Organizing for Global Marketing

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• Organizing for Global Marketing

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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 firms 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.

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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

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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

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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 unitsincluding domestic onesmust
  consider what is best for whole organization
• HQ holds power but keeps channels for good
  ideasand senior managementopen for subsidiaries

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Types of Organizational Structures
(cont.)

• 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

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Types of Organizational Structures
(cont.)

• 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

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Types of Organizational Structures (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

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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

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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

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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

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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

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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

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Global Mandates

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

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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

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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

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Controlling the Global Organization

• Communication Systems
• Effective communication systems facilitate
  control
• Siemens sharenet system

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Controlling the Global Organization (cont.)

• Elements of a control strategy
• Developing standards
• Behavioral standards
• Performance standards
• Measuring and evaluating performance
• Analyzing and correcting deviations from the
  standards