MARKETING ORGANIZATION, IMPLEMENTATION, AND CONTROL

1. MARKETING ORGANIZATION, IMPLEMENTATION, AND CONTROL

2. Chapter Objective • A company’s evolution from a purely domestic entity to a multinational requires a change in its organizational structure and control system in order to reflect its new strategy. • Therefore, the objective of this chapter is to study intraorganizational relationships in the firm’s attempt to optimize competitive response in areas most critical to its business.

3. Organizational Structure • The basic functions of an organization are to provide: • A route and locus of decision making and coordination. • A system for reporting and communications.

4. Organizational Designs • Design determined by the degree of internationalization. • Internationalization = Structure Complexity. • Three categories of organizational design based on the degree of internationalization: • Little or No Formal Organization • International Division • Global Organization

5. Little or No Formal Organization • Very early stage of international involvement. • Domestic operations assume responsibility for international marketing activities. • As international demand grows, a change in organizational structure will take place through the introduction of an export department.

6. Little or No Formal Organization

7. Little or No Formal Organization • As the degree of internationalization increases, the export department structure will become obsolete. This obsolescence leads to the establishment of an international division.

8. The International Division • Entity centralization occurs here. • This approach aims to eliminate a possible bias against international operations that may exist if domestic divisions are allowed to independently serve international customers. • Coordination is vital in order to prevent placing the international division at a disadvantage.

9. The International Division

10. The International Division • Best serves firms with few products that do not vary significantly and when international sales and profits outweigh those of the domestic divisions. • Companies may outgrow this division and the degree of internationalization increases even further.

11. Global Organization Structures • This type of division has become extremely common in today’s marketplace. • Five basic types include: • Product Structure • Area Structure • Functional Structure Level of Utilization • Customer Structure • Mixed-or Hybrid-Structure

12. Product Structure • Gives worldwide responsibility to strategic business units for the marketing of their product lines. • Benefits include: • Improved cost efficiency through centralization of manufacturing facilities • Ability to balance the functional inputs needed by a product and to react quickly to product-specific problems in the marketplace.

13. Product Structure

14. Area Structure • Firm is organized on the basis of geographical areas. • This approach follows the marketing concept most closely because individual areas and markets are given concentrated attention. • Companies that use this alternative typically have relatively narrow product lines with similar end uses and end users.

15. Area Structure

16. Functional Structure • Most simple from the administrative viewpoint of all the approaches because it emphasizes the basic tasks of the firm. • Works best when both products and customers are relatively few and similar in nature.

17. Functional Structure

18. Customer Structure • Utilized when customer groups are dramatically different. • Consumers vs. Businesses vs. Governments • Thus, the product may be the same, but the buying processes of the various customer groups may differ.

19. Mixed-or Hybrid-Structure • Combines two or more organizational dimensions simultaneously. • Permits attention to be focused on products, areas, or functions, as needed. • Typically serves as the foundation of a matrix structure.

20. Mixed-or Hybrid-Structure

21. Matrix Structure • Many multinational corporations adopt this structure in an attempt to facilitate planning, organizing, and controlling interdependent businesses, critical resources, strategies, and geographic regions. • Business is driven by a worldwide business unit and implemented by a geographic unit. • The geographical units serve as the “glue” between autonomous product operations. • See Exhibit 7.7 for reference (Pg. 223)

22. Evolution of Organizational Structures

23. Locus of Decision Making • The organization structure provides a framework for developing global strategies. However, the structure does not indicate where the authority for decision making and control rests within the organization, nor reveal the level of coordination between units. • Levels of Coordination: • National Autonomy Lowest • Informal Cooperation • Coordinating Mechanisms • Central Coordination • Central Direction • Central Control Highest

24. Locus of Decision Making • Most firms are found in levels 2-5. • As a result of this mix or coordination control, the concept of Coordinated Decentralization has introduced itself. • Overall corporate strategy is provided from headquarters, but subsidiaries are free to implement it within the range established in consultation between headquarters and the subsidiaries.

25. Factors Affecting Structure and Decision Making • The degree of involvement in international operations. • The business(es) in which the firm is engaged. • The size and importance of the markets. • The human resource capability of the firm. Affecting Factor Continuum Low Involvement = High AutonomyHigh Involvement = Low Autonomy

26. The Networked Global Organization • Avoids the problems of duplication of effort, inefficiency, and resistance to ideas developed elsewhere by giving subsidiaries the latitude, encouragement, and tools to pursue local business development within the framework of global strategy. • Headquarters considers each unit as a source of ideas, skills, capabilities, and knowledge that can be utilized for the benefit of the entire organization.

27. The Networked Global Organization

28. Promoting Internal Cooperation • The global marketing entity in today’s environment can be successful only if it is able to move intellectual capital within the organization. • Teaching • Use of international teams or councils • Networks

29. The Role of Country Organizations • Strategic Leader – Highly competent national subsidiary located in a strategically critical market. • Contributor – A country organization with a distinctive competence. • Implementer – Exist in smaller, less-established markets in which corporate commitment to market development is less. • Black Hole – A situation that the international marketer has to work out of.

30. Controls • Focus on actions to verify and correct actions that differ from established plans. • Designed to reduce uncertainty, increase predictability, and ensure that behaviors originating in separate parts of the organization are compatible and in support of common organizational goals.

31. Types of Controls • Bureaucratic Controls – consist of a limited and explicit set of regulations and rules that outline desired levels of performance. • International Budget and Planning System • Functional Reporting System • Policy Manuals • Cultural Controls – much less formal and are the result of shared beliefs and expectations among the members of an organization.

32. Exercising Control • Requires great sensitivity to behavioral dimensions and to the environment. • The measurements used must be appropriate and must be relevant. • Entities should be measured only on factors over which they have some degree of control.

33. Questions?