may be international subsidiaries, each headed by a president. The various subsidiary
presidents report to the president of the international division.
Many multinationals shift between types of organization:
■ IBM Part of IBM’s massive reorganization strategy has been to put 235,000
employees into 14 customer-focused groups such as oil and gas, entertain-
ment, and financial services. This way a big customer will be able to cut one
deal with a central sales office to have IBM computers installed worldwide.
Under the old system, a corporate customer with operations in 20 countries
had to contract, in effect, with 20 little Big Blues, each with its own pricing
structure and service standards.^34
GLOBAL ORGANIZATION
Several firms have become truly global organizations. Their top corporate manage-
ment and staff plan worldwide manufacturing facilities, marketing policies, financial
flows, and logistical systems. The global operating units report directly to the chief
executive or executive committee, not to the head of an international division. Ex-
ecutives are trained in worldwide operations, not just domestic or international. Man-
agement is recruited from many countries; components and supplies are purchased
where they can be obtained at the least cost; and investments are made where the
anticipated returns are greatest.
These companies face several organizational complexities. For example, when pric-
ing a company’s mainframe computers to a large banking system in Germany, how
much influence should be wielded by the headquarters product manager, by the com-
pany’s market manager for the banking sector, and by the company’s German coun-
try manager? Bartlett and Ghoshal have proposed circumstances under which different
approaches work best. In their Managing Across Borders, they describe forces that fa-
vor “global integration” (e.g., capital-intensive production, homogeneous demand)
versus “national responsiveness” (e.g., local standards and barriers, strong local pref-
erences). They distinguish three organizational strategies:^35
- Aglobal strategytreats the world as a single market. This strategy is warranted
when the forces for global integration are strong and the forces for national
responsiveness are weak. This is true of the consumer electronics market, for
example, where most buyers will accept a fairly standardized pocket radio,
CD player, or TV. Matsushita has performed better than GE and Philips in
the consumer electronics market because Matsushita operates in a more glob-
ally coordinated and standardized way. - Amultinational strategytreats the world as a portfolio of national opportuni-
ties. This strategy is warranted when the forces favoring national responsive-
ness are strong and the forces favoring global integration are weak. This is
the situation in the branded packaged-goods business (food products, clean-
ing products). Bartlett and Ghoshal cite Unilever as a better performer than
Kao and P&G because Unilever grants more decision-making autonomy to its
local branches. - A“glocal” strategystandardizes certain core elements and localizes other ele-
ments. This strategy makes sense for an industry (such as telecommunica-
tions) where each nation requires some adaptation of its equipment but the
providing company can also standardize some of the core components.
Bartlett and Ghoshal cite Ericsson as balancing these considerations better
than NEC (too globally oriented) and ITT (too locally oriented).
One of the most successful “glocal” companies is ABB, formed by a merger be-
tween the Swedish company ASEA and the Swiss company Brown Boveri.^36
■ ABB ABB’s products include power transformers, electrical installations, in-
strumentation, auto components, air-conditioning equipment, and railroad
equipment. With annual revenues of $31 billion and 219,000 employees, ABB
chapter 12
Designing
Global Market
Offerings^387