Lesson 16 Leading and Organising the Global Marketing

Lesson 16 Leading and Organising the Global Marketing Effort © Prentice Hall 16 -1

Globalization and Leadership “The lower you are in the organization, the less clear it is to you that globalization is a great idea” Jack Welch – former GE chairman “To certain people globalization is threat without rewards…” Paolo Fresco – former GE vice-chairman 16 -2

Leadership The leader’s task is to articulate ◦ ◦ Beliefs Values Policies Intended geographical scope of activities 16 -3

Top Management Nationality “Companies are realizing that they have a portfolio of human resources worldwide, that their brightest technical person might come from Germany, or their best financial manager from England. They are starting to tap their worldwide human resources. And as they do, it will not be surprising to see non-Americans rise to the top. ” - Christopher Bartlett, Harvard Business School 16 -4

Top Management Nationality 16 -5

Leadership and Core Competence Prahalad and Hamel – Executives were judged on their ability to identify, nurture, and exploit the organization’s core competencies in the 1990’s Core competencies must ◦ Provide potential access to a wide variety of markets ◦ Make a significant contribution to the perceived customer benefits ◦ Be difficult to imitate 16 -6

Organizing globalized corporations The goal is to find a structure that: ◦ Enables the company to respond to relevant market environment differences ◦ Ensures the diffusion of corporate knowledge and experience throughout the entire system Organization’s must balance: ◦ The value of centralized knowledge and control ◦ The need for individualized response to local markets 16 -7

Organization In global marketing there is not a single best structure Global corporations agree that: ◦ The structure should be flexible ◦ The structure should be controllable from the HO ◦ The structure is flat and simple In the 21 st century corporations will have to find new, more creative ways to organize ◦ Must be flexible, efficient, and responsive to meet the demands of globalizing markets 16 -8

International Division Structure 16 -9

International Division Structure Four factors that lead to this structure ◦ Top management’s commitment to global operations has increased enough to justify the position ◦ Complexity of international operations requires a single organizational unity ◦ The firm has recognized the need for internal specialists to deal with the demands of global operations ◦ Management recognizes the importance of proactively scanning the global horizon for opportunities and threats ◦ E. g. Walmart, Levi Strauss, Anheuser-Busch 16 -10

Regional Management Centers 16 -11

Regional Management Centers Additional layer of regional subsidiaries Useful when regions are considered culturally alike Additional layer breeds inflexibility Higher costs E. g. Quaker Oats, Electrolux 16 -12

Geographical Division Structures 16 -13

Factors critical to global organizational structure design Cultural similarities of markets ◦ Culturally similar markets world wide should be grouped together under a common head Product groups ◦ Departments should be organized around similar product groups irrespective where they are marketed Administrative reporting ◦ Employees should report to bosses in their own office for administrative reasons 16 -14

The Matrix Design Geographic knowledge – understanding of economic, social, political, and governmental market and competitive dimensions Product knowledge and know-how – Product managers that have a worldwide responsibility can achieve new levels of product competency Market knowledge – understanding the needs of markets 16 -15

The Matrix Design At the fundamental level, an employee reports to two people ◦ Functional reporting: the functional area ◦ Administrative reporting: for day to day work An additional reporting layer may be added by teams E. g. Whirlpool, Gillette, Ericsson, Boeing, etc. 16 -16

The Matrix Design 16 -17

The Matrix Design Key success factors ◦ Conflict resolution capabilities ◦ Take an integrative view of activities ◦ Influence is based on competence and interpersonal sensitivity not line authority 16 -18

Lean Production: Organizing the Japanese Way Craft production meant one worker created one product Mass production gained advantages because one worker could do far more specialized work in the moving assembly line Lean production uses less factory space, smaller inventories, integrates quality control with the process, and rely on supplier chains This increased efficiency by 50% over typical mass production e. g. Toyota Production System 16 -19

Careers in global marketing Abandon ethnocentrism Travel Learn another language, maybe two Develop empathy with other cultures Make friends with internationals 16 -20

Careers in global marketing Look for jobs in other countries Be informed ◦ International news ◦ Business news Consciously target businesses with substantial international operations Realize that there is whole different world out there waiting to be explored by you. 16 -21