1. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 1 Global Marketing Management Masaaki Kotabe & Kristiaan Helsen Third Edition John Wiley & Sons, Inc., 2004

2. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 2 Chapter 18 Planning, Organization, and Control of Global Marketing Operations

3. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 3 Chapter Overview 1. Global Strategic Marketing Planning 2. Key Criteria in Global Organizational Design 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

4. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 4 Introduction The capstone of a company’s global marketing activities will be its marketing plan. 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. 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. Global marketers must confront organizational issues such as: Global marketers must confront organizational issues such as:

5. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 5 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 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?

6. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 6 1. Global Strategic Marketing Planning The content of a global strategic marketing plan usually covers four areas: 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 Bottom-Up versus Top-Down Strategic Planning

7. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 7 1. Global Strategic Marketing Planning (contd.) Pitfalls: Marketing plans can go wrong. The top three stumbling blocks are: 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

8. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 8 2. Key Criteria in Global Organizational Design Environmental Factors: Environmental Factors: –Competitive Environment –Rate of Environmental Change –Regional Trading Blocs –Nature of Customers Firm-Specific Factors: Firm-Specific Factors: –Strategic Importance of International Business –Product Diversity

9. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 9 2. Key Criteria in Global Organization Design (contd.) –Company Heritage –Quality of Local Managerial Skills

10. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 10 3. Organizational Design Options International Division Structure International Division Structure Global Product Division Structure (see Exhibit Global Product Division Structure (see Exhibit18-2) Geographic Structure (see Exhibit 18-2) Geographic Structure (see Exhibit 18-2) –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

11. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 11 3. Organizational Design Options (contd.) »The cabinet member »The ambassador »The representative –Regional Structures: A recent survey done in the Pacific region singles out five distinct roles for regional headquarters (RHQs): »Scouting »Strategic simulation »Signaling commitment

12. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 12 3. Organizational Design Options (contd.) »Coordination »Pooling resources Matrix Structure (see Exhibit 18-4) 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.

13. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 13 3. Organizational Design Options (contd.) The Global Network Solution (see Exhibit 18-5) The Global Network Solution (see Exhibit 18-5) –The networked global organization is sometimes also referred to as a transnational. Example: Asea-Brown Boveri (ABB) –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.

14. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 14 4. Organizing for Global Brand Management Global Branding Committee Global Branding Committee –Usually made up of top-line executives from headquarters, regional, or local offices. Brand Champion Brand Champion –A brand champion is a top-line executive (sometimes a CEO). Global Brand Manager: For the global brand manager to be effective, the following conditions should hold: 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.

15. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 15 4. Organizing for Global Brand Management (contd.) –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 Informal, Ad-hoc Branding Meetings

16. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 16 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. 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 18-6). 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). One of the major popular schemas is the stages model developed by Stopford & Wells (see Exhibit 18-6). 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).

17. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 17 5. Life Cycle of Organization Structures (contd.) Glocal Mind-Set: Country and regional managers must look at strategic issues from multiple perspectives. Glocal Mind-Set: Country and regional managers must look at strategic issues from multiple perspectives.

18. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 18 6. To Centralize or Decentralize? Centralization and Consolidations: In practice, MNCs are somewhere between these two extremes (see Exhibit 18-7). Centralization and Consolidations: In practice, MNCs are somewhere between these two extremes (see Exhibit 18-7). Transnational Solution: Companies strike a balance between centralization and decentralization. Transnational Solution: Companies strike a balance between centralization and 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: Federalism: Federalism is a way to combine the autonomy of the local units with the benefits of coordination. The model has the following characteristics: –Noncentralization

19. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 19 6. To Centralize or Decentralize? (contd.) –Negotianalism –Constitutionalism –Territoriality –Balance of Power –Autonomy

20. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 20 7. Controlling Global Marketing Efforts Formal (“Bureaucratic”) Control Systems Formal (“Bureaucratic”) Control Systems –Establishing Standards (Metrics) »Behavior and outcome-based –Evaluating Performance –Analyzing and Correcting Deviations Informal Control Methods Informal Control Methods –Corporate Culture: »Clan cultures & market cultures

21. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 21 7. Controlling Global Marketing Efforts (contd.) –To shape a shared vision, cultural values should have three properties: »Clarity »Continuity »Consistency –Human Resource Development “Soft” versus “Hard” Levers: There are seven management tools or levers that companies can use to resolve the global/local tradeoffs: “Soft” versus “Hard” Levers: There are seven management tools or levers that companies can use to resolve the global/local tradeoffs:

22. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 22 7. Controlling Global Marketing Efforts (contd.) –1. Organizational structure –2. Process –3. Incentives –4. Metrics –5. Strategy –6. Networks –7. Culture

23. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 23 7. Controlling Global Marketing Efforts (contd.) For a proper structure and strategic coherence, the following pieces of advice are offered (see Exhibit 18-10 & Summary): For a proper structure and strategic coherence, the following pieces of advice are offered (see Exhibit 18-10 & Summary): –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.

24. Chapter 18Kotabe & Helsen's Global Marketing Management, Third Edition, 2004 24 Copyright © John Wiley & Sons, Inc., 2004