Organizing for Global Marketing
Presented by:Prof Nizam Jim Wiryawan
Chapter
18
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
OutlineImplementing Global MarketingOrganizational StructuresCoordination in Global NetworksTools for CoordinationManagerial RolesConflict ResolutionTakeaways.
1. The firm is already present in many markets.2. The firm is successful in at least some of the
major markets.3. There is a history of successful operations with
local autonomy.4. Country managers have experience at home. For
administrative & control reasons, subsidiaries may be run by expats. Local marketing is run by a local marketing manager.
5. The legitimacy of the global marketing “imperative” is not all that obvious in the organization – unless competitors have forced the issue.
6. The global advantage derives from cost savings, demand spillover effects & serving global customers.
7. In a global strategy, there will be less autonomy for the local subsidiary.
8. The initiative for a global strategy comes from the top.
Implementing Global Marketing: The Context
1. Communication2. Motivation3. Flexibility
1. Creating new organizational units (e.g. global teams)
2. Creating new positions (e.g. global marketing director)
3. Changing the reporting lines
4. Creating new systems5. People adapting
The needed coordination involves:
Via these organizational tools:
Implementing Global Marketing: Achieving Coordination
Organizational Structures
EXPORT DEPARTMENT INTERNATIONAL DIVISION GEOGRAPHICAL/REGIONAL STRUCTURE
GLOBAL PRODUCTS DIVISION MATRIX ORGANIZATION TRANSNATIONAL ORGANIZATION HORIZONTAL NETWORKS
President Central staff
MarketingExport Production
R & D
Finance
Export Staff
Planning Personnel
Country 1Representative
sCountry 2
Representatives
Country 3Representative
s
Export Department Structure
Executive Vice President Domestic
Executive Vice President
InternationalDivision StaffDivision Staff
Country 1. Sub. GM
Country 2. Sub. GM
Country 3. Sub. GM
Subsidiary staff
Marketing LogisticsManufacturing
Product BDivision
Product ADivision
Corporate Staff
President
Note: Sub. GM = subsidiary general manager
International Division Structure
Executive Vice President
Domestic Market
Executive Vice President
Western Europe
Executive Vice President
Latin America
President
Corporate staff
UKsub. GM
Germanysub. GM
Scandinavia sub. GM
Note: Sub. GM = subsidiary general manager
Regional Structure
Product 1 division Executive Vice
President
Product 2 division Executive Vice
President
Product 3 division Executive Vice
President
President Corporate staff
Home country sales manager
Country 1 sales
subsidiary
Country 2 sales
subsidiary
Homecountr
yplant
Brazil
plant
Malaysia
plantJapanplant
Manufacturing Sales
Global Product Structure
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
Subsidiaries (manufacturing, sales, R &
D)
MotorcycleheadquarterAutomobileheadquarter
Power productheadquarter
Regional headquarters
Europe, Middle & Near East, Africa (Reading, UK)
Regional headquarters Americas
(Los Angeles)
Regional headquarters
Asia & Oceania (Tokyo, Bangkok)
Regional headquarters
Japan(Tokyo)
Honda Motor Co., Ltd.HondaR&D
(Tokyo)
Global Matrix Structure: Honda Motor
Distributed specialized resources and capabilities
Coordination and cooperation in an
environment of shared decision making
Flows of components, products, resources,
people and information
A Transnational Network
• Many companies view their global network as an “invisible resource” or “hidden asset”. The network is an FSA, making it feasible to attack and defend in different countries.
• This makes local units more strategic, countering feelings of compromised authority when shifting to a global strategy.
• Treating the network as an asset allows a global strategy to become a “win-win” proposition for both headquarters & subsidiaries.
• The “network theory” stresses that the linkages within a global network can constitute the true source of competitive advantage for the firm.
The Advantage of a Network
Complex networks facilitate direct
exchange of information between subsidiaries, but
makes coordination difficult.
Global Marketing: Coordination is Key
Global Marketing: Coordination is Key
Strong centralization facilitates coordination
but reduces direct knowledge sharing.
Global Marketing: Coordination is Key
Simplified networks attempt to facilitate coordination without limiting knowledge
sharing.
• To implement global marketing projects, the most common organizational change is the creation of global teams.
• The teams consist of members from different country subsidiaries and from different functional fields.
• Responsibilities vary from launching specific programs or activities, such as the advertising campaign for a new product, to more wide-ranging responsibilities, including the whole marketing mix.
• The European integration has spawned many examples of global teams (e.g. 3M’s global teams)
Global Teams
• GLOBALLY STANDARDIZED PLANNING SYSTEMS
• GLOBALLY STANDARDIZED MANAGEMENT SYSTEMS
• GLOBALLY STANDARDIZED SALES REPORTS
• COORDINATING COMMITTEES, STAFF
• CROSS-FUNCTIONAL AND CROSS-COUNTRY TEAMS
• INFORMAL COORDINATION, PEOPLE-TO-PEOPLE
Tools for global coordination
• Organizational culture is defined by a company’s informal routines & procedures for problem solving & decision making.
BUILDING A STRONG CORPORATE CULTURE GLOBALLY
HELPS COORDINATION
BECAUSE LOCAL SUBSIDIARY MANAGERS
CAN MAKE AUTONOMOUS DECISIONS IN LINE WITH THE GLOBAL
STRATEGY
Organizational culture and coordination
• Strategy:Strategic planning, budgeting, and implementation with
functions and regions
• Systems: Design, creation, and maintenance of global marketing
control systems
• Coordination: Coordination of all functions affecting business and major
product lines
• Performance evaluation: Participation in performance evaluation of functional and regional managers
• Profitability: Profit accountability for individual lines of business and major product lines
The Global Marketing Director’s Job
Apart from being the headquarters' envoy, the expatriate country manager must fill the following
roles:
• CUSTOMER REPRESENTATIVE – a high-level contact with customers, prospects, & suppliers in the local market
• LOCAL CHAMPION – a champion for the local office at headquarters, airing local requests and justifying the need for additional resources
• NETWORK COORDINATOR – one who provides linkages with the firm’s other offices in the worldwide network of the firm
The Expatriate Manager
In B2B, where a customer might be a large multinational, the global account manager (GAM) serves a coordinative function for this one single
global customer.
The GAM’s tasks include:
• Coordination of customer orders from different countries
• Providing uniform prices
• Coordination of communication within headquarters
• Provisions of consistent after-sales services
The Global Account Manager
Conflicts between headquarters and local subsidiaries are almost unavoidable. A few practices can help minimize them:
1. Let local managers retain local brands and marketing budgets
2. Solicit country managers’ input for new product development
3. Give country managers lead roles in global teams
4. Provide international transfers for country managers
5. Involve country managers in formulation of global marketing strategies.
Conflict Resolution
The global network of the multinational firm is a marketing asset that can be
leveraged with a global strategy only if the appropriate organizational linkages to
the local market are created.
Takeaway
The most important aspect of any organizational solution is to make sure that local motivation is not diminished, negatively affecting a global strategy.Local managers need to be consulted early
in the strategy formulation process.
Takeaway
Local managers not only have better knowledge of the local market but can also assume a more global view given the chance.
In the “transnational” company, local subsidiaries become centers of excellence,
with global responsibilities for a particular product line – local
globalization.
Takeaway
Coordination mechanisms that companies use range from creating a common global culture, sharing information, &
establishing personal relations, to the creation of new organizational units such as global account managers and global
teams.
Takeaway