UNIT 10 INTERNATIONAL MARKETING PLANNING,
IMPLEMENTATION AND CONTROL
Unit Summary
I.
Strategic planning
II.
Organizational structure
III.
Controlling global marketing efforts
I.
Strategic planning
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Strategic planning - is the act of creating a plan to put a strategy in place
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Strategic market planning - is a process to examine the environments in which their company competes, the opportunities and threats they face, the goals and objectives to be achieved, and the products and services offered in order to maintain a viable fit between their company’s capabilities and resources and the threats and opportunities that arise.
Its purposes is to identify and develop a corporate purpose, objectives and goals, and
plans of action that effectively relate the company, its businesses, and functional areas to their relevant environments and that enables the company to profitably exploit
future marketplace opportunities in which it is likely to enjoy a competitive advantage.
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goal and objective – if don’t have an objective, any plan will suffice. Even have a plan, not a guarantee of success.
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The purpose of strategy is to win customers and market share from competition.
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Strategic market planning focuses on markets, competition, corporate resources, and
timing. Marketing management assumes these decisions have been made and goes about creating a marketing mix.
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Focuses on determining the best match between the needs, objectives and capabilities with the market where there is competitive advantage
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Must answer 3 questions:
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Where to compete (markets and segments)
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How to compete (new product, add features, eliminate product or create new image)
When to compete (timing)
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Common problems faced by strategic marketers in formulation and implementation:
(1) Not enough emphasis on how to compete
Same market segments appears attractive to you and your competition. How to make you better than the competition? Product features psychological dimensions (position or brand image) or specific aspects of the marketing mix?
(2) Too little focus on uniqueness and adaptability
‘Me too’ products and retailing. e.g. Diet Coke vs. Diet Pepsi. Colgate tartar control vs.
Crest. Retail stores all have comparable layouts, merchandise lines, sales staff, even same background music. How can serve the customer better is doing the same as the competition?
(3) Deciding ‘when’ to compete
Optimum time is the time that minimizes or eliminates competition. Deciding on timing depends on your level of market knowledge, the nature of the competition and the
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state of corporate resources.
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II.
Organizational structure
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There is no magic formula that prescribes the ‘ideal’ organizational setup under a given set of circumstances. Only appropriate in given international marketing environment relative to the resources and capabilities of the company.
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Centralization vs. Decentralization:
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Centralization:
 authority over decision making and allocating corporate resources and the corresponding responsibility resides at the top of the organizational structure
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(upper management)
corporate head office in the home country
Decentralization:
 authority and responsibility flows downward throughout the organization
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(obviously the lower the level in the organization the less authority/responsibility held) country or subsidiary managers rapidly respond to changes in individual host markets and local competitive actions faster decision making and intimate local knowledge is used in all decisions loss of control and coordination possibility of conflicting goals and strategies in individual host markets
Most multinationals use a combination of centralization and decentralization.
Transnational organizations attempt to find the delicate balance between centralization and decentralization to get overall strategic control (maintaining global brands and brand images) but also responsiveness to local host market conditions
Exhibit 18-10
New Forces Impact on Integration/Differentiation
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A.
Environmental and firm-specific factors
Environmental factors: a.
Competitive environment
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International marketplace faces both host and home country competitors.
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Must make rapid decisions in response to competitive pressure
Intense localized competition favors decentralized organizational structures. b.
Rate of environmental change
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Drastic change – must respond rapidly – favor decentralization
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Stable and slower changing host market – favor centralization c.
Regional trading blocs
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Companies that operate within a regional trading bloc usually integrate to some extent their marketing efforts across the affiliates within the block area d.
Nature of customers
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The customer based has a large influence on organizational design
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Rely on local customers – decentralization; global customer base – regional structure/centralization
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Companies want global reach but also want to ‘stay close’ to their customers e.
Others
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Geographic distances / time zone differences
Government regulations (laws concerning imports, exports, taxes and hiring)
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Political stability and risk
Firm-Specific factors: a.
Strategic importance of international business
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When overseas sales account for a very small fraction of the overall sales ,
 simple organizational structures can easily handle the firm’s global activities
As the firm grows so will its organizational structure b.
Product diversity
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Companies with substantial product diversity tend to organize into global product divisions c.
Company heritage
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Changing organizational structures requires changing the underlying corporate culture. d.
Quality of managerial skills
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Decentralization is a problem when local managerial talent is missing
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B.
Organizational design options a. International division structure
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Most companies begin with an export department usually followed by an
 international division
Suitable for companies that have not too diverse product lines and does not require a large amount of adaptation to local country needs. b. Global product division structure
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Different product lines or strategic business units of the company. Each SBU is managed separately.
Popular among high-tech companies with highly complex products for MNCs with a
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 very different product portfolio.
Ex. 18-1
Benefits include:
 large degree of flexibility in terms of cross-country resource allocation and
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 strategic planning economics of scale in production competitive cost position improvement facilitates the development of a global strategic focus to cope with
 challenges posed by global players.
Shortcomings include:
 lack of communication and coordination can lead to needless duplication of tasks
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 can distract from local market needs can scatter company resources-fragmentation. c. Geographic structure
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Area structures are especially appealing to companies that market closely related product lines with very similar end-users and applications around the world.
Country-based subsidiaries
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By setting up country affiliates, the MNC can stay in close touch with the
 local market conditions
Handicaps include:
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Too costly; coordination cumbersome; leads to a “not-invented-here” bias
New role of country managers
 most believe that this is a declining form of organization
 forces that are leading to a decline include:
 threats by global competitors that must be dealt with globally
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 global customers regional trading blocs
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factors that still point to the usefulness of this form of manager includes:
 nurturing links with local governments
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 local competitor consideration strong local brands
 innovative ideas that come from the local environment
to strike a balance, country managers must fit one of these profiles:
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 trader—entrepreneurial spirit builder—develops local markets
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 cabinet member—team player ambassador—in charge of large or strategic markets. Good at government relations representative—like Ambassador but in large markets
Regional structures. A compromise position between a centralized organization and a decentralized country structure.
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Advantages:
 put companies in close contact with distributors, customers, and subsidiaries
 d. Matrix structure
 faster response to changing local conditions
Disadvantages:
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Possibility of duplication an dinefficiencies.
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 combines forms and recognizes the multi-dimensional nature of global strategic decision-making. Structures could even be three dimensional.
There is a dual chain of command
Advantages include:
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Reflect complexities—local and global competitors, customers, and distributors.
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Fosters team spirit and cooperation.
Disadvantages include:
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 reporting and profit responsibilities are confusing and conflict oriented bureaucratic bloat e. The global network solution
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 attempt to reconcile the tension between two opposing forces—the need for local responsiveness and the wish to be an integrated whole.
This form is a mindset rather than a real structure (in the truest sense of the term). Another term used to describe this form is transnational.
Advocates of this model believe that MNCs should develop processes and linkages that allow each unit to tap into a global knowledge pool.
An international teaming concept can be used to form the network.
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III.
Controlling global marketing efforts
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Through control processes – determine if the goals and objectives were achieved
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Control can be conducted at any stage in strategic implementation.
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During strategic implementation – fine tuning the strategy
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Control processes can be used with all aspects of marketing planning, strategy and mix decisions
Can be conducted on an individual host country basis, on a regional or subsidiary basis, or for the organization as a whole.
A.
Formal control processes
Three building blocks include: a.
Establishing standards
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 these standards should be driven by the company’s corporate goals types include behavior-based and outcome-based ideally, standards are developed via a “bottom-up” and “top-down” planning process of listening, reflecting, dialoguing, and debating between headquarters and the local
 units balance between behavior and outcome goals, and individual divisions, countries or regions b.
Evaluating performance
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 the actual performance is compared against the established standards though it is necessary to reward managers for their contribution, the contribution is hard to gauge. c.
Analyzing and correcting deviations
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 analyze the causes behind deviations and correct reward systems are necessary for managers. However, due process is also important. Due process has five features:
 the head office should be familiar with the subsidiaries’ local situation.
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There should be a two-way communication in global strategy-making decision processes
The head office is relatively consistent in making decisions across local units
The local units can legitimately challenge headquarters’ strategic views and decisions
The subsidiary units get explanations for final strategic decisions
Rodrigues:
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Issue of how much control the corporation should maintain over subsidiaries
Either too much centralization or decentralization can be ineffective. Suggests a balance approach
Under the cultural and other needs of subsidiary
Organizational global vision, core values and cultural principles are shared by all
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Kotler: Four types of formal control processes (can be use one type or combination) (on host-country-by-country basis or the organization as a whole):
1.
Annual plan control
Ensure achieve the sales, profits and other goals established in its annual plan
Four basic steps:
1. Goal setting (standard)
2.
Performance measurement (actual)
3.
Performance diagnosis (deviation)
4.
Corrective action
Five tools in annual-plan control:
1.
Sales analysis
Sales-variance analysis: relative contribution to gaps in sales from different factors
Microsales analysis: sales on a per producct or territory
2.
Market share analysis
percentage of total market sales
percentage of total sales to its served market
percentage of total combined sales of the top three competitors
percentage of the leading competitor’s sales
Consider the impact of:
environmental forces
new firms
own efforts such as eliminating unprofitable customers or products
Possible explanations:
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Customer penetration
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Customer loyalty
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Customer selectivity
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Price selectivity
3.
Marketing expense-to-sales analysis
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Concerned with the costs incurred in aspects of marketing efforts to achieve sales
e.g. advertising-to-sales ratio, sales force-to-sales ratio
4.
Financial analysis
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Financial such as profit margin, asset turnover, return on assets, rate of return on net worth
5.
Market-based scorecard analysis
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Use customer-based measures. Set standards and monitor on a regular basis on customer complaints, customer satisfaction/dissatisfaction levels, etc.
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2.
Profitability control
See in-depth information about the profitability or losses of each individual product, host market, or subsidiary.
Further finetune the information to illustrate profitability or losses for territories, customer segments or trade channels.
3.
Efficiency control
The best combination of human, physical and financial resources to generate the most output for the least input.
Establish the position of marketing controller to analyse all marketing expenditures and results from the perspective of maximizing efficiency.
Key indicators to monitor: e.g. sales force efficiency: number of call, call time, cost, number of new customers, lost customers etc.
Determine the cause of the deviation, then take appropriate corrective action.
4.
Strategic control
Marketing audit: comprehensive, systematic, independent, periodic
On domestic and international marketing operations.
Review the marketing environment, marketing strategy, marketing organizations, marketing systems, marketing productivity and marketing functions.
B. Informal control processes a.
Corporate culture. Forms can be classed as:
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Clan-based cultures—they embody a long socialization process strong and powerful norms and a defined set of internalized controls. Appropriate for multinational corporations where integration and a shared vision are essential.
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Market-based cultures—(the opposite) norms are loose or absent, socialization processes are limited, and control systems are purely based on performance measures.
Corporate values have properties
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 clarity continuity consistency b.
Human resource development. Critical in three regards:
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Training programs can help managers worldwide in understanding the MNC’s mission
 and vision and their part in pursuing them.
Such programs can speed up the transfer of new values when changes in the
 company’s environment dictate a “new” corporate mentality.
They can also prove fruitful in allowing managers from all over the world to share their best practices and success stories.
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