Organizing for Global Marketing Chapter 18 © 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

Outline Implementing Global Marketing Organizational Structures Coordination in Global Networks Tools for Coordination Managerial Roles Conflict Resolution Takeaways.

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.Communication 2.Motivation 3.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 systems 5.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

PresidentCentral staff MarketingExportProductionR & DFinance Export Staff PlanningPersonnel Country 1 Representatives Country 2 Representatives Country 3 Representatives Export Department Structure

Executive Vice President Domestic Executive Vice President International Division Staff Country 1. Sub. GM Country 2. Sub. GM Country 3. Sub. GM Subsidiary staff Marketing Logistics Manufacturing Product B Division Product A Division 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 UK sub. GM Germany sub. 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 PresidentCorporate staff Home country sales manager Country 1 sales subsidiary Country 2 sales subsidiary Home country plant Brazil plant Malaysia plant Japan plant ManufacturingSales Global Product Structure

Subsidiaries (manufacturing, sales, R & D) Motorcycle headquarter Automobile headquarter Power product headquarter 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. Honda R&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

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

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. Takeaway