8/18/2019 Achieving Glocal Success

1/3

Achieving ‘Glocal’ Success

BY MICHAEL R. CZINKOTA AND ILKKA A. RONKAINEN

 czinkotm@georgetown.edu

 ronkaii@georgetown.edu

Many of the most successful global companies

have adopted an organizational approach that

provides clear global strategic direction along

with the flexibility to adapt to local opportunities and

requirements. The term “glocal” has been coined to

describe this approach. Big and small organizations

have the scale and resources of a global powerhouse,

but also the speed, creativity and agility of a fresh,

new startup.

Companies that have adopted thisapproach have incorporated the

following four dimensions intotheir organizations.

Building a Shared Vision

Te first dimension relates to a clear andconsistent long-term corporate missionthat guides individuals wherever theywork in the organization. Examples ofthis are Johnson & Johnson’s corporatecredo of customer focus; Coca-Cola’s

mission of leveraging global beveragebrand leadership “to refresh the world,inspire moments of optimism andhappiness, create value and make adifference”; Nestlé’s vision to make the

company the “reference for nutrition,health and wellness”; and Samsung’smission to “create superior productsand services, thereby contributing to abetter global society.” But formulating

and communicating a vision or missioncannot succeed unless individualemployees understand and accept thecompany’s stated goals and objectives.

Broadening Perspectives

Tis relates to the development of a

cooperative mindset among region orcountry organizations to ensure theeffective implementation of globalstrategies. Managers may believe that

global strategies are intrusions ontheir operations if they do not have

an understanding of the corporate vision, if they have not contributed tothe global corporate agenda, if they arenot given direct responsibility for itsimplementation or if there is no rewardfor their cooperation.

Also, negative attitudes towards certain“foreign activities” such as marketingcan prevent management abroad fromparticipating fully in the process of change.

Defensive, territorial attitudes can lead to

the emergence of the “not invented here”syndrome—that is, country organizationsobjecting to or even rejecting a soundstrategy. Education and information playa major role in getting local managers onboard with a strategy, and, more importantyet, in letting them work accurately withothers. It is much easier to be truthful withothers when one understands the issues at

hand, as well as the plans for the future.For example, in an area structure,

country units may operate quite

independently. o tackle potentialproblems, firms conduct managementmeetings once a month to supervise

regional operations. Each committeeincludes representatives of the majorfunctions, such as manufacturing,marketing and finance. Yum Brands hasa structure that emphasizes its individualbrands, including KFC, Pizza Hut, aco

Bell and Long John Silver’s, but it alsohas three operational units: one for theU.S. market, an international divisionand a separate China division coveringmainland China, Tailand and KFCaiwan because of the size and strategicimportance of China.

Te network avoids the problems ofduplication of effort, inefficiency andresistance to ideas developed elsewhere

by giving subsidiaries the latitude,encouragement and tools to pursuelocal business development withinthe framework of the global strategy.Headquarters considers each unit a sourceof ideas, skills, capabilities and knowledgethat can be used for the benefit of theentire organization. Tis means that thesubsidiaries must be upgraded from therole of implementation and adaptation

to that of contribution and partnershipin the development and execution ofworldwide strategies. Efficient plantsmay be converted into internationalproduction centers, innovative R&D unitsmay become centers of excellence (andthus role models), and key subsidiarygroups may be given a leadership role indeveloping new strategic approaches forthe entire corporation.

Allowing maximum flexibility at the

country-market level takes advantageof the fact that subsidiary management

knows its market and can react tochanges quickly. Problems of motivationand acceptance are avoided whendecision makers are also implementingthe strategy. On the other hand, manymarketers faced with global competitivethreats and opportunities have adoptedglobal strategy formulation, which,

by definition, requires some degreeof centralization. What has emergedas a result can be called “coordinateddecentralization,” which means that

marketingmanagement  INTERNATIONAL MARKETING

MARKETING NEWS | APRIL 201418

8/18/2019 Achieving Glocal Success

2/3

the overall corporate strategy isprovided rom global or regionalheadquarters, but subsidiaries are ree

to implement it within a rangeestablished in consultation betweenheadquarters and the subsidiaries.

However, moving into this newmode may raise significant challenges.Among systemic difficulties is a lack owidespread commitment to dismantling

traditional national structures, driven byan inadequate understanding o the larger,global orces at work. Some organizationalinitiatives, such as multicultural teams orcorporate chat rooms, may be jeopardizedby the act that people do not have the

necessary skills—the language ability,Six Sigma, etc.—or that an inrastructuresuch as an intranet may not exist in anappropriate ormat.

Capable Managers

Te third component in the “glocal”approach is making use o representativesrom different countries, regions, andcultures. Organizationally, the orces oglobalization are changing the countrymanager’s role significantly. With profit-and-loss responsibility, oversight o

multiple unctions, and the benefits(and drawbacks) o distance rom

headquarters, country managers enjoyedconsiderable decision-making autonomy,as well as entrepreneurial initiative.oday, however, many companies haveto emphasize the product dimension othe product-geography matrix, whichmeans that power has to shif at leastto some extent rom country managersto worldwide strategic business unitand product line managers. Many o

the previously local decisions are now

subordinated to global strategic moves.However, regional and local

brands still require an effective localmanagement component. Tereore,the uture country manager will have tohave diverse skills, such as governmentrelations and managing entrepreneurialteamwork, and wear many hats inbalancing the needs o the operation or

which the manager is directly responsiblewith those o the entire region orstrategic business unit. o emphasize

the importance o the global/regionaldimension in the country manager’sportolio, many companies have tied

the country manager’s compensation tothe way the company perorms globallyor regionally, not just in the market orwhich the manager is responsible.

Te human actor in any organizationis critical. Managers both at headquarters

and in the subsidiaries must bridgethe physical and psychic distancesseparating them. I subsidiaries havecompetent managers who rarely need toconsult headquarters about conditionso overlaps and tradeoffs between units,they may be granted high degrees

o autonomy. In the case o globalorganizations, subsidiary managementmust understand the corporate culture

because subsidiaries must sometimesmake decisions that meet the long-termobjectives o the firm as a whole but thatare not optimal or the local market.

Internal Cooperation

In today’s environment, the globalbusiness entity can be successul only i itis able to move intellectual capital withinthe organization—that is, to transmit

ideas and inormation in real time. Ithere are impediments to the ree flowo inormation across organizationalboundaries, important updates aboutchanges in the competitive environmentmight not be communicated in atimely ashion to those tasked withincorporating them into the strategy.

For example, Procter & Gamblemakes the recruitment and teaching

o uture leaders a priority or its topexecutives. All o the top officers atthe company teach in the company’s

executive education programs, and actas mentors and coaches or youngermanagers. P&G takes global executivedevelopment seriously and grooms itstop management prospects through aseries o career-building assignmentsacross business units and geographies.

Eighty-five percent o the company’stop management have had one or moreinternational assignments.

WPP, the global marketing servicesgroup, has developed a graduate

marketing ellowship program orpromising global managers comprisingthree one-year rotations with

individual companies within thegroup’s global network and requiringan international assignment.

Another method to promoteinternal cooperation or globalstrategy implementation is the use ointernational teams or councils. In the

case o a new product or program, aninternational team o managers maybe assembled to develop a strategy.While final direction may come romheadquarters, such direction willnow be inormed o local conditions.

Implementation o the strategy isenhanced since local country managerswere involved in its development.

Tis approach has worked even in

cases involving seemingly impossiblemarket differences. In some cases, it isimportant to bring in members o otherconstituencies—or example, suppliers,intermediaries or service providers—tosuch meetings to share their views andexperiences, and make available theirown best practices or benchmarking. Insome major production undertakings,

technology allows ongoing participationby numerous internal and external team

members. Te key is cooperation and joint value identification or the firmand its employees in order to leveragecorporate capabilities and resourcesthroughout all spans o the organizationto achieve the best positive outcomes. m 

MICHAEL R. CZINKOTA researches inter-

national business and marketing issues at

Georgetown University. He served in trade

policy positions in the Ronald Reagan and

George H.W. Bush administrations. His

International Marketing text, co-authored

by Ilkka Ronkainen, is now in its 10th edi-

tion with Cengage.

ILKKA A. RONKAINEN is a member of

the faculty of marketing and international

business at Georgetown University. He has

received the undergraduate teaching

and research award twice, as well as the

International Executive M.B.A. award.

  INTERNATIONAL MARKETING  marketingmanagement

APRIL 2014 | MARKETING NEWS   19 

8/18/2019 Achieving Glocal Success

3/3

C o p y r i g h t o f M a r k e t i n g N e w s i s t h e p r o p e r t y o f A m e r i c a n M a r k e t i n g A s s o c i a t i o n a n d i t s    

c o n t e n t m a y n o t b e c o p i e d o r e m a i l e d t o m u l t i p l e s i t e s o r p o s t e d t o a l i s t s e r v w i t h o u t t h e      

c o p y r i g h t h o l d e r ' s e x p r e s s w r i t t e n p e r m i s s i o n . H o w e v e r , u s e r s m a y p r i n t , d o w n l o a d , o r e m a i l    

a r t i c l e s f o r i n d i v i d u a l u s e .