Chapter 16: Organizing for

Global Marketing
Chapter Outline

Elements that affect a global marketing organization

Types of organizational structures
Controlling the global organization
Conflict between headquarters and subsidiaries

Elements that Affect a Global Marketing Organization

Corporate goals
o Mission statement
Sometimes corporate goals are inmashed in the corporate mission
statement. A mission statement answers questions like Why do we
exist?, Where are we going?, What do we believe in?, What is
our distinctive competence?.
o Strategies and objectives
Are we a global, regional or adapted marketing firm? What
strategies will we use to meet our objectives?
Corporate worldview
How the corporation sees its place in a larger market place
o Ethnocentric orientation
Ideas emanating from the home market are considered superior
than those coming from subsidiary markets and also that
headquarters tell subsidiaries what to do.
o Polycentric orientation
We consider that each market is unique and local subsidiaries are
given leeway to develop and implement their own strategies
o Geocentric orientation
This means that all national units, including the domestic units,
must consider whats best for the whole organisation. Headquarters
keeps power, but keeps channels open for good ideas and senior
management from subsidiaries. If something works in a subsidiary,
theyre more than willing to try it out in other parts of the world.
External Forces
o Geographic distance
Might mean the distance of the subsidiary markets from the home
market or domestic market, might mean timezones differences
across various international markets.
o Types of customers
Companies that serve very few geographically concentrated
customers will organise differently than those serving a large
amount of fewer customers in country after country
o Government regulations
Political risks and laws involving import, export, taxes and hiring
affect organizational structure.
Internal Factors
 o Importance of international sales
The higher the percentage of international sales, this requires a
more complicated structure
o Diversity of international markets served
The greater the diversity of the markets, the more complicated of an
organizational structure youre gonna need.
o Level of economic commitment
Are you unwilling or unable to commit resources, if thats the case,
youre gonna need a simpler structure.
o Human resource availability
You have adequate personnel or you lack personnel. If you lack
personnel, thats gonna constraint your growth.
o Organizational flexibility
Even companies that establish a perfect design for the present, find
themselves in troubles later on when the firm grows or the industry
changes.

International Specialists

Companies without international specialists

o REACTIVE
Inquiries from foreign buyers who saw an advertisement in a trade
magazine or attended a trade show or addressed by domestic staff.
International specialists and export departments
If you have an international specialist and export department, their
primary function is the sales function. They respond to inquiries, manage
exhibits at international trade shows and handle export documentation,
shipping, insurance and financial matters. International specialists may
 also maintain contact with embassies, export financing agencies and
various departments of commerce. The international specialist or export
department may use an export agent, an export management company or
import intermediaries to assist in the process.
o PROACTIVE
The company assigns designated staff to export operations.

Southern, Midwestern, Eastern and Western Manager are all refering to the
domestic market. In addition to managers for the domestic market, there is an
International Specialist.
International Division

Created as sales to foreign markets become more important to the

company and when international sales coordination goes beyond the
capacity of international specialist or an export department
The structure is associated with a serious desire to grow overseas markets
Directly involved in the development and implementation of global
strategy
International division normally reports to the president. This gives an equal
status with other functions such as marketing, finance and production.
Heads of international divisions have marketing managers, sales
managers, perhaps even production managers reporting to them. These
divisions focus all their efforts on the international markets.
Actively seeks out opportunities in foreign countries
As a result theyre often successful at increasing international sales. The
international division actively seeks out market opportunities and the sales
and marketing efforts in each country are supported through regional or
local offices or subsidiaries which usually have very close contacts with
market participants.
 Regions
The international division is usually subdivided into regions such as Africa,
Europe, Latin-America, North-America, the Middle East etc.
PROACTIVE but NOT GLOBAL YET
The existense of an international division separate from domestic
operations, is useful for focusing on foreign growth, but it doesnt
necessarily allow for globally integrated strategies.

Global Organization

The home market is treated as simply a part of the whole.

Global organizations may be organized by
o Geography
o Function
o Product

Geographic Global Organization

Customer and Environmental Knowledge

This structure gives the company the opportunity to understand the local
culture, the economy, politics, laws and competitive situation.
Two Types
o Country-based organizations
What we have is a separate unit for each country. These units are
extremely sensitive to local customs, laws and needs.
o Regional organization
Focuses on various regions of the world. It allows the company to
locate marketing and manufacturing efforts in such a way as to take
advantage of regional agreements, like NAFTA, EU, the GCC in the
Middle East etc.
Functional Organization

Worldwide responsibilities
Top-executives and marketing, finance, production, accounting and R&D all
have worldwide responsibilities
Best for global products
Narrow or homogenous product lines with little variation between products
or geographic markets = global products
 Vice Presidents have global oversight
For example the VP of marketing would have the following oversight
responsibility: global product development, global branding, modifying
uniform pricing, tracking of parallel imports, global theme advertising etc.
o VP R&D
o VP Manufacturing
o VP Procurement
o VP Marketing

Product Organization
Each product group is responsible for marketing, sales, planning and (in some
cases) production and R&D
Other functions such as legal accounting and finance can be included in the
product group or performed by corporate staff. This is common for companies
with several distinct industries. A product global organization is 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 in sensitivity to local market conditions can be
diminished. This facilitates the development of global products and global
rollouts.
Geography versus Function/Product

Global strategy argues for shift to function/geography

Tough decision culture still matters
The implications of culture on the individual markets is a big deal.
Geographic organizations can be globally tweaked with global mandates
and teams to overcome this problem.
Structurally Undecided
There is no one best structural organisation for all companies. Both Ford and
Coca Cola are examples of how companies keep changing their minds about what
is and is not the best organizational structure. In fact no structure is perfect and
each structural form has its strengths and its weaknesses. As Ford and Coca Cola
have discovered as theyve played with various strenghts and weaknesses. One
thing that can help with a structurally undecided or any structure you choose, is
the issue of global mandates and teams.
Global Mandates & Teams

Ways to introduce some needed global integration into geographic

organisations
o A global mandate is an expressed assignment to carry out a task on
a global scale. For example this could mean that the company would
want global account management for its advertising function or
perhaps global brand management to maintain a systematic and
consistent brand image across various regions of the world
o Global teams are comprised of members from different parts of the
world. Often the team members are cross-functional. They are
commonly used to create regional solutions to problems, such as
 creating pricing court orders to reduce gray trade or parallel
importing in a region or to produce pan-regional advertising
campaigns.
Matrix Organizational Structure

Allows for two or more dimensions of theoretically equal importance =

product and geography
Matrix organisations are not without their challenges. Some critics of
Unilevers matrix structure complained that its complexity with some
managers in charge of product categories, others in charge of brands and
still others in charge of geographic areas, resulted in duplication of
authority and confusion of responsibility leading to power struggles.
Whos the boss? This requires a change in management structure from
traditional authority to influence system based on technical competence,
interpersonal sensitivity and leadership. Also downsizing has resulted in
few resistance or liasons personnel. Managers with more than one boss are
settled with doing more coordinations themselves.

Born Global Organizations

They become global from the very beginning of their existence. Born
globals can benefit from the fact that they have no organizational history.
o Forgo costs associated with structural change. Other firms have
traditionally passed through several structural reorganisations as
they involved into global firms. Born global firms can adapt global
organisations from the start, this is envyable and that structural
change can entail heavy costs and business disruptions.
But firms that move into international markets more slowly
 o Can build up market and cultural knowledge over time
o Cultivate and support increasingly extensive worldwide operations
through recruitment and training of knowledgeable and experienced
managers and staff
Born globals attempt to do this practically overnight and can find
their managerial resources stretched to the limit. As is the case with
other entrepreneurial ventures, they can find themselves with fewer
assets than opportunities.
Controlling the Global Organization: Management Processes

Three elements of a control system

o Establishment of standards
o Measurement of performance against those standards
o Behavioral standards or the analysis and correction of any deviation
from the standards.
Creating a communications system (when effective, it facilitates the
control)

Performance standard refer to market outcomes. They extend beyond

financial data and might include sales by product line, market share,
product trial rates by customers, innovation and customer satisfaction.
Behavioral standards refer to actions taken within the form, they can
include the type and amount of advertising to be developed and utilized,
the market research to be performed and the prices to be charged for a
product. Behavioral standards may also apply to ethical conduct within the
firm. After Wal-Mart revealed that it was conducting an internal
investigation of possible violations of the US Foreign Corrupt Practices Act,
which prohibits giving bribes or making grease payments in India, the
global retailer sought to establish clear behavioral standards concerning
questionable payments to government officials. Wal-Mart hired a US law
firm and a global auditing firm, KPMG, to develop compliance procedures in
a accordance with US law and provide training to nearly 1,700 employees
in India. Conversely with Avon, they had incurred over a 130 million dollars
in fine and 340 million dollars in legal and other expenses related to on-
going bribery investigations. Avon decided that the company needed a
tighter approval process for expenses and more training for its staff
worldwide to better understand the companys behavior. Once these
elements of the control system have been developed, they must be
communicated clearly and forcefully to all of the effected divisons of the
company.
Corporate Culture as Control

If an international firm can establish a strong corporate culture across its

subsidiaries, then managers from its various units share a single vision and
values
Some believe that this corporate socialization enables global firms to
operate with less burdensome hierarchical structures and fewer time-
consuming procedures. Unilever, for example, spends as much time on
training as it does on R&D, not only to upgrade skills, but also to
indoctrinate managers into the Unilever family. This helps build personal
 relationships and informal contexts that can be more powerful than any
formal systems or structures.
Conflicts Between HQ and Subsidiaries

Are inevitable because

o Subsidiary manager usually wants more authority and differntiation
o Headquarters wants more detailed reporting and greater unification
of geographcially dispersed operations
An inherent conflict build up between headquarters and the various
subsidiaries around the world.

A number of issues that have different perspectives on them with the

headquarters on one side of the issue and the subsidiary on the other side. This
study and prior studies confirm that there is a great deal of disagreement
between headquarters and subsidiaries.
Global Marketing Directors
Usually at the VP level in an organization and are located in headquarters

Their job to desisign, create and maintain the global marketing system of a
company
Since they have a bird eyes view that can see across the organization,
they can identify areas of opportunity with a company can standardize its
marketing strategy.
Primary job: strategic planning, budgeting and implementation with
functions, regions and countries
Participation in performance evaluation of functional and regional
managers
Country Managers

Seek to adapt to the local country environment wherever possible if it

means increased country level sales, because that is usually how they are
evaluated. Country managers often are not rewarded based on overall
corporate performance, but primarily on the performance of their
subsidaries, although many companies are changing country managers
incentive systems to more greatly reflect corporate performance rather
than simple geographic-based performance. Country managers provide
key local input inside in the marketing strategy.
o They know the customers and
o Competitors the best
o They are the ones with the contacts and local knowledge to identify,
assess and manage strategic partners in the country.
o Many new products and process ideas come from country managers
o Usually better suited to take a leadership role in local government
relations because of their contacts and local knowledge.
Hence we see a conflict between headquarters and the subsidiary.
Key to Success

Two sides of the same coin

Being able to recognize that the perspectives of headquarters and of the
subsidiary are basically working towards the same goal.
Conflict is not all bad
This generates constant dialogue regarding the international marketing
dilemma: do we standardize or do we adapt?
The term subsidairy evokes subsurveillance, but national subsidiaries are a
companys front line. Interacting with customers and competitors, their
knowledge is substantial.
As for People, George Yip Suggests

Mixture of national backgrounds should be represented in each national

subsidiary to cross- fertilize with different ideas and see how other people
have been working in other parts of the company.
International transfers should occur at an early stage of a managers
career
At higher levels, non-nationalists should hold at least 10% of positions.
The best performers in an organisation should get transferred overseas.
Veterans of foreign assignment should get job preference.
No advancement should be made without substantial or significant
experience abroad and Yip says at least 2 years abroad.
Possible Employment Settings

Ad agencies
Consulting firms
Entertainment firms
Franchisees or franchisors
Government
Industry
Manufacturers
 Service industries
Media
Nonprofits
PR firms
Retailers
Transportation firms in the channel of distribution
Wholesalers
Financial institutions

There are many ways in which people can get significant international
experience.
Key Attributes of Succesful Managers

Overseas experience
Experience with diversity, they realize that most of the world doesnt look
or act or think just like them and that theyre going to deal with a variety
of national cultures
Excellent planning skills, they know how to plan ahead
An open and flexible mind, if you have somebody who wants to do it the
way they did it in their previous country or back in the home market, thats
not an open and flexible mind. Each market is different and you need to be
able to see the market for what it is.
Remain poised while plowing through roadblocks from the simple to
absurd! You cant get mad, you cant get upset, you just have to
consistently push ahead until the road blocks are removed.
Managerial Takeaways

People are responsible for any global marketing strategy. How a company
organizes for global marketing will be critical to its success.
Structure should follow strategy, if a company needs to centralize
authority, its structure should reflect this. If a company needs to
decentralize authority, its structure should reflect this. This is true of a
companys control system as well.
Increasingly the global nature of most industries suggests a shift towards
centralization of authority. However a companys local subsidiaries are its
front line. Subsidiary manager often have greater insights into both
customers and competition.
Conflict exists. Conflict between headquarters and subsidiaries has always
existed and always will. It doesnt have to be a bad thing, learn from it!
No organization is perfect, flexibility should always be a part of a culture of
a multinational corporation.
You can never forget the personal element. People make global marketing
work. The right person in the right job can make all of the difference.