L7: Implementation and Coordination

MK328 Strategic Marketing in an International Context

Lecture 7: Implementation and Coordination

  • Focus on: Managing, measuring, and control of global marketing programs.

  • Key areas:
      - Cross-cultural sales negotiation.
      - Organization and control of the global marketing program.

Cross-Cultural Sales Negotiation

  • Relevance:
      - Successful global marketing requires not just a strategy, but also effective execution and adaptation across various cultural and structural settings.

  • Definition: Cross-Cultural Sales Negotiation:
      - The process of reaching an agreement between buyers and sellers from different cultural backgrounds.
      - Emphasizes the impact of cultural distance on negotiation success.

Two Different Negotiation Cultures

  • Rule-Based Cultures (Primarily Western World):
      - Trust is placed in rules over personal relationships.
      - Deals are formalized through contracts and enforced by legal systems.
      - Authority is derived from adherence to rules rather than individual power or identity.

  • Relationship Negotiation Cultures (e.g., Asian cultures):
      - Based more on loyalty and obligations to friends, family, or superior relationships.
      - A focus on building relationships rather than strictly negotiating deals.
      - Confrontational bargaining might occur even when guided by protocol (example: Japan).
      - In informal settings (like street markets), confrontation is common, and relationships do not play a role.
      - Acceptance of practices like bribery is noted.

Cross-Cultural Negotiations Insights

  • Psychical Distance and Uncertainty:
      - Greater cultural distance leads to higher uncertainty in negotiations.

  • Time Perception:
      - Western Culture: Time is viewed linearly (schedule-oriented); “time is money”, emphasis on promptness.
      - Oriental Nations (e.g., Japan/China): Time considered irrelevant or flexible, with a focus on rituals and personal rapport.
      - Middle East and Africa: Reported to have a more relaxed view of time; deadlines are often missed.

  • Trust and Respect:
      - Essential in cultures such as Japan, China, Mexico, and Latin America.
      - Japanese often hold multiple meetings before engaging in business discussions.
      - US and Europeans prefer to commence business negotiations quickly.

Language of Negotiation

  • Different Views on Compromise:
      - In the USA and Western Europe, compromise equals fairness and morality.
      - In contrast, for Mexicans/Latin Americans, it signifies a loss of dignity; Russians and Middle Easterners may see it as a weakness.
      - Perspectives on persuasive communication differ; it may be seen as aggressive and superficial in non-Western settings.

Negotiation Process Framework

  1. Non-Task Related Interaction:
       - Status Distinction: Recognizing cultural norms and hierarchy in status.
       - Impression Formation Accuracy: Cultures differ in interpreting cues; misinterpretation may lead to misunderstandings and lack of trust.
       - Interpersonal Attraction: Building rapport can vary based on cultural expectations.

  2. Task-Related Interaction:
       - Exchange of Information: Norms for information sharing, ranging from transparency to discretion.
       - Persuasion and Bargaining Strategy: Differences in logical reasoning vs. emotional appeals.
       - Concession Making and Agreement: How concessions are viewed varies by culture; they may indicate weakness or collaboration.
       - Negotiation Outcome: Success metrics may differ (completing a deal vs. fostering relationships).

Implications of Hofstede’s Dimensions (1983)

  • Uncertainty Avoidance:
      - High levels signal a preference for structured negotiations and clear agreements.
      - Low levels allow for more flexibility and tolerance for ambiguity.

  • Long-Term vs. Short-Term Orientation:
      - Long-term cultures tend to prioritize future benefits and relationship building.
      - Short-term cultures typically seek immediate results.

  • Power Distance:
      - Cultures with high power distance may favor authority figures.
      - Low power distance cultures expect egalitarian decision-making.

  • Individualism vs. Collectivism:
      - Individualistic cultures focus on personal goals.
      - Collectivist cultures prioritize group harmony.

  • Masculinity vs. Femininity:
      - Masculine cultures value competitiveness; feminine cultures emphasize collaboration and compromise.

The Gap Model in International Negotiation

  • Cultural Influence:
      - Cultural distance can create challenges in language, ethics, and time orientation; high-context vs. low-context communication plays a vital role.
      - Organizational culture shapes negotiation adaptation; misalignment increases cultural distance.

  • Negotiating Strategies:
      - Adapting behavior helps minimize cultural gaps.
      - Effective gaps closure strategies include market research, cultural training, and salesperson education.

Knowledge Management and Learning Across Borders

  • Explicit and Tacit Knowledge:
      - Explicit Knowledge: Documented best practices shared from international markets (e.g., UK and Sweden).
      - Tacit Knowledge: Unarticulated, culturally nuanced insights gleaned from market exposure.
      - The objective is to share both knowledge types to refine overall business strategy.

  • Global Group Projects:
      - Aimed at identifying and sharing effective best practices across diverse cultural markets.
      - Selection of diverse group members from various international markets (UK, Sweden, US, France, Japan) adds perspective.
      - Leadership by top management is essential for aligning best practices with core business strategy.

Cross-Cultural Sales Negotiation – Key Points

  • Cultural understanding is critical for successful negotiations; cultural distance can raise transaction costs.

  • The negotiation process is split into non-task interactions (relationship building) and task-related interactions.

  • Expatriate challenges include culture shock and negotiation difficulties abroad.

  • Global marketing coordination issues revolve around sales force management, candidate selection, training, support, and repatriation.

  • Knowledge management's aim is to enhance strategies through shared insights and experiences.

  • Navigate ethical challenges in differing cultural norms, especially concerning practices like bribery.

Dunkin’ Donuts Case Study

  • Dunkin’ Donuts sells 5 million doughnuts and 4 million cups of coffee daily and has over 7700 locations in the US.

  • Internationally, it has over 3000 locations in 48 countries, particularly strong in the Philippines, Indonesia, South Korea, and Thailand.

Dunkin’ Donuts Case Questions

  1. Risks in European cross-cultural negotiations for US negotiators include unfamiliar cultural norms and relationship expectations.

Organizational and Control of the Global Marketing Program

  • Organizational Architecture: The totality of a firm’s organization, encompassing structure, control systems, incentives, and culture.

Classical Organisation Structures

  • Vertical differentiation includes:
      - Centralization vs. Decentralization.

  • Horizontal differentiation involves:
      - Functional, divisional, global matrix, and mixed structures.

Vertical Decentralization

  • Centralization:
      - High-level managers make strategic decisions that are implemented by lower levels.
      - Advantages: Coordination across the value chain; consistent decision-making.
      - Disadvantages: Discourages initiative, top-down information flow can hinder innovation.

  • Decentralization:
      - Lower-level managers have decision-making power.
      - Advantages: Proximity to customer and market insights fosters entrepreneurial initiative.
      - Disadvantages: Cross-country coordination issues; local interests can outweigh global performance.

Horizontal Differentiation

  • Horizontal differentiation includes:
      - Specifying tasks, dividing them among various organizational units and establishing superior-subordinate relationships.

Functional Structure

  • The functional structure groups individuals based on expertise and is common among companies with narrow product lines.

Divisional Structure

  • The divisional structure categorizes employees based on product, customer, or geographical location, duplicating functions across divisions as necessary.

Matrix Structure

  • The matrix structure blends functional and divisional forms, creating dual reporting relationships.
      - Useful for companies with high demands for global integration while ensuring local responsiveness.

Neoclassical Structures

  • Neoclassical structures focus on coordination and relationships rather than strict command hierarchies.
      - Network Structure: Allocates resources and responsibilities in a decentralized manner.
      - Virtual Structure: Employs technologies to facilitate remote collaborations across various partners.

Coordination Systems

  • Coordination by Standardization: Universal rules applied globally to ensure consistency.

  • Coordination by Plan: Involves deadlines and objectives for collaborative efforts.

  • Coordination by Mutual Adjustment: Relies on manager collaboration and informal interactions.

Control Systems

  • Bureaucratic Control: Emphasizes authority and rules; suited for organizations with a structured environment.

  • Market Control: Leverages external benchmarks like profitability.

  • Clan Control: Uses shared values to guide employee behavior.

Types of Marketing Control

  • Include: strategic control, annual plan control, efficiency control, and profitability control, as structured by performance metrics.

Organization and Control - Key Points

  • Cross-cultural negotiation success relies on understanding and respect for cultural differences.

  • Proper organizational structure aids global marketing coordination.

  • Effective control systems enhance international marketing strategies.

Development of the International Marketing Plan

  • 18.1 – Global Marketing
      - Focused on outlining international marketing strategies.

Case Study: From Strategy to Structure: Organizing within Koç Holding
Discussion Questions

  1. Assess Koç Holding’s hierarchical and divisional structures.

  2. Evaluate the role of cross-functional teams at Koç Holding.

  3. Analyze how Koç Holding aligns its structure and strategic objectives.

  4. Identify organizational design challenges faced by Koç Holding.

  5. Discuss the application of mechanistic vs. organic structures at Koç Holding.

Lecture 7 - Summary

  • Cross-Cultural Sales Negotiation: Success hinges on grasping cultural differences and employing effective strategies.

  • Organizational Structures in Global Marketing: Include classical and neoclassical structures to balance integration and responsiveness.

  • Control Systems: Encompassing monitoring performance, budgeting, and knowledge management to strengthen global strategies through shared learning.