16 Organizing for Global Marketing

Learning Objectives List and explain the internal and external factors that impact how global organizations are structured and managed. Note the advantages and disadvantages of the different ways of structuring a firm with international sales. Discuss global mandates, and note how global mandates can affect a firm’s organization. Explain why organizational issues for born-global firms differ from those for traditional multinational companies. Give examples of how technology can be utilized to support internal global communications systems. List and explain the elements of an effective global control strategy. Discuss the conflicts that can arise between international headquarters and national subsidiaries. Consider a career in global marketing.

Chapter Outline Elements that affect a global marketing organization Types of organizational structures Controlling the global organization Conflict between headquarters and subsidiaries Considering a global marketing career

Elements That Affect a Global Marketing Organization Corporate goals –Mission statement Why do we exist? Where are we going? What do we believe in? What is our distinctive competence? –Strategies and objectives

Elements That Affect a Global Marketing Organization (cont.) Corporate worldview –Ethnocentric orientation Ideas emanating from home market considered superior HQ tells subsidiaries what to do –Polycentric orientation Each market considered unique Local subsidiaries given leeway to develop and implement their own strategies –Geocentric orientation All national units—including domestic ones—must consider what is best for whole organization HQ holds power but keeps channels for good ideas—and senior management—open for subsidiaries

Types of Organizational Structures International divisions –Created when international sales coordination extends beyond capacity of international specialist or export department –Directly involved in the development and implementation of global strategy –Actively seeks out opportunities in foreign countries Regional or local offices = close contact with market (cont.)

Types of Organizational Structures Geographic organizational structures –Appropriate when company needs intimate knowledge of its customers and their environments –Gives company opportunity to understand the local culture, economy, politics, laws, and competitive situation –Two Types Regional management centers Country-based organizations (cont.)

Geographic organizational structures –Regional management centers Focus on regions of world Market similarity and size Allows company to locate marketing and manufacturing efforts in such a way as to take advantage of regional agreements such as NAFTA Puts company in closer contact with distributors, customers, and subsidiaries Types of Organizational Structures (cont.)

Geographic organizational structures –Country-based organizations Separate unit for each country Extremely sensitive to local customs, laws, and needs Expensive!!! Many companies are phasing out country-based structures and are moving toward regional centers Types of Organizational Structures (cont.)

Functional organizational structures –Top executives in marketing, finance, production, accounting, and research and development all have worldwide responsibilities –Best for narrow or homogeneous product lines with little variation between products or geographic markets Types of Organizational Structures (cont.)

Product organizational structures –Each product group is responsible for marketing, sales, planning, and (in some cases) production and research and development Other functions such as legal, accounting, and finance can be included in the product group or performed by corporate staff –Common for companies with several unrelated product lines Types of Organizational Structures (cont.)

Product organizational structure –Advantageous when product line constantly changes with technological advances –Facilitates the development of global products and global roll-outs –Appropriate when perceived differences involved with marketing the various product lines are greater than perceived differences in geographic markets –Knowledge of specific geographic areas can be limited and sensitivity to local market conditions can be diminished Types of Organizational Structures (cont.)

Matrix organizational structures –Developed to overcome drawbacks of geographic, functional, and product organization structures –Allows for two or more dimensions of theoretical weight, e.g., importance to product and geography –Complexity can cause duplication of authority, confusion of responsibility and power struggle –Requires change in management structure from traditional authority to influence system based on technical competence, interpersonal sensitivity, and leadership Types of Organizational Structures (cont.)

Global Mandates Global mandate – Expressed assignment to carry out a task on a global scale –Global account management –Global brand management

Global Teams Teams consisting of members from different parts of the world –Often are cross-functional –Commonly used to create regional solutions Pricing corridors to reduce gray trade in a region Pan-regional advertising

Organization of Born Global Firm Can adopt global organizations from the start –Forgo costs associated with structural change But firms that move into international markets more slowly –Can build up market and cultural knowledge over time –Cultivate and support increasingly extensive worldwide operations through recruitment and training of knowledgeable and experienced managers and staff

Controlling the Global Organization Communication Systems –Effective communication systems facilitate control –Siemens “sharenet” system

Controlling the Global Organization (cont.) Elements of a control strategy 1.Developing standards Behavioral standards Performance standards 2.Measuring and evaluating performance 3.Analyzing and correcting deviations from the standards