1. Global Strategic Management
P&G in Japan; Issues in Strategy,
Organization, and Country Management

2. P&G Japan Case Summary
Each “affiliate” country has a strategic role that influences strategy, structure, and the role of the country manager. The strategic role of the country also influences which functions are duplicated within the country (e.g., R&D, mfg., etc.). A lead market must have R&D.
The country manager’s role is a function of the strategic role of the country in the multinational firm’s overall strategy:
- Access new markets with existing products (Implementer)
- Develop new markets and adapt and develop new products for those markets (Local Manager)
- Develop “lead” markets from which to learn and transfer knowledge to other relevant markets (Global Network Manager)
There are numerous potential competitive advantages that MNCs can realize by thinking about their firm as a global network of resources and capabilities.

3. P&G Update: Performance in Asia
Opened technical center in Kobe in 1993; 3 mfg. plants
Now sell 20 brands with market leadership in 1/3 of those.
“P&G views Japan as one of the top two markets in Asia. The Japanese market is made up of very discriminating consumers, intense competition, and a need for constant product innovation. If P&G can do well in Japan, P&G can do well in any other market. We take the Japnese market very seriously; although I wouldn’t consider it a major growth market, I would consider it a market that we want to maintain market leadership in.”
P&G executive 4/21/98
We use what we learn in one market to succeed in others
P&G executive 4/9/01

4. Country Management Issues
What is the role of a country organization?
What activities, resources to locate within a country?
How is an affiliate integrated into worldwide operations?
What is the role of the country manager (CM)?
How can a CM define and meet local and global goals?
What role does the CM play in a firm’s worldwide strategy?
Country Organization Role
Traditional View
Organization to sell products locally
Emerging View (interdependent markets as part of global network)
Pool of resources that happen to be located within a national market that are used to compete locally and globally

5. Roles of Country Organizations
Source: Bartlett and Ghoshal

6. Country Management Model
Stage 1: Global Strategy/Structure
Export focus on sales and distribution
Worldwide units dominate structure (local staff report to global units)
Country manager as TRADER (implementer)
Stage 2: Multinational Strategy/Structure
Focus on developing, making, and selling broader line to locally adapted products
Country Manager as MANAGER (potentate)
Stage 3: Transnational Strategy/Structure
Focus on worldwide integration, reducing local authority, standardizing systems
Country manager as GLOBAL NETWORK MANAGER (cabinet member)

7. Strategic Role of Country Local Implementor (Trader)
Country Strategy (Global)
Implement common strategy in new foreign market
Sale existing products in new market
Build up initial local infrastructure
Control operations in line with corporate strategy
Country Manager
Expatriate
Experience with company products, systems
Entrepreneur
Identify new business opportunities with existing pdts./capabilities
Local
Market
Suppliers
Customers
Government
Competitors
Country
Manager
Local Operations
Corporate
Headquarters

8. Strategic Role of Country Local Manager
Country Strategy (Multi-Domestic)
Develop and profitably expand local business
Adapt products
Expand scope of local resources, activities
Install local structure and systems in line with local needs
Country Manager
Local Expertise is critical
Experience with local market (customers, distribution network, workers, government, etc.).
Manager
Manage and coordinate various functions/entire business
Entrepreneur
Build business, new products, etc.
Country
Manager
Local
Market
Local Operations
Suppliers
Customers
Government
Competitors
Corporate
Headquarters

9. Strategic Role of Country Global Network Manager (cabinet member)
Country Strategy (Trans-national)
-Expand local business
- Integrate local business within worldwide operations
-Develop “learning” routines (lead market) to transfer knowledge to other markets
-Access, leverage global resources
Country Manager
Local expertise, Global access
Experience with local market and worldwide operations of the company.
“Ambassador”
Manage local interests globally
Manage global interests locally
Country
Manager
Local
Market
Local Operations
Customers
Government
Competitors
Corporate
Headquarters

10. Why the Global Network (Transnational) is Valuable
Where is the Value in a
Global Network?
Learning and capability development (P&G, Bain)
Options and access on large new markets (Otis)
Operating flexibility to shift production to changing factor conditions, exchange rates, etc. (Nike)
Ability to arbitrage differences in tax regimes, transfer pricing, etc.
Global Network
Perspective

11. Knowledge Requirements of a Global Manager
Strategic
Management
Concepts
Country-Specific
Knowledge
(i.e., culture, gov’t
regulations, market
conditions, etc.)
Global
Environment
(macroeconomic,
financial, political,
competitive)
Firm-Specific
Knowledge
(capabilities,
products, etc.)