Global Organization

Global Organization

Several firms have passed beyond the international division stage and become truly global organizations. They stop thinking of themselves as national marketers that sell abroad and start thinking of themselves as global marketers. The top corporate management and staff plan worldwide manufacturing facilities, marketing policies, financial flows and logistical systems. The global operating units report directly to

global organization the chief executive or executive committee of the organization, not to the head of

Affirm of international an international division. Executives are trained in worldwide operations, not just

organization whereby domestic or international. The company recruits management from many coun­

top corporate tries, buys components and supplies where they cost the least, and invests where

management and staff the expected returns are greatest.

plan worldwide Moving into the twenty­first century, major companies must become more

manufacturing or global it' they hope to compete. As foreign companies successfully invade the

operational facilities, domestic market, domestic companies must move more aggressively into foreign

marketing policies, financial flatus and

markets. They will have to change from companies that treat their foreign oper­ logistical systems. The ations as secondary concerns, to companies that view the entire world as a single

global operating unit borderless market. 22

reports directly to the More intensely competitive international markets suggest that global firms must

chief' executive, not to an place a premium on organizational flexibility. GFT, the Italian firm, is the world's

international divisional biggest manufacturer of designer clothes, covering expensive 'labels' such as

head. Emanuel Ungaro, Giorgio Armani, Valentino and Baulmer. The company's inter­ national expansion required extreme flexibility in managing organizational change. The tension the firm faced mirrors the dilemma confronting most global

firms today: For GFT, globalisation is not about standardisation; it is about a quantum

increase in complexity. The more the company has penetrated global markets, the more sustaining its growth depends on responding to myriad local differences in its key markets around the world. 23

Organising for effective international marketing is a considerable challenge that besets multinational firms of any size. The tension between centralization and decentralization is a very tight one. On the one hand, managers must agree upon the key strategic decisions and activities to centralize. On the other, they

must give as much autonomy as possible to local staff who are close to market conditions. There is no one correct combination of centralized­deeentralized organization. It is important to heed the maxim, 'Think global, act local'. The organ inational structure varies according to the firm's circumstances and over time. The firm must ensure that its structure fits with its international environ­ ment, while at the same time having the internal flexibility required to implement its strategic goal. J *

Percy Barnevik, chief executive officer of the Swiss­Swedish group Asea Brown Boveri, best sums up the real complexity of international business organ­ izations. He describes the need to have a structure that leverages the firm's core technologies, gains scale economies and still maintains local market position and responsiveness:

ABB is an organization with three internal contradictions. We want to be global and local, big and small, radically decentralized with centralized reporting and control. If we can resolve those contradictious we create real organizational advantage.

218 • Chapters The Global Marketplace