Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 17 Organizing for Global Marketing

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. IntroductionIntroduction The Context The managerial context in which implementing global marketing is generally difficult is one where The company is already present in many markets The company is successful in at least some of the major markets There is a history of quite successful operations with local autonomy The country managers have experience and status at home and in the organization Legitimacy of global marketing “imperative” is not obvious in the organization The global advantage derives from cost savings, demand spillover effects, and serving global customers One effect of a global strategy will be less autonomy for the local subsidiary The initiative for the global strategy comes from the top

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. IntroductionIntroduction The Task Organizational requirements for implementing global marketing strategy Communication An effective multiple-way communication system needs to be set up to carry directives from the center to the local markets Motivation The local country managers need to be given incentives to implement the global strategy Flexibility The organization structure and/or systems need to be flexible so that changing conditions and new developments can be responded to when they arise

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. IntroductionIntroduction The Task Organizational tools used to accomplish organizational requirements Creating new organizational units The most common new units are perhaps global teams Creating new positions A typical example is the creation of a global marketing director Creating new reporting lines The organization can change the existing structure Creating new systems The organization can create new systems within the given structure People adapting The organization can rely on people to change their behavior

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Organizational Structure Organizational Design Stages used when expanding overseas Export department The creation of an export department structure is usually the first step in the functional organization toward entry into foreign markets International division As the export revenue share increases and there are several countries in the strategic portfolio, the firm changes to an international division structure Geographical/regional structure As overseas sales expand and the management of the countries takes more time and resources, the firm usually subdivides the international division into country groups or trade regions

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Organizational Structure Organizational Design Stages of expansion (cont’d) Global product divisions Regional and local managers’ authority is subordinated to that of the global division chief, who approves and directs Matrix organizations Organizations in which both country and product receive equal emphasis Transnational organization Organizational structures in which different parts of the firm’s value chain are located in different parts of the world Horizontal networks The new “ideal” type of organizational structure that results from the drive toward “lean” organizations

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Global Network as an Asset Painful History The increased need for an integrated global strategy surfaced partly because of the successful attacks on world markets by newly emerging multinationals The Win-Win View The win-win solution to the problems involved in implementing a global strategy against local resistance has surfaced primarily from companies and researcher in Europe The central tenet of the network theory is that the linkages between actors in the global network constitute the true source of competitive advantage for the firm

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. The Global Network as an Asset The Win-Win View From a global marketing viewpoint The most striking benefit derived from the network approach is the recognition of what the firm’s resources and FSAs are and where new ideas and innovation might emerge As global competition heats up and companies are faced with “hypercompetition” The global network is a key source of competitive advantage and new possibilities

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Globalizing Management Global Marketing Directors Responsibilities of the global marketing director Strategy Strategic planning, budgeting, and implementation with functions and regions Systems Design, creation, and maintenance of global marketing 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

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Globalizing Management Global Teams One of the most common organizational changes for global marketing is to create global teams The responsibilities of global teams can vary from: 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

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Management Systems Informal Coordination Information sharing about similar experiences in different markets is a first step in achieving integrated strategies Coordinating Committees Companies attempt to achieve more effective implementation system by creating joint committees of regional or country managers that meet on a regular basis Coordinating Staff As the global strategy is endorsed at top management levels, its implementation usually leads to temporary arrangements of meetings between the various country subsidiary managers

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. People and Organizational Culture Local Acceptance Global marketing strategy often requires a great deal of work on the part of local managers Local conditions are frequently different from other places Corporate Culture Methods that people and organizational culture use to enhance effective communication Build a strong corporate culture internationally Build a common technical or professional culture Build strong financial and planning systems

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. People and Organizational Culture The Expatriate manager Typical leadership roles of the expatriate manager Role 1 – Customer representative The expatriate manager must serve as a high-level contact with existing customers, prospects, and suppliers in the local market Role 2 – Local champion The expatriate manager must be a champion for the local office at headquarters Role 3 – Network coordinator The expatriate management must provide linkages with the firm’s other offices in the worldwide network of the firm

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. People and Organizational Culture The Expatriate manager (cont’d) When strategies are globalized The expatriate manager is often put in a delicate position since the strategy often reduces the autonomy of the local subsidiary Being the connecting link with headquarters, it is natural that the expatriate must be the one to explain and implement the strategy locally When strategies are globalized, expatriate managers may need or want to be replaced, rotated to another country, or promoted

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Global Customers Global Account Management The typical solution for the multinational buyer is for companies to organize global account managers whose sole responsibility is to serve that customer globally Global customers naturally force a coordinated marketing approach These coordinated strategies involve relationship marketing with the account management and their groups providing special services Coordination of marketing activities for smaller customers and individual buyers is usually more narrowly focused on avoiding.pricing arbitrage

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Global Customers Retail Trade Groups Retailers who are resellers of the manufacturer’s product lines are a special type of global customer Consumer goods manufacturers are creating special forms of retail trade marketing groups These groups attempt to meet the powerful retailers’ need for Customized product design Advertising Direct marketing Sales promotion

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Conflict Resolution Conflict Resolution Practices Let country managers retain local brands and marketing budgets Solicit country managers’ input for new-product development Give country managers lead roles in global teams Provide international transfers for country managers Involve the country manager in the formulation of the global marketing strategy