Chapter 19 Organization and control of...Slide 19.48 Hollensen: Global Marketing, 5th Edition, ©...
Transcript of Chapter 19 Organization and control of...Slide 19.48 Hollensen: Global Marketing, 5th Edition, ©...
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Svend Hollensen
GLOBAL MARKETING5th Edition
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Chapter 19 Organization and control of
the global marketing programme
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Slide 19.2
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Learning objectives (1)
Examine how firms build their organizational
structure internationally and what roles
headquarters can play
Identify the variables that affect the
reorganization design
Describe and evaluate functional, geographic,
product and matrix organizations as the key
international structural alternatives
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Slide 19.3
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Learning objectives (2)
Explain pitfalls and opportunities with Global Account Management
Describe the key elements of the marketing control system
List the most important measures for marketing performance
Explain how a global marketing budget is established
Understand the steps in developing the global marketing plan
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Slide 19.4
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.1 Structural evolution of international operations
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Slide 19.5
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Research
and
development
Sales
and
marketing
Production Finance
Domestic
Export
Corporate
staff
CEO/
Board of
directors
Figure 19.2 Example of the functional structure
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Slide 19.6
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Product A Product B Product C Product D
Corporate
staff
CEO/
Board of
directors
R&D
Production
Marketing
R&D
Production
Marketing
R&D
Production
Marketing
R&D
Production
Marketing
Figure 19.3 Example of the product structure
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Slide 19.7
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Country
subsidiaries
Country
subsidiaries
Country
subsidiaries
Country
subsidiaries
Corporate
staff
CEO/Board
Production
Marketing
Finance
Production
Marketing
Finance
Production
Marketing
Finance
Production
Marketing
Finance
EuropeNorth
America
Latin
AmericaAsia/Pacific
Figure 19.4 Example of the geographical structure
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Slide 19.8
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Reasons for regional
management centres (RMCs)
When sales volume in a particular region
becomes substantial there needs to be
specialized staff to focus on the region
Homogeneity within regions and
heterogeneity between them necessitate
treating each region separately
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Slide 19.9
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
North
America
CEO/Board
Europe
Product
A
Product
B
Product
C
Asia/Pacific
Figure 19.5 Example of a matrix structure
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Slide 19.10
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
What is this?
What term refers to a relationship-
oriented marketing management
approach focusing on dealing with the
needs of an important global customer
with a global organization?
Global account management
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Slide 19.11
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.6 Global account management (GAM)
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Slide 19.12
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Steps for
implementing GAM
Identifying the selling firm’s global accounts
Analyzing the global accounts
Selecting suitable strategies
Developing operational capabilities
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Slide 19.13
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Criteria for determining
strategically important customers
Sales volume
Age of relationship
selling firm’s share of customers’ purchase
Profitability of the customer to seller
Use of strategic resources and extent of
executive/management commitment
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Slide 19.14
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Analyzing global accounts
Basic characteristics of a global account
Relationship history
Level and development of commitment
Goal congruence of parties
Switching costs
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Slide 19.15
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Developing
operational level capabilities
Product/service development and performance
Organizational structure
Individuals (human resources)
Information exchange
Company and individual level benefits
http://www.agramkow.com
http://www.agramkow.com/http://www.agramkow.com/
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Slide 19.16
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.8 Development of GAM
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Slide 19.17
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.7 Relational development modelSource: adapted from Millman and Wilson (1995); Wilson and Millman (2003)
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Slide 19.18
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Supplier’s advantages
with GAM (1)
Provides better fulfillment of customers’
global need for having only one supplier
Create barriers for competitors
Increase sales of existing products and
services through a closer relationship with
the key customer
Facilitate the introduction of new products
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Slide 19.19
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Supplier’s advantages
with GAM (2)
Coordinates marketing activities across borders
May increase profit potential
Reduces marginal costs of creating adapted programmes for every new market
Provides access to new customers through customer’s global network
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Slide 19.20
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Supplier’s disadvantages
with GAM
Supplier will feel pressure to improve global consistency
Pressure to ‘standardize’ pricing on a global basis
Pressure to ‘standardize’ all terms of trade, not just price
Supplier’s loss of GA due to major competitors using GAM strategy
Multiple decision makers due to matrix structure
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Slide 19.21
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Organizational set-up
of GAM
Central HQ–HQ negotiation model
Balanced negotiation model
Decentralized local–local negotiation model
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Slide 19.22
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.9 Relational development modelSource: adapted from Millman and Wilson (1995); Wilson and Millman (2003)
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Slide 19.23
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 201119-23
Customer (GA) HQ
Supplier HQ
……..CountryA
Country
B
Country
C
Country
N
Traditional HQ-HQ negotiations
with central distribution
Model 1: Centralized coordination of the GAM relationship:
(GAM relationship with relative high customer power):
Customer (GA) HQ
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Slide 19.24
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
……..
……..
Dec
en
trali
zed
an
d l
ocal
ad
ap
tati
on
of
GA
M
Supplier HQ
Customer (GA) HQ
Local
Coordina-
tion
Local
Coordina-
tion
Local
Coordina-
tion
Country
A
Country
A
Country
B
Country
B
Country
C
Country
C
Country
N
Country
N
Mix - coordination af GAM-forhold:
Model 2: Balanced negotiation model:
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Slide 19.25
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Sauer-Danfoss mostly work with Model 2:
Source: different Sauer-Danfoss material (as at 2004), Hollensen (2006)
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Slide 19.26
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
……..
……..
Dec
entr
ali
zed
an
d l
ocal
ad
ap
tati
on
of
GA
M
Supplier HQ
Customer (GA) HQ
Local
Coordina-
tion
Local
Coordina-
tion
Local
Coordina-
tion
Country
A
Country
A
Country
B
Country
B
Country
C
Country
C
Country
N
Country
N
Model 3: Decentralized local-local negotiation model:
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Slide 19.27
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
(source: also ‘Global Marketing’, 4e, Case 19.2, p. 675)
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Slide 19.28
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Building the
marketing plan;
global
marketing
decisions
Budgeting Controlling
Figure 19.10 The firm’s budget and control system
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Slide 19.29
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
What is this?
What term refers to the regular
monitoring of output, like profits, sales
and expenditures?
Output control
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Slide 19.30
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
What is this?
What term refers to the regular
monitoring of behaviour like sales
people’s ability to interact with
customers?
Behavioural control
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Slide 19.31
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Decide objectives, strategies,
plans for implementation
Establish marketing
performance standards
Locate responsibility
Evaluate
Take corrective/
supportive action
Reward, promote,
advise, punish
Aft
er
sta
ndard
s
Aft
er
obje
ctives
Figure 19.11 The marketing control system
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Slide 19.32
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Slide 19.34
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 201119-34
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Slide 19.35
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Slide 19.36
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.12 Adjustment of global marketing strategySource: Samli et al. (1993, p. 421)
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Slide 19.37
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.13 The hierarchy of sales and control
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Slide 19.38
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 19.14 Marketing budget 200X and its underlying determinants
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Slide 19.39
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Slide 19.40
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Slide 19.42
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Slide 19.43
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Courtesy of Henkel.
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Slide 19.44
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 1 Henkel sales 2008 by business sector
Figure 2 Henkel EBIT by business sector
EBIT
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Slide 19.45
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Figure 3 Henkel management board
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Slide 19.46
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
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Slide 19.47
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Questions for discussion (1)
Identify the four developmental stages of a firm’s international organization and discuss their relationship to the international competitiveness of the firm.
Identify appropriate organizational structures for managing international product development. Discuss key features of the structures suggested.
What key internal/external factors influence the organizational structure? Can you think of additional factors?
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Slide 19.48
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Questions for discussion (2)
Discuss the pros and cons of standardizing the
marketing management process. Is a
standardized process of more benefit to the
company pursuing a national market strategy or
a global market strategy?
Discuss to what degree the choice of
organizational structure is essentially a choice
between headquarters centralization and local
autonomy.
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Slide 19.49
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Questions for discussion (3)
Discuss how the international organization of a firm may affect its planning process.
Discuss why firms need global marketing controls.
What is meant by performance indicators? Why does a firm need them?
Performance reviews of subsidiary managers and personnel are required rarely, if at all, by headquarters. Why?
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Slide 19.50
Hollensen: Global Marketing, 5th Edition, © Pearson Education Limited 2011
Questions for discussion (4)
Identify the major weaknesses inherent in
the international division structure.
Discuss the benefits gained by adopting a
matrix organizational structure.