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CHAPTER 16
Organizing for Global Marketing
CHAPTER OUTLINE
C. Elements that Affect a Global Marketing Organization
A. Corporate Goals
CII. Controlling the Global Organization
A. Elements of a Control Strategy
B. Communication Systems
C. Corporate Culture as Control
CIII. Conflict Between Headquarters and Subsidiaries
CIV. Considering a Global Marketing Career
CV. Conclusion
CHAPTER OBJECTIVES
At the end of this chapter, students should be able to do the following:
List and explain the internal and external factors that affect how global organizations
are structured and managed.
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Give examples of how technology can be utilized to support internal global
communications systems.
List and explain the elements of an effective global control strategy.
QUESTIONS FOR DISCUSSION
1. How does a domestic organization evolve into an international organization? What type
of international organization is likely to develop first? What type is likely to develop
second? Why?
First, a firm is likely to appoint an individual as an international specialist or establish a
2. In order to achieve better international sales (which currently account for about 30
percent of total revenues), the U.S.-based toy manufacturer Mattel decided to put U.S.
division heads in charge of international sales. Discuss the pros and cons of such a move
in general and for a firm in the toy industry in particular.
Note: This is a real announcement taken from the business news. Management at Mattel is
essentially opting for a product global structure. In general the pros of such a structure are:
It is easier to promote any product line internationally. Country managers cant choose
to ignore one product division in favor of another.
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3. Apart from its formal organizational structure, how can the global company ensure that
it is responding to the market and achieving efficiency, local responsiveness, and global
learning?
Suggestions may include:
Establishing global teams to address a particular market or technological challenge.
4. What are the advantages and limitations of using the Internet as a means of internal
communication within a global organization?
A prompt (if necessary) may be to ask students what problems they have ever had
communicating on the Internet.
Advantages:
It is relatively cheap.
Limitations:
What language will you use? If English, will all employees be equally adept in this
language? Could misunderstandings arise?
5. What suggestions would you propose to bridge the gaps between headquarters and
subsidiaries that are noted in Table 16.1?
This table suggests that subsidiaries and headquarters have divergent ideas on a variety of
issues. Mainly managers at headquarters think they are doing a good job of communicating
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CASE 16.1: HOW LOCAL SHOULD COKE BE?
Like 3M at the beginning of the chapter, Coca-Cola is uncertain as to what its global organization
should look like. Right now, Cokes regional organization in Europe is becoming a sub-regional
organization. For reasonsgood or badthe firm has decided to shift control away from
headquarters in Atlanta and give more control to their managers in Europeor have they really?
This case is a good vehicle to discuss the advantages and disadvantages of central control of
marketing activities versus giving more power to subsidiaries. It highlights not only issues of
organizational structure but also issues of corporate culture and control. Since organizations should
reflect the needs of a proper global marketing strategy, the case is a good review of prior topics in
the course.
DISCUSSION QUESTIONS
1. What are the pros and cons of changing Coke’s single European structure into ten
different regional groups?
Besides listing the pros and cons, it is interesting to discuss whether this step really shifts
power away from headquarters in Atlanta.
Pros:
It is unwise to think of the diverse European markets as having similar social and
cultural histories, climates, resources, and languages and thus similar needs for
products.
Cons:
Increased operational costs are associated with localization. There is likely to be more
duplication of efforts. After two years of bad profits, Coke is probably looking for
improved profits and these may not be realized immediately.
The move was an overreaction to some bad publicity. This is no reason to undertake
such an upheaval in the global organization.
2. Do you agree with Coke’s firing of the executive in Germany? Why or why not? How
should Coke avoid incidents like this in the future?
Since this involves someone getting fired, this question should generate some emotion among
students. The arguments for not firing the executive will likely center on the fact that Coke
told the subsidiaries to take more control of marketing. Such a severe punishment may not
As to the question of how Coke should avoid such incidents in the future, there are several
options:
Headquarters takes back formal control. They approve advertisements more centrally or
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3. If you were the manager of Coke in Germany or Turkey, where would you invest your
greatest effort, behind the launch of Powerade or behind the launch of your locally
develop fruit-flavored drink? What factors would guide your decision?
This question not only elaborates on an issue begun in Question 1, but it also allows a further
discussion of conflicts between headquarters and subsidiariesand what factors may be
Other issues that might arise are:
How important is Aquarius in the German and Turkish markets? What cannibalization
4. What suggestions would you offer to Coke about its global organizational structure and
control?
Good arguments might be made in both directions, but I am inclined to think that the sub-
regional organization is throwing the baby out with the bath water.
Coke faces pan-regional media and retailers. It is trying to build global/regional brands.
All these argue for at least a broader regional structure rather than a sub-regional one.
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UPDATE AND FOLLOW-UP QUESTIONS
This case actually occurred in 2000. I have kept it in the textbook because of its timelessness.
However, I have followed the companys organizational changes over the past 15 years. And it can
be very useful to follow up by telling your students what happened in 2015fifteen years after the
events in this casebecause it highlights the fact that reaching organizational perfection is clearly
impossible.
Besides cutting costs the elimination of regional centers was supposed to address organizational
problems as well. Former executives alleged that:
The company was structurally bloated and slow. Basic operating decisions could require
going up several rungs of administration for approval.
Chapter 16 notes two conflicting realities about the potential of regional centers that are
superimposed on country organizations:
Some executives think that superimposing a regional headquarters makes the country–
level implementation of strategy more cumbersome rather than improving it.
FOLLOW-UP QUESTIONS
When Coke first decided to abandon regional centers for a more country-based organization, the
stated mission was to push power from headquarters to the country subsidiaries. What appears to
be the rationale this time?
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Save money by shutting down a layer of organization. You might then tell the students that
TO SUM UP:
Even companies with extensive international experience struggle with the problem of determining
the right organization to make global marketing work properly. There are always arguments for
local versus central control. The proper way to make this decision is based on a clear idea of
whether the pros of centralization outweigh the cons for your particular industrynot by reacting
to one or two incidents that may arise. And making global marketing work is more than an
organization structureit involves control systems, corporate culture and having the right people
with the right mindsets managing the company at all levels.
CASE 16.2: THE GLOBALIZATION OF INDIAN IT
In contrast to companies like Coca-Cola, most Indian IT firms are new entrepreneurial ventures or
else new business units of older domestic business groups. This case allows students to delve
deeper into the organizational possibilities and challenges of born-global firms.
DISCUSSION QUESTIONS
1. Why will Indian IT firms have to transform themselves into more global corporations in
the future?
There are both market and competitive drivers that suggest that IT firms will have to
globalizeand rapidly.
Costs in India are going up quickly, causing these firms to lose their original cost-based
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2. How will their internationalization experience differ from the experience of U.S.-based
firms in the latter half of the twentieth century?
There are several ways that Indian IT firms will differ in their internationalization from
earlier U.S.-based firms:
3. What unique advantages and disadvantages do these firms possess?
Advantages:
They should save time, effort, and resources by not reorganizing as many times, as more
traditional multinational companies have in the past, as they evolved into a global firm.
Disadvantages:
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By being born global, these firms have had almost no time to establish a business model
domestically before having to deal with customers from other cultures.
4. Which organizational structure do you think would be appropriate for a more global
Wipro? Why?
This question allows students to choose and defend an organizational structure. It creates the
opportunity to discuss pros and cons of the different structures as well as raising the question
if a hybrid structure could be considered.
To sum up:
Born-global firms appear increasingly on the global competitive horizon. Their
internationalization is revolutionary rather than evolutionary. Older, established firmsin
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Country Market Report
The Country Market Report (CMR) is a project in which students investigate an international
market for a product or service. It allows students to 1) apply concepts from the book, 2) become
familiar with resources that can help managers better understand conditions in international
markets, and 3) develop analytical skills.
The CMR Outline for students is found at the end of the textbook. A copy of that outline is
included here (see Appendix A.)
The CMR is perhaps best suited for teams of three to four students. However, it should be stressed
that teams must work together to make decisions even if team members divide the research. A good
length is 22-25 pages (double-spaced) and exclusive of references/endnotes, bibliography and
exhibits. I limit the latter to five.
Further tips for administering the Country Market Report are provided below:
Choosing projects
CHOOSING PROJECTS
If students or local businesses have products or services that they wish to take to a foreign market,
these can provide projects for the CMR. However, the easiest way to find lots of project ideas is to
choose well-known companies and identify markets they havent entered. This can usually be
ascertained by visiting their websites and looking under Company History or International. Most
companies will then list the foreign markets where they operate. However, company websites are
not always up-to-date. I suggest an Internet search as well.
ASSIGNING AND ASSESSING TEAMS
It is best to assign groups earlybut late enough to assure that student adds and drops have ceased.
I usually do at the end of the third week of class. Students are asked to look at the listed projects,
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visit the posted websites of the businesses, and email their choice of projects listed in order of
preference.
Because some teams will have their slackers, I find it useful to note on the syllabus that a students
final team grade may be assessed downward if he/she is the group slacker. After the CMR is turned
GETTING STUDENTS STARTED
First of all, direct your students to the Country Market Report Outline at the end of the
textbook.
You can also direct them to any useful subscription online sources provided by your
library. Your librarian can help you put this together. These include sources that are not
free on the Internet and cannot be included on the books site. I worked with the
THE PROJECT UPDATE
I find that it is useful to assign a project update (about six pages) to be handed in about one-third
through semester. This update serves two purposesit gets students working before the last minute
and it can help identify big problems/gaps before the paper is handed in.
I assign 5 percent of the course grade to this update and try to get it back to the students as soon as
PRESENTATIONS
If time permits, well-done presentations can enhance the learning experience for the whole class. I
find that assigning 5 percent of the class grade to the presentation has resulted in very high-grade
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EVALUATING WRITTEN REPORTS
I tell students that they are evaluated on:
Finding appropriate information