector, the company and the

lifespan of the product.

Peter Doyle found the key issues involved in managing the marketing mix are that:

There are two key decisions which are central to marketing management: the selection

of target markets which determine where the firm will compete and the design of the

marketing mix which will determine its success in these markets. (Baker, 2008, p.251)

I understand this to mean organisations need to determine the target market, discussed earlier,

in order decide on the relative importance of the marketing mix, which may change in every

market. Hart et. al said the marketing mix should be run by operational management; will be

accountable for turning the strategy into a plan. “Irrespective of whether it has one or several

mixes, the objective is the same to develop and maintain a sustainable differential advantage

(SDA).” (Baker, 2008, p.251)

I must admit there are criticisms of the marketing mix. Some theorists think it focuses only on

what marketing managers are doing to attract consumers, rather than the other way around.

Secondly, it ignores the internal market segments and focuses solely on the external market.

Thirdly, it doesn’t take into account that marketing mix processes intermingle with each

other. Finally, it removes the variable of brand loyalty and shows it only as a business

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transaction. These criticisms I note are reasons why organisations need to be careful to ensure

they are susceptible to any of these pitfalls.

1.4.5 Marketing Research

Market Research is defined as, “the collection, analysis and communication of information to

assist decision making in marketing.” (Baker, 2008, p.140)

I concur, multinational organisations having such analysis is crucial. This helps the

organisation to meet customer needs. Through computerisation, multinational organisations

are able to capture data on their customers much faster today. Organisations have drastically

increased the amount of data they hold which allows them to retain and analyse past customer

transaction histories. Organisations can extract data to demonstrate which previous marketing

campaigns led to the greatest increase in sales, and which didn’t; this is crucial to the

marketing plan.

Figure 1.4.5: Marketing Research (Homework Help Experts, 2011)

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From previous purchasing trends, organisations can extrapolate if customers are likely to live

in a family or not. This is targeted information because it means organisations, that sell

varying products for different age groups, can offer such people special promotions.

Organisations are also moving towards looking at awareness and attitudes, rather than

previous behaviours, in order to develop new products. This potentially gives organisations

first mover advantage.

Marketing managers have to avoid pitfalls when gathering personal information. If they don’t,

poor data can lead to organisations tailoring their marketing activities incorrectly. The quote

below shows how market researchers see market research:

“It was especially interesting to observe the role of marketing research, when and how it was

used and abused: as a way of learning and problem-solving, for decision-making, and as a

weapon for in-fighting.” (Levy, 2012, p.10)

According to Baker and Hart there are seven steps in the marketing research process:

1. Identification of problems and opportunities;

2. Formulation of research needs/ research brief;

A. Selection of research provider

B. Creation of research design/choice of research;

3. Gathering Previous Research

4. Collection of secondary data;

5. Collection of primary data;

6. Analysis of data; and

7. Preparation and presentation of research findings and recommendations

These steps represent the research process and the activities that must be addressed in order to

provide useful information to the marketing team:

Step 1 involves monitoring the organisations marketing position in order to detect

possible issues, opportunities or threats which may occur;

Step 2 involves contacting all relevant departments who have an input into the

marketing decision to ensure research is consistent with what they want;

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Step 3 involves both selection of an organisation to carry out the research and the

creation/choice of research the organisation wants completed;

Step 4 involves gathering previously obtained research as it may reduce costs and can

be obtained easily;

Step 5 is probably the most important; it can involve any method of collecting primary

data through the use of observational research, gathering consumer behaviour

information without asking participants any questions;

Step 6 involves using primary and secondary data and deciding which type of research

analysis should be used, i.e. qualitative or quantitative research methods; and

Step 7, involves preparing a report for the organisation and presenting findings for

approval to, say, the Board. .

I believe the quote by Thomas (2001) demonstrates what can happen when multinationals do

not conduct market research:

How many of the dot.com business ventures were based on solid marketing research?

Virtually none. How many of the high-profile telecommunications ventures were

based on solid marketing research? Very few. How many of the other high-tech

ventures did their homework and conducted the basic marketing research necessary to

accurately evaluate the market potential for their ventures? Very few. How many of

these companies used marketing research to refine their business concepts and tweak

their processes after the new ventures were launched? Very few. (p.11)

Figure 1.4.5 (B): Marketing Research (Ted Blog, 2013)

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1.4.6 Conclusion

I believe I have provided a good insight into marketing management on an international level

for multinational organisations. I tried to tie together all the different areas I focused on to

provide a snapshot of the component parts of marketing management. I believe I have

demonstrated how an organisation determines what they need to do prior to developing a

marketing plan. I attempted to make this more cohesive by linking back to the Strategic

Management and Planning section, as some of the same tools can be used for the marketing

plan.

With regards to the marketing mix, which has been continuously developed and changed by

organisations and theorists to derive what they are looking for, and to attempt to simplify it

like McCarthy did to the Four Ps, I tried to give examples of the ways it can be interpreted by

multinational organisations.

I attempted to validate the best processes and outline potential pitfalls. From my research on

this topic theorists have one common denominator; market segmentation is the key element

and ensuring they have the most up-to-date and relevant information is crucial. I concluded

that Hall has the most useful methodology. If organisations follow the seven steps their

research would be far more accurate and they would develop more appropriate products.

Hart’s seven steps are building block and can still be approved upon.

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Chapter 2: Contextualisation

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2.1. Introduction to Microsoft

Microsoft was founded by Bill Gates and Paul Allen in 1975 and has become one of the

largest organisations in the world. Microsoft’s main products are Windows and the Office

Suite of applications designed to run on Windows. Microsoft also developed successful

products such as the Xbox game console. Microsoft is the leading software manufacture in the

world by revenue and one of the world’s most valuable companies. When the company went

public in 1986, it created an estimated 3 billionaires and 12,000 millionaires. One of their

strategic acquisitions was Skype, which was acquired for an estimated $8.5 billion. Microsoft

is diversifying their products and has a share in five segments of the IT industry.

Figure 2.1: Microsoft (StockLogos, 2012)

“Microsoft is not about greed. It's about innovation and fairness.” (Bill Gates)

I think this quote sums up what new CEO Nadella is trying to return to Microsoft. Something

Microsoft was lacking in the last few years was production innovation; whether from poor

leadership or lack of planning and management we will find out. I maintain it was a

combination, however I believe Microsoft will address this under Nadella.

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Satya Nadella has been working with Microsoft for over 22 years and in that time has proven

his leadership abilities.

Figure 2.1 (B): Satya Nadella (Compare The Cloud, 2014)

He was praised by Bill Gates in the Press Release (2014) where he said:

“Satya is a proven leader with hard-core engineering skills, business vision and the

ability to bring people together. His vision for how technology will be used and

experienced around the world is exactly what Microsoft needs as the company enters

its next chapter of expanded product innovation and growth.”

I believe Nadella will improve the strategic management and planning process. He will

encourage even more collaboration between all employees on innovation. I think he has the

knowledge and the team in marketing management to address this.

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2.2 Global Strategic Management and Planning

Microsoft follows the Seven Steps process in Strategic Management and Planning. The first

step they talk about is preparing a detailed plan for achieving success. They know, in order to

succeed, every organisation must first determine their objectives and what they need to do to

make it happen. They achieve this by reviewing their products, services, customers and finally

internal and external operations. Bill Richardson (Microsoft 2002) goes on to say that strategy

is fluid, continuous, and iterative and can be broken down into logical steps or elements:

1. Goal Setting - The First Step

2. Strategy Development Process - The Road Map

3. Customer Analysis - Getting to the Truth

4. Internal Business Analysis - The Health Check

5. Strategic Choices

6. Strategic Thinking - Optimising Assets

7. Implementing Strategic Decisions – Execution Matters

The first step is Goal Setting and as Microsoft’s goal is to be innovative, they build a strategy

that makes best use of the organisation’s innovative resources. Satya Nadella states that “Ours

is not an industry that respects tradition – it only respects innovation.” (Buss D. 2014)

Nadella, in his 2014 speech, said Microsoft would begin by fixing its mobile and Windows

business, stating they need a ‘renew or die’ policy. As such, Nadella has set the goal for

Microsoft which they now need to plan to achieve.

Richardson (Microsoft 2002) stated that:

These objectives are aimed at maximising the value of the organisation to the

shareholders, with the critical factor being time. Even though we create a vision of the

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organisation, say, twenty years out, the strategic plan considers only a three-year to

five-year time horizon.

In other words, Microsoft could have a 20 year plan but realistically it may only last 3 years.

This 2002 approach is consistent with Nadella’s vision which is interesting as he only took

over as CEO in February 2014and I wonder how his policy of innovation will mix with the

internal restructuring which he had just commenced.

The next step for Microsoft is the Strategic Development Process and this is used to take the

goals, which were set out by Nadella, and develop this into a plan. For this new innovation

goal, Nadella will have to ask himself some crucial questions. Where are we now? Where

should we go? How do we get there? From these questions they can begin an in depth

analysis of Microsoft, similar to the one set out in the figure below:

Figure 2.2: Microsoft Strategic Development Process (Microsoft, 2002)

Microsoft’s next step Microsoft is Customer Analysis. They need to identify the needs of

customers in order to ensure the products they are developing, for instance Office for I Pad,

actually have a market. Microsoft said this could be part of step two but they are keeping it

separate in order to ensure it accentuates and allows for facilitation of continuous analysis.

They say it is crucial to understand why customers buy from them, so they can improve the

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process and, why customers buy from their competitors, so they can use similar processes.

This also relates to Marketing Management in the Literature Review.

Step four for Microsoft is the Internal Business Analysis; this is also one of the most crucial

processes. It is referred to by Microsoft, as the health check because it is required in order to

optimise the internal processes, like HR, and make changes if required. Nadella, in the first

six days as CEO, restructured the Executives and Managers in Microsoft. Microsoft uses a

SWOT analysis to run this “health check”. I discussed this process in the Literature Review

Marketing Management section.

Step five is Strategic Choices. Under former CEO, Steve Ballmer, Microsoft made some poor

strategic choices and lost market share to Google. Many sources commented, before Nadella

took over, that ‘Google was what Microsoft wanted to be’. Nadella in two months as CEO has

announced some major changes:

First, he announced Office for I Pad, releasing a touch version of Office for Apple's

tablet before Microsoft had a touch version of Office for Windows”  and “Then during

Build, Microsoft's conference for developers, Microsoft announced that Windows

would be free for all devices with nine-inch or smaller screens. Basically, Windows is

free to tablet and phone makers, just as Android is free to device makers. Really,

Windows is more free than Android, since nearly every Android device maker has to

pay a patent license fee to Microsoft. (Yarow J. 2014)

In the context of Strategic Choices these are far reaching choices. If they work, Nadella will

be seen as the genius who got Microsoft back on track; if they fail, then he could be known as

the CEO who cost the company billions. These choices, whilst being bold and gutsy, will

more than likely help Microsoft’s growth aspirations, especially in mobile technology.

In step six, Strategic Thinking, Microsoft consider all the tools I covered in the first section of

this Report. They used PEST, Porter and the Product Life Cycle. They used these to formulate

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their strategies and propose solutions to key questions, i.e. which products to update, which

markets to enter, and how to optimize their organisational resources.

In an email to Microsoft employees, ex-CEO Ballmer (Microsoft, 2014) says:

Satya is a proven leader. He’s got strong technical skills and great business insights.

He has a remarkable ability to see what's going on in the market, to sense opportunity,

and to really understand how we come together at Microsoft to execute against those

opportunities in a collaborative way.

I predict Nadella will make optimizing Microsoft’s assets a priority.

In a speech to the Microsoft employees in 2013, Ballmer said the core business has shifted.

The core business is defined by the products, consumer segments, processes and technologies

which give Microsoft the best competitive advantage. This will change how Microsoft does

business as it means they will need to adjust their analysis and their target market. “Over a

year ago, we started a shift in our business to a devices and services company, software

development as a core asset, delivered through devices of our own and our partners, as well as

services.” (Ballmer 2013)

As referred to above, Nadella changed this even further by offering certain products for free

on certain devices and implementing an internal restructure of Executives.

The Final step Microsoft undertakes is Implementing Strategic Decisions which I discussed

under the Strategic Management and Planning section. They refer to this, as Execution

Matters. Microsoft recognises planning is easier than actual execution and most plans fail due

to lack of commitment from Senior Management. Microsoft uses the Balanced Scorecard

method for monitoring implementation. This is useful for Microsoft as it provides a

perspective in four processes:

Financial;

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Customer;

Business processes; and

Learning and Growth.

Microsoft realised the best way to implement strategies is on a team basis. To that end,

Microsoft improved the collaboration between their departments and attempted to make

strategic processes all inclusive.

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2.3 International Human Resource Management

Microsoft is an employee driven organisation which means Nadella relies heavily on having

the best employees doing the best job. This differs from some other multinationals that rely

more on better manufacturing techniques, or better technology, “Microsoft’s success is based

on the effectiveness of their employees.” (Silistre, 2011)

I observe from this if Microsoft is not utilizing their HR assets to their best extent, they will

struggle to compete with other multinationals, like Google.

Microsoft has developed a programme called the Dynamic AX Human Resources Solution. In

this they outline the importance of HR and my research shows they practice what they preach.

I think the quote below, from their sales pitch on software, gives a good insight into

Microsoft’s HR thinking.

“In the end, your people get better at what they do, your customers get greater value,

and your company gets a greater return. So how do we get there? There’s a simple

answer, of course, but before we can discuss where HR is going, we need a clear

picture of what’s going on right now. We’re talking about three things, specifically: 1)

successful HR departments are shifting from reactive problem-solving to proactive,

strategic planning; 2) the Facebook-generation workforce doesn’t function well

without being connected; and 3) security and privacy issues require more self-

sufficiency in the HR department.” (Microsoft, 2013)

I have confirmed this through my research on Microsoft. They offer employees exceptional

training to ensure they can drive their careers and offer employees competitive remuneration

along with a wide range of benefits. Microsoft also encourages diversity in their work force.

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In relation to diversity, I linked this back to my analysis on Cultural Issues outlined in the

Literature Review. Microsoft has taken the view they can hire the best from across the world

whatever the cultural differences. They attempt to integrate all cultures into the business.

They ensure inclusion is at the forefront of how they run their operation. Microsoft ensures,

not only does this apply to their employees, but also their customers.

The following quote from Microsoft demonstrates how much they are interested in cultural

diversity:

Diversity and inclusion are integral to Microsoft’s vision, strategy and business

success. We recognise that leadership in today’s global marketplace requires that we

create a corporate culture and an inclusive business environment where the best and

brightest diverse minds, employees with varied perspectives, skills, and experiences

work together to meet global consumer demands. The collaboration of cultures, ideas,

and different perspectives is an organisational asset and brings forth greater creativity

and innovation. (Microsoft, 2014)

I believe Microsoft has achieved this cultural diversity demonstrated by their current CEO,

Satya Nadella, from India. This is an important top down message to the organisation.

Microsoft has begun a growth path once again and this will create new employment

opportunities. They saw the need to set aggressive leadership goals and leverage this by

employing highly trained individuals from around the globe with diverse backgrounds.

Microsoft has partnered with programmes to encourage individuals in the study of technology

and science. They believe that: “these goals provide a solid foundation to creating a highly

engaged workforce with a shared purpose of achieving Microsoft’s mission.” (Microsoft,

2014)

Currently, Microsoft employs individuals from approximately 140 countries. The ethos is that

the multicultural workforce can help create original products and maintain and encourage new

employees to join the organisation. This caters for what some HR theorists believe is a more

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divergent world. They understand that maintaining this is a challenge. However, they stated

they will continue with this enterprise to understand value and incorporate differences.

Microsoft offers employees a wide range of opportunities; it is possible for employees to

become expert in a particular field or build proficiencies across many areas. They offer

employees overseas experience and provide training and benefits to encourage staff.

Microsoft has a very collaborative relationship between managers and employees, which

means employees feel they have an input into the organisation. They create an atmosphere

whereby managers assist employees on their career development plans, and facilitate

employees to do so. Their HR department states:

“Your career and professional development is a partnership between you and your manager,

reinforced by our numerous career resources. And as much as we’re here to support you, we

believe your career is an individual adventure.”(Microsoft Career Development, 2014)

Microsoft actively encourages employees to push boundaries; to be creative and to assist in

the growth of the organisation. Microsoft say managers are there for support purposes but it is

employees who are ultimately responsible to shape their personnel experience and achieve

personnel growth. They offer employees the opportunity to move from one business function

to another and obtain a greater depth of expertise. Microsoft said of career path options:

“You don’t have to be a manager to move up. Both individual contributor and

management careers progress all the way through senior levels; we highly value both”.

And on movement across professions, “We define desired results and consistently

apply them for all professions available in our business groups.” (Microsoft Career

Development, 2014)

This system facilitates employees learning about different job opportunities and developing a

range of skills.

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Microsoft talks about how their career guide helps employees to understand their skills and

capabilities to contribute effectively. They offer over 2,000 training programs taught by

leading expert instructors and educational institutes. Microsoft said “You can’t beat the level

of investment we place on career development.”(Microsoft Careers development, 2014)

They mentioned, “At Microsoft we share knowledge, experiences, and resources to help each

other achieve our career goals and grow both professionally and personally.” (Microsoft

Careers Development, 2014)

Microsoft offers mentoring which allows employees to learn from the experiences of in-house

professionals. They try to build a networking process whereby employees can find

opportunities to assist with their future development. This was introduced to make employees

feel they have a personnel connection rather than working for a faceless organization.

“Do you love pets, vegetarian cooking, or the environment? Do you share a cultural

background or special need with other employees? Chances are you’ll find a network

of people with similar interests and/or needs at Microsoft, and you can connect with

them as you develop your career and lifestyle. Being a part of the Microsoft

community is a rich, fulfilling experience.” (Microsoft Careers Development, 2014)

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2.4 Marketing Management

Since Nadella took over, Microsoft has launched a new marketing campaign focused on

getting the right products to the right consumers. They developed a new programme called

Microsoft Dynamics CRM, which utilises functions to better improve their customer

relationships. This new strategy of becoming more connected with the consumer can only

benefit Microsoft in the long run. In a 2011 article on Microsoft’s Global Marketing Strategy

they talk about how they have greatly expanded their advertising, for instance launching

campaigns in Cannes and New York’s Advertising Week. They also mention how they have

become a ‘stand-alone brand’, (Lloyd, 2011), and begun to build relationships with marketing

firms and media organisations through their newly developed team.

In 2011 they launched two Business to Business campaigns, released 20 new display formats

and used advertisements including Flash animations to attract consumers. Noting that

consumers do not want interruptions, and a better online experience, Microsoft decided to

allow their advertisement expand on host pages and when finished return to that page.

One of the products Microsoft strategically marketed was the Filmstrip format to demonstrate

its functionality to consumers and the media, “The 300-by-3,000-pixel unit is designed as a

series of connected frames that users scroll through to find information or entertainment that

appeals to them.” (Lloyd, 2011)

The tool has the ability to allow different products to connect to different websites. This

useful tool allowed marketers to analyse which section on which website is getting the most

hits. Microsoft marketed it so well that Ford and Dodge wanted to pilot the software and it

was later bought by RIM.

Another strategy employed by Microsoft’s marketing team to encourage consumers to buy

products was offering free research whitepapers to consumers. When my source article was

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written, whitepapers downloads had reached almost 10,000. Many marketing researchers said

the information was extremely useful and a “good value-added service.”

I think the best new marketing tool from Microsoft was the NUads. It used the Xbox Kinect

software that let users use hand gestures and voice commands in interacting with the

advertisements and tweet about them on Twitter. This was extremely popular among users,

just as the Siri programme on Apple systems.

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2.5 Conclusion and Recommendations

Firstly, I must note much of the available information on Microsoft’s internal processes is

dated which created a difficulty for me; this is perhaps because Microsoft is reluctant to

release current information for competitive advantage purposes. Most information I retrieved

was secondary and means the accuracy is in question. I think the information I used gives a

reasonable insight into Microsoft’s inner workings.

While I sourced information for each of my three sections, the tools identified mostly relate to

software developed by Microsoft to sell to customers carrying out market research or for HR

management, rather than as part of Microsoft’s own processes, however, they also use these

tools. Due to the sheer size of Microsoft, I am unable to say how effective these tools are and

are they used globally.

My First recommendation for Microsoft relates to game-changing innovation. To coin a

phrase from John Staunton “there is an empty road in front and they aren’t moving”. When I

look at Microsoft I see a firm incrementally adapting their products, such as new versions of

Windows, or simply trying to offer their version of other company’s products, such as Xbox.

Is it such a big deal that they are going to develop Office for I Pad? Windows was the last

time Microsoft introduced a game-changer; it is time for something truly innovative.

My Second recommendation is drawn from the fact I struggled to identify substantive

information on their internal HR processes. There is a wealth of information on their culture,

approach to career development and diversity. I cannot comment on how successful they

actually are at integrating various cultures.

I note after the failure of Ballmer’s “One Management” restructuring plan, Nadella will have

to ensure Microsoft becomes more integrated which he has commenced. It will be interesting

to see how this develops, considering he is only in the job for a little less than 2 months. The

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key for Microsoft is not just to talk about the benefits of these “soft” HR objectives but to

actually deliver innovation through better use of their assets.

My final recommendation relates to their marketing campaigns. Microsoft relies heavily on

marketing firms to develop strategies and implement them for new products. They have a

Sales and Marketing team, but it is unclear how they are structured. In my opinion, evidenced

from the 2011 article by Lloyd, one of the best marketing strategies delivered was the Kinnect

system and voice command advertisements; it was new and interesting. The challenge for

Microsoft is to blow us away with the latest technology in marketing. I believe the last

recommendation should be for Microsoft to utilise the outsourced Marketing companies to

develop the most innovative new strategies and to develop these for different cultural zones.

Finally, I would like to comment that this was an interesting Project to research and I would

welcome the opportunity to research in more depth both the Literature Review and the

Contextualisation in the future. Due to the enormous amount of Literature information

available and the lack of available up-to-date internal information on Microsoft for the

Contextualisation, I feel there is scope for future research on this topic. Having said that, I

believe I have provided a sufficiently conclusive look into the tools and management

practices that are the subject of this Review.

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Figure 2.5: Microsoft (StockLogos, 2012)

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78

Appendices:

List of Images:

Figure 1.1.3: Management (ColourBox, n.d.)…………………………………………… 6

Figure 1.2.1: Google for Businesses (CK Solutions, n.d.)……………………………… 7

Figure 1.2.1 (B): NIKE Air Runner (Nike Inc., 2014)………………………………….. 9

Figure 1.2.4: Porter’s Five Forces (COMINDWORK, 2013)…………………………... 14

Figure 1.2.5: Coca Cola (Sa Photo Graphics, 2010)…………………………………….. 16

Figure 1.2.5 (B): Twitter (Upcity, 2013)………………………………………………... 16

Figure 1.2.6: Industry Life Cycle (Mark Staunton, 2014)………………………………. 17

Figure 1.2.7: Lidl (Daily Mail, 2014)…………………………………………………… 18

Figure 1.2.7 (B): Aldi (Daily Mail, 2014)………………………………………………. 18

Figure 1.2.8: Porter’s Value Chain(1985) (Mind Tools, n.d.)…………………………... 20

Figure 1.3.2: McDonalds (CP Africa, 2014)……………………………………………. 24

Figure 1.4.2: Red Bull (Red Bull Brand Blogspot, 2011)………………………………. 42

Figure 1.4.3: Boston Consulting Group Matrix (Strategic Management Insight, 2013)... 44

Figure 1.4.5: Marketing Research (Homework Help Experts, 2011)…………………… 47

Figure 1.4.5 (B): Marketing Research (Ted Blog, 2013)………………………………... 49

Figure 2.1: Microsoft (StockLogos, 2012)……………………………………………… 52

Figure 2.1 (B): Satya Nadella (Compare The Cloud, 2014)…………………………….. 53

Figure 2.2: Microsoft Strategic Development Process (Microsoft, 2002)………………. 55

Figure 2.5: Microsoft (StockLogos, 2012)……………………………………………… 66

79

Abbreviations:

BCG - Boston Consulting Group

CEO - Chief Executive Officer

CRM - Customer Relationship Management

HR - Human Resources

HRM - Human Resource Management

IHRM - International Human Resource Management

IT - Information Technology

KSF - Key Success Factors

MNE - Multinational Enterprise

PEST - Political, Economic, Social and Technology

SMART - Specific, Measurable, Achievable, Relevant and Time-bound

STP - Segmentation, Targeting and Positioning

SWOT - Strengths, Weaknesses, Opportunities and Threats

80

Definitions:

Halal - the Arabic word for “permitted.” Halal is commonly seen as “Halal food” which

means food that is permitted under Islamic guidelines as found in the Qu’ran. Halal also

extends to the humane slaughter of animals.

NUads – NUads transforms TV advertising, delivering what is most scarce to advertisers

today — consumer engagement. This new ad format was built with the consumer and

advertiser in mind. For consumers, through the power of Kinect for Xbox 360, NUads

enable natural interactivity using the simplicity of a spoken word or the wave of a hand. 

81