Chapter
18
Organizing for Global Marketing
McGraw-Hill/Irwin
© 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Outline
 Implementing Global Marketing
 Organizational Structures
 Coordination in Global Networks
 Tools for Coordination
 Managerial Roles
 Conflict Resolution
 Takeaways.
Implementing Global Marketing: The Context
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:
Achieving Coordination
The needed coordination
involves:
1.
Communication
2.
Motivation
3.
Flexibility
Via these organizational tools:
1.
Creating new organizational
units (e.g. global teams)
2.
Creating new positions (e.g.
global marketing director)
3.
Changing the reporting lines
4.
Creating new systems
5.
People adapting
Organizational Structures
 EXPORT DEPARTMENT
 INTERNATIONAL DIVISION
 GEOGRAPHICAL/REGIONAL




STRUCTURE
GLOBAL PRODUCTS DIVISION
MATRIX ORGANIZATION
TRANSNATIONAL ORGANIZATION
HORIZONTAL NETWORKS
Export Department Structure
President
Export
Marketing
Central staff
Production
R&D
Finance
Planning
Export Staff
Country 1
Representatives
Country 2
Representatives
Country 3
Representatives
Personnel
International Division Structure
President
Corporate Staff
Executive Vice President
Domestic
Executive Vice President
International
Division Staff
Product A
Division
Product B
Division
Division Staff
Country 1.
Sub. GM
Country 2.
Sub. GM
Country 3.
Sub. GM
Subsidiary staff
Note: Sub. GM = subsidiary general
manager
Manufacturing Marketing
Logistics
Regional Structure
President
Corporate staff
Executive Vice
President
Domestic Market
Executive Vice
President
Western Europe
UK
sub. GM
Note: Sub. GM = subsidiary general manager
Germany
sub. GM
Executive Vice
President
Latin America
Scandinavia
sub. GM
Global Product Structure
President
Product 1 division
Executive Vice President
Corporate staff
Product 2 division
Executive Vice President
Manufacturing
Home
country
plant
Brazil
plant
Malaysia
plant
Product 3 division
Executive Vice President
Sales
Japan
plant
Home country
sales
manager
Country 1
sales
subsidiary
Country 2
sales
subsidiary
Global Matrix Structure: Honda Motor
Honda
R&D
(Tokyo)
Honda Motor Co., Ltd.
Regional
headquarters
Americas
(Los Angeles)
Regional
headquarters
Europe, Middle
& Near East,
Africa (Reading,
UK)
Regional
headquarters
Asia &
Oceania (Tokyo,
Bangkok)
Regional
headquarters
Japan
(Tokyo)
Motorcycle
headquarter
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Automobile
headquarter
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Power
product
headquarter
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
Subsidiaries
(manufacturing,
sales, R & D)
A Transnational Network
Distributed specialized
resources and
capabilities
Coordination and cooperation in
an environment of shared
decision making
Flows of components,
products, resources,
people and information
The Advantage of a 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.
Global Marketing: Coordination is Key
Complex networks facilitate
direct exchange of information
between subsidiaries, but
makes coordination difficult.
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.
Global Teams
•
•
•
•
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 wideranging responsibilities, including the whole
marketing mix.
The European integration has spawned many
examples of global teams (e.g. 3M’s global
teams)
Tools for global coordination
•
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
Organizational culture and 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
The Global Marketing Director’s Job
•
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 Expatriate Manager
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 Global Account 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
Conflict Resolution
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.
Takeaway
The global network of the multinational firm is a marketing
asset that can be leveraged with a global strategy only if
the appropriate organizational linkages to the local market
are created.
Takeaway
The most important aspect of any organizational solution is
to make sure that local motivation is not diminished,
negatively affecting a global strategy.
Local managers need to be consulted early in the strategy
formulation process.
Takeaway
Local managers not only have better knowledge of the local
market but can also assume a more global view given the
chance.
In the “transnational” company, local subsidiaries become
centers of excellence, with global responsibilities for a
particular product line – local globalization.
Takeaway
Coordination mechanisms that companies use range from
creating a common global culture, sharing information, &
establishing personal relations, to the creation of new
organizational units such as global account managers and
global teams.
Takeaway
The organizational structure & the systems need to be
designed to serve one common purpose:
to bring the global company closer to the local customer –
global localization.