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DesigningMarket-DrivenOrganizations

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

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Designing Market-Driven Organizations

Considerations in organizational design

Organizational design options

Selecting an organizational design

Global dimensions of organizations

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CONSIDERATIONSIN ORGANIZATIONDESIGN

Extent of need toalter verticalstructures

Extent ofpartnering withother organizations

Extent of process-type organizationaldesign

Considerations in Marketing Organization

Matching structureto strategic goals

Impact of Internet onorganizational processes

Need to integratevalue-creating activitiesaround customers

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Alternative Organizational Structures

TraditionalHierarchy

FunctionalStructure

ProcessOverlay

FunctionalOverlay

ProcessStructure

HorizontalStructure

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The Challenge of Integration

Integration problems Marketing’s links to other

functional units Additional approaches to

effective integration– relocation/design of facilities– personnel movement– reward systems– formal procedures– social orientation– project budgeting

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Illustrative Example: GE’s Philosophy

“One clear message in our approachis the value of the borderless culturewhich breaks down the horizontalbarriers between functions and the vertical barriers between organizationallevels. This means that employees areencouraged to collaborate with othersand given considerable freedom toturn their creativity into productivity.”

Source: Robert Nardelli, GE, 1993

14-7Impact of the Internet on Organizations

New managerial roles and practices are mandated by the Web– fast access to information from any

location and remotely– accelerated trend towards flatter

organizations– virtual team-working across

geographical and organizational boundaries

– new approaches to supplier relationship management (SRM) and customer relationship management (CRM)

– managing and controlling outsourcing of more business processes and activities to specialist suppliers

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Organizational Design Options

Traditional designs Marketing’s corporate role New forms of marketing

organizations

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TRADITIONALDESIGNS

Functional

Matrix Product-Focused

Market-Focused

Traditional Marketing Organization Designs

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Product-Focused Structure

14-11Marketing Organization Based on a Combination of Functions

and Products

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Organizational Transformation

Hybrid organization forms

Designs linked to value strategy and core capabilities

Vital role of data networks

Shared information and decision making

Source: George S. Day, “Aligning the Organization to the Market,” in Reflections on the Future of Marketing, Donald R. Lehmann and Katherine E. Jocz, eds. Cambridge, MA: Marketing Science Institute, 1997, 67-93.

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New Forms of Marketing Organization

New marketing roles– Chief relationship officer, chief

knowledge office, chief customer officer

Transforming vertical organizations through managing processes

New organizational forms– networked organizations– the marketing coalition company– venture marketing organizations

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The Marketing Coalition Company

Source: Ravi S Achrol, “Evolution of the Marketing Organization: New Forms for TurbulentEnvironments”, Journal of Marketing, October 1991, 88.

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Selecting an Organization Design

Organizing concepts Organizing the sales force

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TRANSACTIONALBUREAUCRATIC

ORGANIC RELATIONAL

CentralizedFormalizedNonspecialized

Internal(hierarchical)Organizationof Activity

External(market)Organizationof Activity

DecentralizedNonformalizedSpecialized

Organizing Concepts

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Organizing the Sales Force

Organizing multiple sales channels– personal selling– Internet-based channels– telesales– direct marketing

Coordinating major account responsibilities– Key account management– Global account management

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Global Dimensions of Organizations

Issues in organizing global marketing strategies– Variations in business functions– Organizational considerations

Coordination and communication– Strategic alliances– Executive qualifications

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Marketing Organization Plan Combining Product,

Geographic, and Functional Features

Source: Philip B Cateora and John L Graham, International Marketing, 12th ed.(Burr Ridge, IL: McGraw-Hill/Irwin, 2005), 336.

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GLOBALORGANIZING

ISSUES

StandardizedVersus

CustomizedStrategies

AlternativeOrganization

Forms

ExecutiveQualifications

StrategicAlliances

Coordinationand

Communication

Global Marketing Organization