16

Organizing for
Global Marketing
Learning Objectives

• List and explain the internal and external factors that impact how global
organizations are structured and managed.
• Note the advantages and disadvantages of the different ways of
structuring a firm with international sales.
• Discuss global mandates, and note how global mandates can affect a
firm’s organization.
• Explain why organizational issues for born-global firms differ from
those for traditional multinational companies.
• Give examples of how technology can be utilized to support internal
global communications systems.
• List and explain the elements of an effective global control strategy.
• Discuss the conflicts that can arise between international headquarters
and national subsidiaries.
• Consider a career in global marketing.
Chapter Outline

• Elements that affect a global marketing

organization
• Types of organizational structures
• Controlling the global organization
• Conflict between headquarters and
subsidiaries
• Considering a global marketing career
Elements That Affect a
Global Marketing Organization
• Corporate goals
– Mission statement
• Why do we exist?
• Where are we going?
• What do we believe in?
• What is our distinctive competence?
– Strategies and objectives
Elements That Affect a
Global Marketing Organization (cont.)
• Corporate worldview
– Ethnocentric orientation
• Ideas emanating from home market considered superior
• HQ tells subsidiaries what to do
– Polycentric orientation
• Each market considered unique
• Local subsidiaries given leeway to develop and implement
their own strategies
– Geocentric orientation
• All national units—including domestic ones—must
consider what is best for whole organization
• HQ holds power but keeps channels for good ideas—and
senior management—open for subsidiaries
Types of Organizational
Structures (cont.)
• International divisions
– Created when international sales coordination
extends beyond capacity of international specialist
or export department
– Directly involved in the development and
implementation of global strategy
– Actively seeks out opportunities in foreign
countries
• Regional or local offices = close contact with market
Types of Organizational
(cont.)
Structures
• Geographic organizational structures
– Appropriate when company needs intimate
knowledge of its customers and their environments
– Gives company opportunity to understand the local
culture, economy, politics, laws, and competitive
situation
– Two Types
• Regional management centers
• Country-based organizations
Types of Organizational
Structures (cont.)
• Geographic organizational structures
– Regional management centers
• Focus on regions of world
• Market similarity and size
• Allows company to locate marketing and
manufacturing efforts in such a way as to take
advantage of regional agreements such as
NAFTA
• Puts company in closer contact with
distributors, customers, and subsidiaries
Types of Organizational
Structures (cont.)
• Geographic organizational structures
– Country-based organizations
• Separate unit for each country
• Extremely sensitive to local customs, laws, and
needs
• Expensive!!!
• Many companies are phasing out country-based
structures and are moving toward regional
centers
Types of Organizational
Structures (cont.)
• Functional organizational structures
– Top executives in marketing, finance,
production, accounting, and research and
development all have worldwide
responsibilities
– Best for narrow or homogeneous product
lines with little variation between products
or geographic markets
Types of Organizational
Structures (cont.)

• Product organizational structures

– Each product group is responsible for
marketing, sales, planning, and (in some
cases) production and research and
development
• Other functions such as legal, accounting, and
finance can be included in the product group or
performed by corporate staff
– Common for companies with several
unrelated product lines
Types of Organizational
Structures (cont.)
• Product organizational structure
– Advantageous when product line constantly
changes with technological advances
– Facilitates the development of global products and
global roll-outs
– 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 and sensitivity to local market conditions
can be diminished
Types of Organizational
Structures (cont.)
• Matrix organizational structures
– Developed to overcome drawbacks of geographic,
functional, and product organization structures
– Allows for two or more dimensions of theoretical
weight, e.g., importance to product and geography
– Complexity can cause duplication of authority,
confusion of responsibility and power struggle
– Requires change in management structure from
traditional authority to influence system based on
technical competence, interpersonal sensitivity, and
leadership
Global Mandates

• Global mandate – Expressed

assignment to carry out a task on a
global scale
– Global account management
– Global brand management
Global Teams

• Teams consisting of members from

different parts of the world
– Often are cross-functional
– Commonly used to create regional solutions
• Pricing corridors to reduce gray trade in a
region
• Pan-regional advertising
Organization of Born Global Firm

• Can adopt global organizations from the start

– Forgo costs associated with structural change
• But firms that move into international markets
more slowly
– Can build up market and cultural knowledge over
time
– Cultivate and support increasingly extensive
worldwide operations through recruitment and
training of knowledgeable and experienced
managers and staff
Controlling the Global
Organization
• Communication Systems
– Effective communication systems facilitate
control
– Siemens “sharenet” system
Controlling the Global
Organization (cont.)
• Elements of a control strategy
1.Developing standards
• Behavioral standards
• Performance standards
2.Measuring and evaluating
performance
3.Analyzing and correcting deviations
from the standards