Organisational Dimensions of Global Marketing by Hans Raffée and Ralf T. Kreutzer University of Mannheim, FRG Global marketing is a new basic strategy which stands at the centre of intensive discussion within the context of international marketing!1, 2,3). Experiences in globalising business activities show that the ‘success of global marketing depends on how effective its organisational incorporation is|4, 5). It is usually insufficient if a globalising philosophy is anchored only in the minds of the employees without organisational support. Global marketing rather needs to be flanked by organisational measures in order to develop and secure the sought-after positive effects in the long run, on the one hand and, on the other, to cushion and moderate the negative effects which cannot be neglected and, if possible, to eliminate them permanently. In this article a comprehensive concept of global marketing is developed. Global marketing philosophy to date is outlined. It is shown that global marketing is far more than merely standardising ‘communication activities. On the one hand, the globalising philosophy has an influence on the marketing mix as a whole and, on the other, global marketing can also be executed as far as internal processes are concerned. To realise these standardisation activities, special organisational forms are needed for the implementation of global marketing. Various organisational possibilities for the incorporation of global marketing are described. Characteristics of Global Marketing Global marketing is based on a specific marketing philosophy that attempts to surmount particular viewpoints oriented towards individual countries(6,7). “Thinking in world market dimensions”, which is called for here, requires guidance of employees and organisational forms that go beyond a dominant ‘my brand, my country” mentality. The key issue of global marketing is not the isolated optimalisation of a number of national engagements in the sense of a ‘'multi- domestic approach’, rather a procedure is required which subordinates national interests to global objectives, this means accepting a ‘‘dry stretch’” in one country, if necessary, in favour of the development of the company as a whole. Within the framework of such a “global approach’, a “‘calculated country adjustment’ is aimed for in order to optimise the success of the entire business complex. In order to realise a “global approach”, the analysis, evaluation and clustering of the world market is carried out primarily with a view to supranationally determining common market traits and individual target groups (identification of Global Marketing 43European Journal of Marketing 235 44 cross-cultural target groups) instead of concentrating solely on given differences ({1,8] and, for a cultural segmentation concept, see|9|). The possibility of doing this results from convergence tendencies that are coming into focus(10,11), The required comprehensive perspective is the foundation for a specific method of choosing a market, as well as market activities, that takes off from the conversion of ‘'standardisation”” as the basic marketing strategy. ‘The global marketing philosophy is not oriented solely towards the market or the activites affecting it, rather it sweeps out over the internal sectors of the company as well. The question concerning common traits (e.g. in view of particular planning procedures, processes of acquiring information) that can be developed into uniform regulations which, consequently, can be standardised, arises here also. Global marketing can therefore be characterised by two major aspects (12, pp. 525-540; 13|: © the standardisation of marketing processes (process-oriented/formal standardisation); © the standardisation of marketing contents and programmes, respectively (standardisation of contents). Formal standardisation primarily concerns the unification of structures and processes for the development, realisation and control of marketing concepts as well as the information processes that are connected to them. A rationalisation ‘of marketing is striven for through the unification of working steps and the starting points of problem solving (e.g. in the case of decision-making processes, training programmes, and product introduction strategies) Within the frame of contents standardisation, attempts are made to achieve cost- cutting and effect-increasing goals in the marketing sector by unifying the contents of marketing concepts. In their most general version standardised concepts are characterised by identical products that are distributed for the same price, on the same terms and through the same distribution channels ~~ through application of the same communication concept (standardisation of the four ““Ps") Even though both directions can be realised independently, their positive interaction should be held in mind at this point. In many sectors formal and contents standardisations not only supplement each other, but formal unification is often an instrument, at times even a prerequisite, for the realisation of contents standardisation| 14,15] Organisational Incorporation of Global Marketing Profile of Requirements for Organisational Solution Assessment Every type of organisational incorporation of global marketing must orient itself to the “guiding principle of co-operation and participation’’ and must lead to a corresponding ‘standardisation by participation”. The application of this guiding principle and the consequent relinquishment of a“'standardisation by power, order, and pressure’ represents a key requirement for the success of global marketing. ‘The counterproductive “‘not-invented-here” syndrome can be best avoided through a co-operative concept which repeatedly leads to a rejection of standardised concepts and processes. It is expressed in statements like: "It’s a great idea,but it won't work in my market’’(16, p. 8|. In the majority of cases such a reaction results from fear of one’s own scope for development being restricted by centrally defined standards. This fear is coupled with the risk that motivation of the staff of foreign branches will be dramatically reduced if the impression is spread that they are merely employed in order to fulfl the obligations of an over-powerful head office. A criterion for development of organisational measures therefore represents the institutionalisation of global participation in formulating standardised concepts and process In correspondence with the room for adaptation of the foreign branches during the realisation of a “‘multi-domestic approach", responsibility for turnover and profits and loss has also been devolved to the individual branches. Intensive assistance from headquarters and/or individual foreign branches, with regard to marketing activities, means that spheres of responsibility also have to be newly defined. If the countries are, for example, merely responsible for the execution (including, under certain circumstances, unavoidable adaptation) of centrally developed marketing concepts and strategies, then they can no longer be held fully responsible. Globalisation-otiented organisational forms must provide for new ‘ways of determining the limits of responsibilty. Productive co-ordination mechanisms must be implemented in order to intensify the co-operation between units of a global enterprise. In doing so extreme asymmetry between the superordination of the co-ordinators and the suborcination of the co-ordinated should be avoided. Such central co-ordination, domi instructions and regulations, would be contrary to the participation”. To provide for this guiding principle, a form of decentralised co- ordination must be established. The objective is that the decision-makers involved should co-ordinate themselves as much as possible. In doing so, centrally defined instructions that go beyond stipulating outline conditions (such as in determining global business goals or focusing on research and development) can be done without. If excessive expansion of the decision-making process with regard to time is to be avoided the companies must install shorter communication channels: only these can provide for timely justifiable participation of individual units of the company. Types of organisational incorporation of global marketing must also be ‘measured according to whether they allow for ample flexibility in business behaviour. Intensive involvement of headquarters in the fields of activity of the individual foreign branches brings the risk that the branch capacities will be insufficient adequately to allow global assignment of duties. Co-ordination within the company can suffer from such overloading of task bearers and communication relationships. Although process standardisation, especialy, is implemented within the frame of global marketing with the intention of reducing complexity/17), the hazard of an uncontrollable increase in complexity remains in many sectors. As a result, organisational starting points to solutions must be judged according to their contribution in reducing complexity. In summing up, possible starting points for organisational implementation of global marketing must be assessed according to the extent to which they provide for the following summarised requirements: Global Marketing 45European Journal of Marketing 23,5 46 Global participation New areas of responsibility Decentralised co-ordination Short communication channels Leeways in flexibility Contribution to reducing complexity. Types of Organisational Incorporation Organisational forms which have the greatest potential for successfully fulfilling those duties that arise within global marketing are described below. Regular Discussion Circles ‘A first step in achieving global participation can be the implementation of regular discussion circles between local product managers, market researchers, members of the department of research and development, controllers, production managers and the corresponding employees of the parent company. Such a procedure alone can lead the way long-term to seizing a successful strategy from a foreign branch and promoting its worldwide implementation. Such discussion circles can ensure the required decentralised co-ordination within short communication channels. In doing so, the “'not-invented-here”” syndrome can be avoided to a great extent. Since the co-operation directly involves the individual bearing responsibilty and a defined area of work, the complexity of the collaboration that has to be overcome can be held within bounds while at the same time the existing scope for flexibility is used to the full Risks are also involved in the implementation of regular discussion circles. The co-ordination of such discussions is very time-consuming if clear regulations concerning responsibilities and, as a result, concerning the members’ decision- making authority are lacking (degeneration of the discussion circles to mere “debating groups"). In addition, concentration of co-ordination through regular discussion circles may be associated with counterproductive task completion that isa matter of routine, which does not provide an adequate decision-making situation wrdination Groups ‘The implementation of global co-ordination groups is a far-reaching start in the organisational installation of global marketing. These groups, defined as being task- oriented, consist of members of the individual foreign branches and the head company, respectively. One-sided planning, for example “‘central-down'” or “local- up” planning, should be avoided using the countercurrent principle for the benefit of collaboration between the parent company and foreign branches. The function of these co-ordination groups is to define standardised marketing concepts and processed with other authorities within their assigned sectors and to employ them in co-operation with the foreign branches. The co-ordination tasks which arise during the realisation process exemplify one of their major functions besides the generation of the concept. The co-ordination groups differ in this way from the discussion circles described above.Various working groups can be established in relation to particular spheres of Global activities that have to be dealt with. Especially vital exemplary co-ordination groups Marketing are outlined below (for classification see Figure 1). Strategic Planning Groups: within a strategic planning group, upper management of the parent company and the foreign offices, respectively, define the global starting objectives and the company’s directions of activity (defining the global business) Aer initiation of comprehensive analysis and prognosis activities, a transformation a7 takes place in the measure-oriented concepts of objectives and worldwide | | cenva Cental [/ resoone | ‘group Creative Jcommunication| Creative RAD. a v Sie = i } } J 4 7 Groups 31European Journal of Marketing 23,5 48 implementation strategies (defining the global business mission)|18-20]. A practical procedure presents itself within the scope of collaboration after the individual foreign offices (oriented to common points of reference such as the guiding principle outlined in the corporate identity) define goals and develop corresponding programmes. For instance, involvement of the foreign branches can be achieved in this manner and, secondly, the integration of local conditions can be ensured during the rough draft phase (see also |21, p. 69] ‘To ensure that these working groups are effective, it is imperative that their co-ordination lies in the hands of one staff member who usually comes from the parent company. This planning co-ordinator is responsible for the conception and realisation of the planning group: At Procter & Gamble similar study groups in the form of Euro-teams are regularly convened to overcome suboptimal country orientation as well as to achieve closer collaboration among individual countries. The objective is to unite representatives of the various foreign branches in “brand management teams" znd “‘brand profit teams" in order to discuss common possibilities and limits of standardisation as well as, under certain circumstances, to decide on the employment of standardised concepts|22, p. 55) Creative Communication Groups: The function of creative communication groups lies in developing global communication campaigns. Besides representatives from the parent company and the foreign offices members of local or international advertising agencies should be admitted in some cases. Through the direct collaboration of the members responsible for the communication policy, the possibilities and limits of standardisation of communication concepts can be jointly sounded out. The global frame of orientation for the communication study teams is depicted by the objectives and procedures defined within the scope of the strategic planning sessions that have to be transformed into concrete communication measures. A member of the creative communication group must also be made responsible for co-ordination and organisational studies. This creative co-ordinator is responsible for the sphere of activities of the study groups as well as for the co-operation of the foreign offices and at agencies. In order to work together effectively, it is mandatory that the various decision- making levels for which the participants are individually or collectively responsible are mutually defined (the decisions can deal with, e.g., media mix, advertising timing, layout designs). If the participants agree on these issues, possible areas of confict and clashes of power can be cleared out of the way from the beginning| 23} Research Groups: Lines of objectives and the drafting of international market studies are discussed in research groups. The central issue is the question of the way. in which a standardised procedure can be carried out; it is important to decide which countries are key strategic markets for the company|24, p. 282; 25-27), and which countries are appropriate “‘substitute countries” for studies and market tests and are comprehensively representative of a large region or the world market. ‘The objective is to gather together comparable basic information about various countries not only to identify the cross-cultural groups|17| that one is interested in but also, for example, to collect data for the contents of an internationally-orientedPortfolio analysis, to make forecasts about country analogies|28) or also to research possibilities for defining standard advertising factors. At the same time the research groups have to identify necessary modifications that must be carried out and have to incorporate them when drafting global study concepts (for a specific test concept see [29)). Another key aspect of the work of the research group is the processing of the information gathered regardless of what nation it is derived from. For example, the extent to which marketing-relevant convergent tendencies show up between the countries surveyed and the target groups must be tested and, also, what effects similarly structured campaigns had or will probably have within the individual countries|30|. Creative R&D Groups: At regular intervals, creative R&D groups assemble those ‘employees responsible for the development of new products and those responsible for product improvements in order to ensure an international transfer of knowledge and experience. As a result, not only is parallel work ruled out but also a “cross fertilisation’ of the research teams is achieved|5,31 Personnel Groups: One aspect of activities of international personnel groups is the support of global marketing through personne! policy measures. The key issue concerns starting points of process standardisation. This includes, for example, the drafting and global implementation of uniform personnel selection procedures, ‘and parallel promotion principles, as well as internationally-oriented career planning in order intensively to exchange personnel within the corporation (e.g. through ‘global job rotation) and, last but not least, in order to instal advanced training programmes for the purpose of developing and introducing a system of common opinions in a common language. The introduction of central guiding management principles is especially important in this context (in the form of a corporate identity) since this represents a key requirement for the success of global marketing|32, 33). The control of these working groups is appropriately placed into the hands ‘of a personnel co-ordinator who, as a member of the parent company, is responsible for the collaboration of the individual personnel departments, Consequently, these co-ordination groups orient themselves towards the guiding principle of global participation. The construction of one-sided, parent company dominated, positions of power is avoided and the principle of decentralised co- ordination is adequately accommodated. Since individually responsible employees are assembled for a direct dialogue, the short communication channels are provided for. In addition, this direct exchange of opinions also offers the possibility of ‘guaranteeing the required flexible conduct in the market and within the company, without being coupled with uncontrollable complexity. One negative aspect of the co-ordination team must be taken into consideration from the start. It concerns the tendency of the members of the group to withdraw themselves increasingly from the actual difficulties of the foreign branches, especially when they represent the offices as delegates. Due to this distance from the daily business, the importance of decisions concerning it is not properly recognised and the effect of these decisions on the individual countries cannot be judged suitably. This problem can be forestalled by rotating the members of Global Marketing 49European Journal of Marketing 23,5 50 the study groups in the daily business of the foreign offices. ‘The risk of falling into routine that generally arises can also be avoided here. Even if not all products of a company have the potential to be marketed on a lobal basis, these co-ordination groups can have an important function. The task of these groups will be, in this case, to find appropriate ways of developing and implementing marketing concepts on a country-specific basis, without losing sight of the global targets. Lead Country Concept ‘The basic idea of the lead country concept is that one country, and therefore one foreign branch (or possibly the parent company), takes over the duties of the co: ordinator and is primus inter pares for a large region (e.g. Europe, North America and Latin America, or Southeast Asia) or for the world market as a whole. The leading function of a country is usually with reference to one single product or a homogeneous product group. Under the management of a lead country, the scope for orientation is outlined with regard to the marketing activities of the individual countries allocated to it. The marketing concepts that are developed within this framework are to be the basis of all marketing activities in any of the allocated countries. Only if major hindrances prevent unmodified execution of these concepts (e.g, with regard to competition, legal possibilities, consumer preferences and consumer value systems) can adaptations be carried out for the individual countries (see Figure 2). ‘This figure shows that different countries can have a leading function. On one hand the field of responsibility of the lead unit can be concentrated on a few countries if there is not one homogeneous segment of countries. On the other hand the existence of a world market makes it possible that only one country has the co-ordination function on a global basis. The choice of a lead country is influenced by the marketing authority of the foreign branches, the strategic importance of the countries represented, national images present (So that country-of-origin effects can be put to use), the products involved, the location of production units and, last but not least, the legal requirements and restrictions of the host countries. The lead country concept offers the advantage, in contrast to the assessment of an example of global product responsibility outlined below, that thorough-going centralisation of the marketing activities in the parent company is avoided to a great extent. In this way the criterion of decentralised co-ordination is accommodated. In doing this, strong influence from the parent company with regard to the marketing concepts as a whole is not necessary. Owing to the fact that any foreign office, in general, can take over the leading function, a power monopoly cannot arise within the head company. The lead country concept of global marketing is especially effective when individual foreign offices are in an especially dominating position with respect to the products they represent, and if this position were to be enhanced if they became responsible for regional or global co-ordination and regulatory functions. This would especially be the case for a heterogeneous programme of products, since it would not then be necessary to concentrate all product-related managerial positions within the parent company.“amc e a e “a e age e sen e “ae” e Guidance supported by the principal of co-ordination through self-regulation provides for global participation|34). Regardless of whether or not the lead country plays a major role in the development of marketing concepts the individually affected foreign agencies are comprehensively integrated into this process. This not only maintains the necessary scope of flexibility, it also keeps complexity within reasonable bounds. In addition, adequate problem orientation is guaranteed through direct incorporation of the lead country in the strategic and operative planning procedure. Global Marketing 51 Figure 2.European Journal of Marketing 23,5 52 he dominating position of the lead country restricts the autonomy of the national product managers. Due to the fact that they can only be held responsible for the success and failures that arise within their area of authority, new areas of responsibility have to be defined. As a result, global and local spheres of responsibility have to be outlined to match the actual spheres of influence. ‘A key requirement for the success of a lead country concept in the communication sector is the willingness of the ad agencies to co-ordinate the structure of their organisation as well as their internal processes with those of the “global client’” (perhaps also vice versa). The lead agency concept, which shows parallels to the lead country concept, was developed by ad agencies to do just that. The resulting “harmony'” between the client and the agency that causes the well-known ‘mirror effect” is often the stepping stone to intensive co-operation between the company and the agency, which is needed in order for global communication to be effective. Within the scope of the lead agency concept, headquarters or a branch office of the internationally operating ad agency takes over all service functions worldwide (or at least within a large region) of a product or product family Global Product Responsibility One step towards centralisation and, consequently, the relocation of the power of decision from the foreign offices to the parent firm, is coupled to the installation of global product responsibiity/35,36]. Its often assumed (but often too extensively) that the success potential of global marketing can only be sufficiently exhausted if the marketing concepts are centrally managed|37,38|, This global product responsibility is personified in a global product manager who is generally established within headquarters. He is the head of a department whose functions include the development, co-ordination and implementation of worldwide product-oriented marketing measures. Through centralisation of these activities in one department the extremely time-consuming and complex decision- making processes can be trimmed down. Consequently, more complex problems are prestructured at a higher level within the hierarchy where their general aspects are resolved before they are delegated to subordinate levels (e.g. to study teams of the individual foreign branches) to be solved in detail. In order to put market knowledge, found especially in the foreign offices, to use and to justify the required global participation at least to a small extent, the global product manager must be a part of an information, regulation and control system that is more extensive than that of the lead country concept. Only a consequent intensive exchange of opinions can dilute the dysfunctional effects of extreme central co-ordination (such as in the form of acceptance problems or general interorganisational resistance). Also, only in this manner can the leeways in flexibility be attained that are imperative for presence in the market. In view of the extensive authority of the global product manager it becomes clear that such a concept is coupled with a steep increase in complexity. The area of autonomy of the national product manager is severely restricted through the dominating position held by the global manager. It is therefore also necessary here, as in the procedure within the frame of the lead country concept, to create new spheres of responsibility which correspond to the actual scope ofactivities. By simply redefining the domains of responsibility afresh, one can ensure that the measures which have to be effected do not fall into the dominant scope of responsibility of a multitude of managers. This would not only be accompanied by immense co-ordination and conversion difficulties|16, p. 6), but, more importantly, the persons responsible for success and failure could not be pinpointed and, therefore, power struggles and alternative saddling of responsibility would consequently arise. ‘Overlapping, hierarchic domains of responsibility must be established in order to overcome this hurdle on the way to globalisation. These are to separate the global areas of responsiblity from the local ones as concretely as possible according to the various fields of activity. An aspect of a global area of responsibility is, for example, determining product placement among surrounding competitors as well as the communication strategy that derives from it. Meanwhile the national product ‘managers decide independently within their local domain of responsibilicy which media mix is to be used and which additional promotional activities should flank the communication campaign. The implementation of global product managers does not cause any major co- ordination problems in single product companies or in firms with a very high heterogeneous product programme. In these cases the individual areas of responsibility can be defined independently from other products at the parent company level as well as at a national level. Global product managers works together directly with national product managers. On the other hand, in the case of a relatively homogeneous product programme, additional committees must be formed to co-ordinate those activities which apply to the various products (see Figure 3 Within the parent firm the responsibility of the co-ordination committee is to ensure that interdependence between various products is taken into consideration at an international level when outlining a global strategy. Discussions concerning {questions about standardised procedures, for example, and necessary country- oriented adaptations are a part of the collaboration between the central and decentral co-ordination groups. Not only can a worldwide uniform course in product placement and support be followed, but the enforcement of proven marketing and employee~ training procedures can be ensured, Finally, at the level of national foreign branches, these committees have to review the compatibility of actions which are, under certain circumstances, nationally oriented with other national activities (such as marketing in local markets) especially with regard to checking their conformity with the international (general) standards. The co-ordination structure, in the form of the lead country concept and global responsibility shown here, needs to be flanked by additional organisational measures in order to effectively fulfil the duties pending. In order to do this the discussion circles described above, as well as the global co-ordination groups, can be employed. Even within single product companies or firms with a very heterogeneous product programme, such co-ordination groups (for example in research and development or with regard to internationally oriented market research activities) can take aver important collaboratory functions. In addition, types of process standardisation can themselves also contribute decisively in implementing a globalisation strategy Global Marketing 53European Journal of Marketing 23,5 | —__ 54 |] {ett roaue | [tte aoa ] [cba poe | [soem [manager A newer || “mmwow ee > (a) == ) ——) | = — ——~ coco ca [ | | a Concept of Global Domains of Respon: sibility in The Case of Homogeneous Product, Progeamme|et. 30 LPM — Local product manager smoothly and effectively|39]. Key aspects in connection with this, which have been discussed in part, are: © building up 2 common company language; © creating a corporate culture in the parent company and in the foreign offices by way of extensive personnel transfer (e.g. through global job rotation) and by way of standardised training and advanced training programmes; © ‘transferring communication, planning, and regulatory systems, resulting perhaps in long-term uniform working methods and lines of thinking, respectively, Not only central patterns of orientation can be imprinted on employees world- wide by such methods, but uniformly outlined working steps also offer the possibilty of co-ordinating behaviour at an early stage and fixing the necessity of co-ordinationin the minds of the staff. The close and extensive collaboration between the Global employees of the parent company and those ofthe foreign branches that is enforced Marketing in this manner is the best guarantee that acceptance problems and separation tendencies are avoided and that the co-operation and participation that is striven for is not only achieved but also lived out. The Implementation of Selected Organisational Starting-Points to Solutions In analysing newly realised organisational starting points to solutions it can be ascertained that distinct polarisation tendencies show up in many areas. On the one hand there is an intensification of centralisation, which is not free of problems because of the risk that the negative effects outlined above are an obstacle to successful globalisation. On the other hand, companies can be found which, due to their organisational structure, remain rooted in dominant decentrally oriented ‘organisational structures. Such a procedure becomes difficult if global marketing is to be realised in spite of this attitude (for orientation systems in international ‘marketing relevant to globalisation |12, pp. 527-9; 40)). Due to the conflict potential that is coupled with it, such a measure not only disrupts the “cultural and philosophical foundation’” of an enterprise, but it prevents or at least restricts the attainment of the goals that are synonymous with global marketing. Which of the organisational forms described here should be put into effect in a given instance can only be decided against the background of each individual situation. In general, it should be kept in mind that itis advisable for many countries to put the initiatives that are described here into effect step by step, ie. in parallel with the global expansion. ‘A company will begin its transformation through the globalisation process by «way of discussion circles or co-ordination groups. It is generally advisable to wait until later before implementing a more far-reaching reorganisation in the direction of the lead country concept or global product management. Such a quasi- evolutionary procedure is the best warranty that, first, the experience gained during the globalisation procedure can flow into the organisational design. Secondly, it is possible that the corporate culture may develop further in the direction of globalisation in a development process that is conceived for a greater length of time. ‘onclusions his article has outlined possible ways of implementing a global marketing philosophy in multinational corporations. The alternatives presented here have actually been implemented in a number of enterprises, which makes it necessary to execute some kind of attendant research. More researchers should be ‘encouraged to make a contribution to finding out how multinationals can successfully achieve organisational incorporation of global marketing. References 1. 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