Chapter 18 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

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Global Marketing ManagementGlobal Marketing Management

Masaaki Kotabe & Kristiaan HelsenMasaaki Kotabe & Kristiaan Helsen Third EditionThird Edition

John Wiley & Sons, Inc., 2004John Wiley & Sons, Inc., 2004

Chapter 18 Kotabe & Helsen's Global Marketing Management, Third Edition, 2004

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Chapter 18Chapter 18

Planning, Organization, and Planning, Organization, and Control of Global Marketing Control of Global Marketing

OperationsOperations

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Chapter OverviewChapter Overview

1. Global Strategic Marketing Planning1. Global Strategic Marketing Planning2. Key Criteria in Global Organizational2. Key Criteria in Global Organizational Design Design 3. Organizational Design Options3. Organizational Design Options4. Organizing for Global Brand Management4. Organizing for Global Brand Management5. Life Cycle of Organizational Structures5. Life Cycle of Organizational Structures6. To Centralize or Decentralize?6. To Centralize or Decentralize?7. Controlling Global Marketing Efforts7. Controlling Global Marketing Efforts

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IntroductionIntroduction

The capstone of a company’s global marketing The capstone of a company’s global marketing activities will be its marketing plan.activities will be its marketing plan.

To implement its global plans effectively, a To implement its global plans effectively, a company needs to reflect on the best company needs to reflect on the best organizational setup that enables it to organizational setup that enables it to successfully meet the threats and opportunities successfully meet the threats and opportunities posed by the global marketing arena.posed by the global marketing arena.

Global marketers must confront organizational Global marketers must confront organizational issues such as:issues such as:

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Introduction (contd.)Introduction (contd.)

(a). What is the proper communication and(a). What is the proper communication and reporting structure?reporting structure?(b). Who within the organization should bear (b). Who within the organization should bear responsibility for each of the functions that need responsibility for each of the functions that need to be carried out?to be carried out?(c). How can an organization leverage the (c). How can an organization leverage the competencies and skills of its individual competencies and skills of its individual subsidiaries?subsidiaries?(d). Where should the decision-making authority (d). Where should the decision-making authority belong for the various areas?belong for the various areas?

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1. Global Strategic Marketing Planning1. Global Strategic Marketing Planning

The content of a The content of a global strategic marketing planglobal strategic marketing plan usually covers four areas:usually covers four areas:

1. Market situation analysis1. Market situation analysis

2. Objectives2. Objectives

3. Strategies3. Strategies

4. Action plans4. Action plans Bottom-Up versus Top-Down Strategic PlanningBottom-Up versus Top-Down Strategic Planning

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1. Global Strategic Marketing Planning 1. Global Strategic Marketing Planning (contd.)(contd.)

Pitfalls: Marketing plans can go wrong. The top Pitfalls: Marketing plans can go wrong. The top three stumbling blocks arethree stumbling blocks are::

1. Lack of proper information1. Lack of proper information

2. Too little emphasis on the development of 2. Too little emphasis on the development of alternative strategic options alternative strategic options

3. Unrealistic strategic objectives3. Unrealistic strategic objectives

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2. Key Criteria in Global Organizational 2. Key Criteria in Global Organizational DesignDesign

Environmental FactorsEnvironmental Factors::– Competitive EnvironmentCompetitive Environment– Rate of Environmental ChangeRate of Environmental Change– Regional Trading BlocsRegional Trading Blocs– Nature of CustomersNature of Customers

Firm-Specific FactorsFirm-Specific Factors::– Strategic Importance of International BusinessStrategic Importance of International Business– Product DiversityProduct Diversity

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2. Key Criteria in Global Organization 2. Key Criteria in Global Organization Design (contd.)Design (contd.)

– Company HeritageCompany Heritage– Quality of Local Managerial SkillsQuality of Local Managerial Skills

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3. Organizational Design Options3. Organizational Design Options

International Division StructureInternational Division Structure Global Product Division StructureGlobal Product Division Structure (see Exhibit (see Exhibit

18-2)18-2) Geographic StructureGeographic Structure (see Exhibit 18-2) (see Exhibit 18-2)

– Country-Based SubsidiariesCountry-Based Subsidiaries– New Role of Country ManagersNew Role of Country Managers: Country : Country

managers of the twenty-first century should managers of the twenty-first century should have the following five profiles:have the following five profiles:» The traderThe trader» The builderThe builder

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3. Organizational Design Options 3. Organizational Design Options (contd.)(contd.)

» The cabinet memberThe cabinet member» The ambassadorThe ambassador» The representativeThe representative

– Regional StructuresRegional Structures: A recent survey done in : A recent survey done in the Pacific region singles out five distinct roles the Pacific region singles out five distinct roles for regional headquarters (RHQs):for regional headquarters (RHQs):» ScoutingScouting» Strategic simulationStrategic simulation» Signaling commitmentSignaling commitment

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3. Organizational Design Options 3. Organizational Design Options (contd.)(contd.)

» CoordinationCoordination» Pooling resourcesPooling resources

Matrix StructureMatrix Structure (see Exhibit 18-4) (see Exhibit 18-4)– The matrix structure explicitly recognizes the The matrix structure explicitly recognizes the

multidimensional nature of global strategic multidimensional nature of global strategic decision making.decision making.

– With a matrix organization, two dimensions are With a matrix organization, two dimensions are integrated into the organization.integrated into the organization.

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3. Organizational Design Options 3. Organizational Design Options (contd.)(contd.)

The Global Network SolutionThe Global Network Solution (see Exhibit 18-5) (see Exhibit 18-5)– The networked global organization is The networked global organization is

sometimes also referred to as a sometimes also referred to as a transnationaltransnational. .

Example:Example: Asea-Brown Boveri (ABB) Asea-Brown Boveri (ABB)– In the network model, each national unit can be In the network model, each national unit can be

viewed as a source of ideas, skills, capabilities, viewed as a source of ideas, skills, capabilities, and knowledge that can be harnessed for the and knowledge that can be harnessed for the benefit of the total organization.benefit of the total organization.

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4. Organizing for Global Brand 4. Organizing for Global Brand ManagementManagement

Global Branding CommitteeGlobal Branding Committee– Usually made up of top-line executives from Usually made up of top-line executives from

headquarters, regional, or local offices.headquarters, regional, or local offices. Brand ChampionBrand Champion

– A brand champion is a top-line executive A brand champion is a top-line executive (sometimes a CEO).(sometimes a CEO).

Global Brand Manager: For the global brand Global Brand Manager: For the global brand manager to be effective, the following conditions manager to be effective, the following conditions should hold:should hold:– The top of the organization is committed to The top of the organization is committed to

branding.branding.

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4. Organizing for Global Brand 4. Organizing for Global Brand Management (contd.)Management (contd.)

– There is a solid strategic planning process in There is a solid strategic planning process in place.place.

– Managers see the need to travel to learn about Managers see the need to travel to learn about local management and best practices.local management and best practices.

– There is a system to identify, mentor, and train There is a system to identify, mentor, and train prospects who can fill the role.prospects who can fill the role.

Informal, Ad-hoc Branding MeetingsInformal, Ad-hoc Branding Meetings

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5. Life Cycle of Organization Structures 5. Life Cycle of Organization Structures

Several management theorists have made an Several management theorists have made an attempt to come up with the “right” fit between attempt to come up with the “right” fit between the MNC’s environment (internal and external) the MNC’s environment (internal and external) and the organization.and the organization.

One of the major popular schemas is the stages One of the major popular schemas is the stages model developed by model developed by Stopford & WellsStopford & Wells (see (see Exhibit 18-6). The schema shows the relationship Exhibit 18-6). The schema shows the relationship between the organizational structure, foreign between the organizational structure, foreign product diversity, and the importance of foreign product diversity, and the importance of foreign sales to the company (as a share of total sales).sales to the company (as a share of total sales).

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5. Life Cycle of Organization Structures 5. Life Cycle of Organization Structures (contd.)(contd.)

Glocal Mind-SetGlocal Mind-Set: Country and regional managers : Country and regional managers must look at strategic issues from multiple must look at strategic issues from multiple perspectives.perspectives.

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6. To Centralize or Decentralize?6. To Centralize or Decentralize?

Centralization and ConsolidationsCentralization and Consolidations: In practice, : In practice, MNCs are somewhere between these two MNCs are somewhere between these two extremes (see Exhibit 18-7).extremes (see Exhibit 18-7).

Transnational SolutionTransnational Solution: Companies strike a : Companies strike a balance between centralization and balance between centralization and decentralization.decentralization.

FederalismFederalism: Federalism is a way to combine the : Federalism is a way to combine the autonomy of the local units with the benefits of autonomy of the local units with the benefits of coordination. The model has the following coordination. The model has the following characteristics:characteristics:– NoncentralizationNoncentralization

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6. To Centralize or Decentralize? 6. To Centralize or Decentralize? (contd.)(contd.)

– NegotianalismNegotianalism– ConstitutionalismConstitutionalism– TerritorialityTerritoriality– Balance of PowerBalance of Power– AutonomyAutonomy

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7. Controlling Global Marketing Efforts7. Controlling Global Marketing Efforts

Formal (“Bureaucratic”) Control SystemsFormal (“Bureaucratic”) Control Systems– Establishing Standards (Metrics)Establishing Standards (Metrics)

» Behavior and outcome-basedBehavior and outcome-based– Evaluating PerformanceEvaluating Performance– Analyzing and Correcting DeviationsAnalyzing and Correcting Deviations

Informal Control MethodsInformal Control Methods– Corporate Culture:Corporate Culture:

» Clan cultures & market culturesClan cultures & market cultures

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7. Controlling Global Marketing Efforts 7. Controlling Global Marketing Efforts (contd.)(contd.)

– To shape a shared vision, cultural values should To shape a shared vision, cultural values should have three properties:have three properties:» ClarityClarity» ContinuityContinuity» ConsistencyConsistency

– Human Resource DevelopmentHuman Resource Development ““Soft” versus “Hard” LeversSoft” versus “Hard” Levers: : There are seven There are seven

management tools or levers that companies can management tools or levers that companies can use to resolve the global/local tradeoffsuse to resolve the global/local tradeoffs::

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7. Controlling Global Marketing Efforts 7. Controlling Global Marketing Efforts (contd.)(contd.)

– 1. Organizational structure1. Organizational structure– 2. Process2. Process– 3. Incentives3. Incentives– 4. Metrics4. Metrics– 5. Strategy5. Strategy– 6. Networks6. Networks– 7. Culture7. Culture

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7. Controlling Global Marketing Efforts 7. Controlling Global Marketing Efforts (contd.) (contd.)

For a proper structure and strategic coherence, the For a proper structure and strategic coherence, the following pieces of advice are offeredfollowing pieces of advice are offered (see Exhibit (see Exhibit 18-10 & Summary):18-10 & Summary):– Recognize the need for business asymmetryRecognize the need for business asymmetry– Democracy is a must.Democracy is a must.– A shared vision is important.A shared vision is important.– There is a need for a good mix of specialists of There is a need for a good mix of specialists of

three types – country; functional; and business.three types – country; functional; and business.– Moving unit headquarters abroad seldom solves Moving unit headquarters abroad seldom solves

the organization’s problems.the organization’s problems.

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Copyright © John Wiley & Sons, Inc., 2004Copyright © John Wiley & Sons, Inc., 2004