Marketing Organization, Implementation, and Control Chapter 19 Marketing Organization, Implementation, and Control

Organizational Structure Provides a route of decision making and coordination along with a system for reporting and communication. Basic organizational international organizational design include three categories for structure development: Little or no formal organization for international activities. International division. Global organization.

Global Organization Structural Alternatives Global product structure Product divisions are responsible for all manufacture and marketing worldwide. Global area structure Geographic divisions are responsible for all manufacture and marketing in respective areas. Global function structure Functional areas are responsible for entire worldwide operations in own area. Global customer structure Operation structures are based customer groups. Mixed or hybrid structure

Evolution of International Structures High Global Matrix Worldwide Product Division Alternative Paths of Development International Division Area Division Low Low High Foreign Sales as a Percentage of Total Sales SOURCE: From Christopher A. Bartlett, “Building and Managing the Transnational: The New Organizational Challenge,” in Competition in Global Industries, Michael E. Porter, ed. (Boston: Harvard Business School Press, 1986), 368. Reprinted by permission of Harvard Business School from Competition in Global Industries, Michael E. Porter, ed. Boston: 1986, p. 368. Copyright by the President and Fellows of Harvard College.

Implementation Organizational structures provide the frameworks for carrying out marketing decisions. Factors affecting organizational structure and decision making The degree of involvement in international operations. The business(es) in which the firm is engaged. The size and importance of the markets. The human resources capability of the firm.

Decentralized versus Centralized Structure The decentralized structure gives a high degree of autonomy to subsidiaries. The centralized structure has control and strategic decision making concentrated at headquarters. Coordinated Decentralization Overall corporate strategy is provided from headquarters. Subsidiaries are free to implement it within the range agreed on with headquarters.

Levels of Coordination Central Control Central Direction Central Coordination Coordinating mechanisms Informal cooperation National autonomy DESCRIPTION No national structures Central functional heads have line authority over national functions Central staff functions in coordinating role Formal committees and systems Functional meetings; exchange of information No coordination between decentralized units; which may even compete in export markets Level 5 = highest; Level 0 = lowest. Most commonly found levels are 1-4.

Dimensions of the “GLOCAL” Approach A clearly communicated corporate vision. HR management to broaden individual perspectives and develop identification with corporate goals. The integration of individual thinking and activities into the corporate agenda The “Not-Invented-Here” (NIH) Syndrome.

Networked Global Organization Decentralized Federation Model Networked Global Model HQ Subsidiary HQ Subsidiary SOURCE:Thomas Gross, Ernie Turner, and Lars Cederholm, “Building Teams for Global Operations,” Management Review, June 1987,34.

Promoting Internal Cooperation Moving human capital within the organization Teaching about what a person knows and believes about what it takes to succeed. Developing a “boundary-less” organizational perspective.

Intranets Benefits Increased productivity Enhanced knowledge capital Facilitated teamwork Incorporation of best practices

Roles for Country Organizations Strategic Importance of Local Market High Low Strategic Leader Contributor High Competence of Local Organization Black Hole Implementor Low SOURCE: Reprinted with permission of Harvard Business Review. An exhibit from “Tap Your Subsidiaries for Global Reach,” by Christopher A. Bartlett and Sumantra Ghoshal, 64 (November/December 1986), 90 Copyright 1986 by the President and Fellows of Harvard College; all rights reserved.

Control Comparison of Bureaucratic and Cultural Control Mechanisms Type of Control The instruments and processes needed to influence behavior and performance of members to meet goals. SOURCES: Peter J. Kidger, “Management Structure in Multinational Enterprises: Responding to Globalization,” Employee Relations, August 2001, 69-85: and B. R. Baliga and Alfred M. Jaeger, “Multinational Corporations: Control Systems and Delegation Issues,” Journal of International Business Studies 15 (Fall 1984): 28.

Budgets and Planning Systems Budgets are short-term guidelines. Plans are formalized long-range programs. Purposes of the budget system Allocation of funds among subsidiaries. Planning and coordination of global production capacity and supplies. Subsidiary performance evaluation. Communication and information exchange between subsidiaries, product organizations, and corporate headquarters.

Cultural Control “… a socialization process to integrate the employee into the organization’s culture and embrace its ideals and values”. Exercising control Develop the “right” control system to reflect the function and the corporate culture.

Exercising Control Control system design considerations The cost of establishing and maintaining it. The costs of trade-off with the benefits to be gained from it. The business environment in which it will function.