Chapter 18 Organizing for Global Marketing Mc GrawHillIrwin

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 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) Automobile headquarter Subsidiaries (manufacturing, sales, R & D) Power product headquarter 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. 3 M’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 B 2 B, 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.