542 The Marketing Book
- Senior management at 25 per cent of
companies surveyed expects alliances to
contribute more than 40 per cent of their
company’s value within five years (Cravens
and Piercy, 2002).
For these reasons, it is important that our
thinking about the implementation of strategy,
and also our understanding of the emerging
forms of competition we face in the market,
should embrace the strategic alliance and the
resulting growth of networks of organizations
linked to various forms of collaborative
relationship.
However, when we think about imple-
mentation capabilities in these new types of
networked organizations major questions
remain unresolved. The role of marketing in
network organizations is unclear. In some
models, like the ‘marketing exchange com-
pany’, the hub of the network is the marketing
facility (Achrol, 1991). Others suggest that the
critical role for marketing in the alliance-based
network is applying relationship marketing
skills to managing the links between partners in
the network (Webster, 1992). Certainly, there is
a compelling argument that the concepts and
processes of relationship marketing are pivotal
to the management of value through mutual
co-operation and interdependence (Sheth,
1994), and we have seen that co-operation and
interdependence are central features of net-
work organizations.
New approaches to marketing
organization
Faced with these challenges, many organizations
are developing new ways to organize marketing
to achieve effective strategy implementation.
These approaches include the following:
Restructuring vertically for more
effective change
Many organizations throughout the world are
restructuring around vertical customer groups
as a way of responding better and faster to
customer needs than traditional organizational
arrangements permitted. For example, since
1999, the Procter & Gamble Co. (P&G) has been
implementing major global organizational chan-
ges, as part of its ‘Organization 2005’ plan, at a
total cost estimated to approach $2 billion. P&G
is widely recognized for its powerful marketing
capabilities, but faces intense competition
throughout the world and loss of position in
several key product markets. By 1999, only half
its brands were building market share, and the
company has struggled to maintain sales and
earnings growth. Previously organized into four
business units covering the regions of the world,
in 1998 seven new executives reporting to the
CEO were given profit responsibility for global
product units such as baby care, beauty, and
fabric and home care (Global Business Units).
Several of the Global Business Units are head-
quartered overseas. The new design concept also
includes eight Market Development Units
intended to tackle local market issues (e.g.
supermarket retailing in South America), as well
as Global Business Services and corporate func-
tions. Key objectives were to increase the speed
of decision making and move new products into
commercialization faster, and to manage the
business on a global basis. ‘Change agents’ have
been appointed to work across the Global
Business Units to lead cultural and business
change by helping teams to work together more
effectively through using real-time collaboration
tools. Virtual innovation teams are linked by
intranets, which can be accessed by senior
executives to keep up with developments. The
programme involves considerable downsizing
in personnel numbers, and substantial change –
25 per cent of P&G brand managers left the
company in 18 months. The sales organization is
being revised to focus salesperson attention
more specifically on individual brands. P&G’s
‘Organization 2005’ programme underlines the
nature of the fundamental changes facing many
companies in realigning their structures and
processes with the requirements of a turbulent
and intensely competitive environment.