Marketing Organization, Implementation and ControlChapter 7 Leanne Mulholland Nguyen Vo Zhouyang Lu
Marketing Organization, Implementation and Control • Moving from a domestic organization to a multinational • Organizational structure • Control systems
Organizational Structure • Organizational Designs • Little or no formal organization • International division • Global organizations
Little or No Formal Organization • Assumed by domestic operations • Transactions conducted on case by case basis • Help from facilitating agents • Export department formed • Licensing • Joint ventures or direct foreign investment
The International Division • Centralizes all responsibilities • Manufacturing and other related functions remain domestic • Coordination between domestic and international divisions
Global Organizational Structures • Product Structure • Area Structure • Functional Structure • Customer Structure • Hybrid (Mixed) Structure • Matrix Structure
0 Implementation • Locus of decision making • Decentralization - Subsidiaries are granted high degree of autonomy. • Centralization - Strategic decision making is concentrated at headquarters. • Coordinated decentralization - Overall corporate strategy is provided from global or regional headquarters, but subsidiaries are free to implement it within the range established in consultation between headquarters and the subsidiaries.
0 Exhibit 7.8 - Levels of Coordination
0 Implementation • Factors affecting structure and decision making • Degree of involvement in international operations. • Business in which the firm is engaged. • Size and importance of the markets. • Human resource capability of the firm. • Firm’s country of origin and the political history of the area.
0 Implementation • The networked global organization • Companies that have adopted the approach have incorporated the following three dimensions into their organizations: • Development and communication of a clear corporate vision. • The effective management of human resource tools to broaden individual perspectives and develop identification with corporate goals. • The integration of individual thinking and activities into the broad corporate agenda.
0 Implementation • The networked global organization • Avoids the problems of duplication of effort, inefficiency, and resistance to ideas developed elsewhere. • Centers of excellence can emerge in three formats: charismatic, focused, or virtual.
0 Implementation • Promote internal cooperation • Move intellectual capital within the organization; one of the tools for moving ideas is teaching. • Use international teams or councils to share best practices. • Two-way communication between headquarters and subsidiaries and between subsidiaries themselves via newsletters, regular and periodic meetings, and Intranets.
0 Exhibit 7.10 - Roles for Country Organizations
Control • Controls focus on actions to verify and correct actions that differ from established plans. • Controls are 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 despite physical, psychic, and temporal distances.
Types of Controls Bureaucratic/ Formalized Control • An international budget and planning system • The functional reporting system • Policy manuals used to direct functional performance Budgets are short-term guidelines, whereas plans refer to formalized long-range programs with more than a one-year horizon.
Bureaucratic/ Formalized Control The budget system is used for four main purposes: • Allocation of funds among subsidiaries • Planning and coordination of global production capacity and supplies • Evaluation of subsidiary performance • Communication and information exchange among subsidiaries, product organizations, and corporate headquarters Long-range plans extend over periods of two to ten years, and their content is more qualitative and judgmental in nature.
Bureaucratic/ Formalized Control • Control can also be seen as a mechanism to secure cooperation of local units. Exhibit 7.12 Securing Country-Organization Cooperation Extent of use of… Approval of local budgets 8.0 Compensation for job performance 7.6 Evaluation of job performance 7.5 Allocation of production capacity/ volume 4.8 Financial contribution from HQ 4.7 Among 35 MNCs. 0 to 10 scale (0=“Never used” and 10=“Always used”)
Types of Control Cultural Control • Cultural controls require an extensive socialization process, and informal, personal interaction is central to the process. • Cultural Control are applied when companies offer lifetime or long-term employment.
Exhibit 7.11Comparison of Bureaucratic an d Cultural Control Mechanism Type of Control
Exercising Control To design a control system: • A firm must take great care to use relevant data. • Management must consider the costs of establishing and maintaining it and weigh the costs against the benefits to be gained. • The impact of environment must also be taken into account.