As global competition increases, multinational companies must change how they manage and alter their organizational structures accordingly. The ultimate goal is to enhance their current position to take advantage of opportunities existing in the global marketplace.
Whether your company is already multinational, or you are domestic company looking into foreign expansion, there are many strategic decisions involved with planning, implementing and maintaining appropriate business processes.
For instance, will you use a standardized or adapted marketing approach, expand in a concentrated vs. dispersed manner, or have integrated vs. independent operations? It makes no difference what industry you are involved with or the size of your organization.
Marketers must fully understand the nature of competition, planning requirements and market-entry options from a global perspective. This post will identify elements that are present in the most successful international and global organizations.
What does Global Marketing mean today?
Throughout the past few decades, there has been much debate over whether global homogenization of consumer tastes allows for standardization of the marketing mix. To refresh, understand that there are differences between global marketing and international marketing. Global marketing implies that your organization standardizes its marketing programs, coordinates across markets and practices global integration.
Today, many companies have trouble deciding whether using a truly global marketing strategy is right for them. There is a slight trend back toward localization due to new efficiencies of customization made possible by technology, the Internet, and new manufacturing processes. “Mass Customization” has now taken the place of “Mass Production.” In today’s world, the customer does not always respond to a “one size fits all” approach.
What are the benefits of Global Marketing? The number of companies that can have a truly global marketing strategy is limited, however if carried out successfully, global marketing offers the following benefits:
- When a large market segment can be identified across major regions, better economies of scale can be achieved and can create a competitive advantage for a multinational company
- The transfer of knowledge and experience across countries results in improved communication and coordination of marketing activities. Global diversity in a marketing team can also lead to new approaches that may not have normally been utilized, creating a a stronger local presence contributing to a more powerful global brand as a whole.
- Marketing globally can gain access to the toughest customers. Pleasing customers in product and services categories that are normally hard to reach means winning business that the competition cannot.
- Diversifying your markets means more financial stability. Spreading out your company’s portfolio means that if financial, legal or economic conditions suffer in one area, they can be balanced out by others.
How do I plan for a Global Market?
If your company chooses to go global, planning is essential and is one area that business-owners are often not disciplined enough to do. As previously discussed, international business can be much more complex than doing business domestically. Planning is a tool that allows you to relate to the future. It is an attempt to control the effects of the internal, external and customer environments in such a way that the firm can set and meet goals. When goals are solidified and a commitment is made to specific resources, growth is more likely.
There are 3 types of planning related to international business: corporate, strategic or tactical.
- Corporate planning is long-term, and includes generalized goals for the whole firm
- Strategic planning is conducted at highest management levels and deals with products, capital, research and the long and short-term golas of the company
- Tactical planning, or market planning, are specific actions and the allocation of resources used to carry out strategic goals in given markets.
Whether you are marketing in many countries or entering a foreign market for the first time, the International Planning Process is essential. The diagram below explains the process.
How do I organize internally?
Do not underestimate the importance internal communication and organizational structure for your MNC (multinational corporation). In order to go global, organizations must reflect upon a number of company-specific factors, such as:
- Level of policy decisions
- The length of chain of command
- Staff support
- Sources of natural and personnel resources
- Degree of organizational control
- Cultural differences in decision-making styles
- Type or level of marketing involvement
There are three ways companies usually choose to structure themselves:
- Global product divisions are responsible for product sales throughout the world
- Geographic divisions are responsible for all products and functions within a defined area
- A matrix organization consists of either of these structures with an additional centralized sales and marketing run by a functional staff, or a combination of area operations and global product management
Considerations must also be made involving who makes decisions and for whom. Management must decide which decisions are made at corporate headquarters, at international headquarters, at regional levels, national levels and even local levels.
There are three major types of organizational patterns used by MNC’s.
- Centralized: Most decisions are made by corporate headquarters. Advantages are that all experts are in one location and can exercise a high degree of control in planning and implementing. Records and information are stored accessible in the same place, which can ease communication.
- Regionalized: Very large corporations may use these structures, where decision-makers are grouped by similar regions. For example, a European headquarters and North American headquarters may have similar functions but express control over different areas.
- Decentralized: Is used when there is a belief that hiring competent local managers and giving them full responsibility of their organizations will ensure that those with the most direct contact with their market are making the best business decisions.
Although formally a firm may have a chosen structure, it is important to remember that informally there may be aspects of different structures affecting the organization. For example, many companies have a highly centralized Product/Service structure, but may have decentralized Pricing, Promotion and Distribution structures. On a global level, marketers must work to have a broad company view that can optimize the performance of each individual market segment and location.