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Unit Summary
I.Strategic planning
II. Organizational structure
III. Controlling global marketing efforts
I. Strategic planning
Strategic planning - is the act of creating a plan to put a strategy in place
Strategic market planning - is a process to examine the environments in which
their company competes, the opportunities and threats they face, the goals and
objectives to be achieved, and the products and services offered in order to maintain
a viable fit between their company’s capabilities and resources and the threats and
opportunities that arise.
Its purposes is to identify and develop a corporate purpose, objectives and goals, and
plans of action that effectively relate the company, its businesses, and functional
areas to their relevant environments and that enables the company to profitably exploit
future marketplace opportunities in which it is likely to enjoy a competitive advantage.
goal and objective – if don’t have an objective, any plan will suffice. Even have a
plan, not a guarantee of success.
The purpose of strategy is to win customers and market share from competition.
Strategic market planning focuses on markets, competition, corporate resources,
and timing. Marketing management assumes these decisions have been made and goes
about creating a marketing mix.
Focuses on determining the best match between the needs, objectives and
capabilities with the market where there is competitive advantage
Must answer 3 questions:
Where to compete (markets and segments)
How to compete (new product, add features, eliminate product or create new
image)
When to compete (timing)
Common problems faced by strategic marketers in formulation and implementation:
(1) Not enough emphasis on how to compete
Same market segments appears attractive to you and your competition. How to make
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you better than the competition? Product features psychological dimensions (position
or brand image) or specific aspects of the marketing mix?
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II. Organizational structure
There is no magic formula that prescribes the ‘ideal’ organizational setup under a given
set of circumstances. Only appropriate in given international marketing environment
relative to the resources and capabilities of the company.
Centralization vs. Decentralization:
Centralization:
authority over decision making and allocating corporate resources and the
corresponding responsibility resides at the top of the organizational structure
(upper management)
corporate head office in the home country
Decentralization:
authority and responsibility flows downward throughout the organization
(obviously the lower the level in the organization the less
authority/responsibility held)
country or subsidiary managers
rapidly respond to changes in individual host markets and local
competitive actions
faster decision making and intimate local knowledge is used in all decisions
loss of control and coordination
possibility of conflicting goals and strategies in individual host markets
Most multinationals use a combination of centralization and decentralization.
Transnational organizations attempt to find the delicate balance between
centralization and decentralization to get overall strategic control (maintaining
global brands and brand images) but also responsiveness to local host market
conditions
Exhibit 18-10
New Forces Impact on Integration/Differentiation
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A. Environmental and firm-specific factors
Environmental factors:
a. Competitive environment
International marketplace faces both host and home country competitors.
Must make rapid decisions in response to competitive pressure
Intense localized competition favors decentralized organizational structures.
b. Rate of environmental change
Drastic change – must respond rapidly – favor decentralization
Stable and slower changing host market – favor centralization
c. Regional trading blocs
Companies that operate within a regional trading bloc usually integrate to
some extent their marketing efforts across the affiliates within the block area
d. Nature of customers
The customer based has a large influence on organizational design
Rely on local customers – decentralization; global customer base – regional
structure/centralization
Companies want global reach but also want to ‘stay close’ to their customers
e. Others
Geographic distances / time zone differences
Government regulations (laws concerning imports, exports, taxes and hiring)
Political stability and risk
Firm-Specific factors:
a. Strategic importance of international business
When overseas sales account for a very small fraction of the overall sales ,
simple organizational structures can easily handle the firm’s global activities
As the firm grows so will its organizational structure
b. Product diversity
Companies with substantial product diversity tend to organize into global
product divisions
c. Company heritage
Changing organizational structures requires changing the underlying corporate
culture.
d. Quality of managerial skills
Decentralization is a problem when local managerial talent is missing
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B. Organizational design options
a. International division structure
Most companies begin with an export department usually followed by an
international division
Suitable for companies that have not too diverse product lines and does not
require a large amount of adaptation to local country needs.
c. Geographic structure
Area structures are especially appealing to companies that market closely
related product lines with very similar end-users and applications around the world.
Country-based subsidiaries
By setting up country affiliates, the MNC can stay in close touch with the
local market conditions
Handicaps include:
Too costly; coordination cumbersome; leads to a “not-invented-here”
bias
New role of country managers
most believe that this is a declining form of organization
forces that are leading to a decline include:
threats by global competitors that must be dealt with globally
global customers
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regional trading blocs
factors that still point to the usefulness of this form of manager
includes:
nurturing links with local governments
local competitor consideration
strong local brands
innovative ideas that come from the local environment
to strike a balance, country managers must fit one of these profiles:
trader—entrepreneurial spirit
builder—develops local markets
cabinet member—team player
ambassador—in charge of large or strategic markets. Good at
government relations
representative—like Ambassador but in large markets
Regional structures. A compromise position between a centralized organization
and a decentralized country structure.
Advantages:
put companies in close contact with distributors, customers,
and subsidiaries
faster response to changing local conditions
Disadvantages:
Possibility of duplication an dinefficiencies.
d. Matrix structure
combines forms and recognizes the multi-dimensional nature of global
strategic decision-making. Structures could even be three dimensional.
There is a dual chain of command
Advantages include:
Reflect complexities—local and global competitors, customers, and
distributors.
Fosters team spirit and cooperation.
Disadvantages include:
reporting and profit responsibilities are confusing and conflict oriented
bureaucratic bloat
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An international teaming concept can be used to form the network.
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III. Controlling global marketing efforts
Through control processes – determine if the goals and objectives were achieved
Control can be conducted at any stage in strategic implementation.
During strategic implementation – fine tuning the strategy
Control processes can be used with all aspects of marketing planning, strategy and mix
decisions
Can be conducted on an individual host country basis, on a regional or subsidiary basis, or
for the organization as a whole.
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Under the cultural and other needs of subsidiary
Organizational global vision, core values and cultural principles are shared
by all
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Kotler: Four types of formal control processes (can be use one type or combination) (on
host-country-by-country basis or the organization as a whole):
4.Financial analysis
- Financial such as profit margin, asset turnover, return on assets, rate of
return on net worth
5.Market-based scorecard analysis
- Use customer-based measures. Set standards and monitor on a regular basis
on customer complaints, customer satisfaction/dissatisfaction levels, etc.
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2. Profitability control
See in-depth information about the profitability or losses of each individual product,
host market, or subsidiary.
Further finetune the information to illustrate profitability or losses for territories,
customer segments or trade channels.
3. Efficiency control
The best combination of human, physical and financial resources to generate the most
output for the least input.
Establish the position of marketing controller to analyse all marketing expenditures and
results from the perspective of maximizing efficiency.
Key indicators to monitor:
e.g. sales force efficiency: number of call, call time, cost, number of new customers, lost
customers etc.
Determine the cause of the deviation, then take appropriate corrective action.
4. Strategic control
Marketing audit: comprehensive, systematic, independent, periodic
On domestic and international marketing operations.
Review the marketing environment, marketing strategy, marketing organizations,
marketing systems, marketing productivity and marketing functions.
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share their best practices and success stories.
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