Global Marketing Management 4 e Chapter 18 Planning

Chapter Overview 1. Global Strategic Marketing Planning 2. Key Criteria in Global Organizational Design 3. Organizational Design Options 4. Organizing for Global Brand Management 5. Life Cycle of Organizational Structures 6. To Centralize or Decentralize? 7. Controlling Global Marketing Efforts Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 2

Introduction § The capstone of a company’s global marketing activities will be its marketing plan. § To implement its global plans effectively, a company needs to reflect on the best organizational setup that enables it to successfully meet the threats and opportunities posed by the global marketing arena. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 3

Introduction § Global marketers must confront organizational issues such as: (a). What is the proper communication and reporting structure? (b). Who within the organization should bear responsibility for each of the functions that need to be carried out? (c). How can an organization leverage the competencies and skills of its individual subsidiaries? (d). Where should the decision-making authority belong for the various areas? Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 4

1. Global Strategic Marketing Planning § The content of a global strategic marketing plan usually covers four areas: 1. Market situation analysis 2. Objectives 3. Strategies 4. Action plans § Bottom-Up versus Top-Down Strategic Planning Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 5

1. Global Strategic Marketing Planning § Pitfalls: Marketing plans can go wrong. The top three stumbling blocks are: 1. Lack of proper information 2. Too little emphasis on the development of alternative strategic options 3. Unrealistic strategic objectives …. . external factors can also interfere. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 6

2. Key Criteria in Global Organizational Design § Environmental Factors: – Competitive Environment – Rate of Environmental Change – Regional Trading Blocs – Nature of Customers Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 7

2. Key Criteria in Global Organization Design § Firm-Specific Factors: – Strategic Importance of International Business – Product Diversity – Company Heritage – Quality of Local Managerial Skills Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 8

3. Organizational Design Options § International Division Structure § Global Product Division Structure (see

3. Organizational Design Options § Geographic Structure (see Exhibit 18 -3) – Country-Based Subsidiaries – New Role of Country Managers: Country managers of the twenty-first century should have the following five profiles: § The trader § The builder § The cabinet member § The ambassador § The representative § The country prince (country manager and product champion) Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 10

3. Organizational Design Options Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc.

3. Organizational Design Options – Regional Structures: A recent survey done in the Pacific region singles out five distinct roles for regional headquarters (RHQs): § Scouting § Strategic simulation § Signaling commitment § Coordination § Pooling resources § Matrix Structure (see Exhibit 18 -4) – The matrix structure explicitly recognizes the multidimensional nature of global strategic decision making. – With a matrix organization, two dimensions are integrated into the organization. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 12

3. Organizational Design Options § The Global Network Solution (see Exhibit 18 -5) – The networked global organization is sometimes also referred to as a transnational. Examples: Asea-Brown Boveri (ABB), Toyota – In the network model, each national unit can be viewed as a source of ideas, skills, capabilities, and knowledge that can be harnessed for the benefit of the total organization. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 14

4. Organizing for Global Brand Management § Global Branding Committee – Usually made up of top-line executives from headquarters, regional, or local offices. § Brand Champion – A brand champion is a top-line executive (sometimes a CEO). Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 17

4. Organizing for Global Brand Management § Global Brand Manager: For the global brand manager to be effective, the following conditions should hold: – The top of the organization is committed to branding. – There is a solid strategic planning process in place. – Managers see the need to travel to learn about local management and best practices. – There is a system to identify, mentor, and train prospects who can fill the role. § Informal, Ad-hoc Branding Meetings Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 18

5. Life Cycle of Organization Structures § Companies need to adapt their organization for a variety of possible reasons- existing structures may have become too rigid or complex, environmental changes, managers learn new skills or new senior management is brought in. § Successful restructuring take time, planning and resources. Often requires a fundamental cultural change. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 19

5. Life Cycle of Organization Structures § Several management theorists have made an attempt to come up with the “right” fit between the MNC’s environment (internal and external) and the organization. § One of the major popular schemas is the stages model developed by Stopford & Wells (see Exhibit 18 -7). The schema shows the relationship between the organizational structure, foreign product diversity, and the importance of foreign sales to the company (as a share of total sales). Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 20

5. Life Cycle of Organization Structures § Glocal Mind-Set: Country and regional managers must look at strategic issues from multiple perspectives. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 21

6. Centralization or Decentralization? § Centralization and Consolidations: In practice, MNCs are somewhere between these two extremes. § Transnational Solution: Companies strike a balance between centralization and decentralization. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 22

6. Centralization or Decentralization? § Federalism: Federalism is a way to combine the autonomy of the local units with the benefits of coordination. The model has the following characteristics: – Non-centralization – – – Negotianalism Constitutionalism Territoriality Balance of Power Autonomy Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 23

6. Centralization or Decentralization? Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc.

7. Control of Global Marketing Efforts § Formal (“Bureaucratic”) Control Systems – Establishing Standards (Metrics) § Behavior and outcome-based – Evaluating Performance – Analyzing and Correcting Deviations Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 26

7. Control of Global Marketing Efforts § Informal Control Methods – Corporate Culture: § Clan cultures & market cultures – To shape a shared vision, cultural values should have three properties: § Clarity § Continuity § Consistency – Human Resource Development Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 27

7. Controlling Global Marketing Efforts § “Soft” versus “Hard” Levers: There are seven management tools or levers that companies can use to resolve the global/local tradeoffs: – – – – 1. 2. 3. 4. 5. 6. 7. Chapter 18 Organizational structure Process Incentives Metrics Strategy Networks Culture Copyright (c) 2007 John Wiley & Sons, Inc. 28

7. Controlling Global Marketing Efforts § For a proper structure and strategic coherence, the following pieces of advice are offered (see Summary and Exhibit 18 -10): – Recognize the need for business asymmetry – Democracy is a must. – A shared vision is important. – There is a need for a good mix of specialists of three types – country; functional; and business. – Moving unit headquarters abroad seldom solves the organization’s problems. Chapter 18 Copyright (c) 2007 John Wiley & Sons, Inc. 29