Global Strategy and Local Adaptation

Transnational corporations need to formulate global strategies that lend themselves to local adaptation. Schulling (2000) described how this has been done at Procter and Gamble (P & G). The following have been useful for P & G.

Market sensing capabilities

It is useful if transnational corporations have excellent market sensing capabilities. All their branches around the world should have this. Schulling points out that at P & G, brand managers at every branch undertake monthly analysis of Nielson data. This enables the company to keep abreast of developments in the market, particularly with regard to what customers want and what competitors are doing.

P & G managers keep in touch regularly with the stores that sell their products. This is done in every branch irrespective of culture. P & G managers also keep a tab on customer preferences. Gurcharan Das, longtime CEO of P & G India, was known for spending hours with house-wives at stores obtaining feedback from them about the detergent Ariel. This brand today has a faithful following among the upwardly mobile in India.

P & G managers all over the world periodically undertake qualitative consumer surveys, such as those done by Das in India. They also conduct periodic assessments of new product launches. The reactions P & G gleans from customers could vary from culture to culture. Hence the way it responds to market sensing would also vary from culture to culture.

Customer-driven culture

A global strategy of P & G is of being customer-driven. Branches are given discretion in this. However, the organizational system used is the same at all branches. P & G has called this the brand manager system. This system requires that every branch has brand teams . If a particular P & G branch is marketing three brands, a brand team is assigned to each one. Each brand team then has to gauge customer wishes and satisfy them. The brand teams are multidisciplinary and have representatives from the fields of marketing, R & D, manufacturing, logistics, finance and accounting.

Fact-based decisions

At every P & G branch, stress is placed on making decisions that are logically thought out and based on facts. Several management tools and techniques are used, such as PERT, technical tests, force field analysis, concept and use tests, optimization tests, and blind tests. Periodic formal reports are written about the management process of each brand. These reports are then shared with the rest of the global corporation. Branches are free to adopt approaches found successful in other cultures. However, before an approach is fully adopted, it is test-piloted in the new culture. The three features of P & G's global strategy described above are without pitfalls as far as intercultural management is concerned . Where their views on corporate strategy can be questioned is with regard to global brand positioning. During the 1990s, P & G created centralized global category teams to manage their 11 product categories. According to Schuller (2000), these centralized global teams are too removed from local markets and local customer tastes to be able to reflect local cultural imperatives. There are short-run monetary advantages in trying to standardize a brand globally and not engage in local adaptations. However, it is local adaptations that reflect a global corporation's intercultural management skills. All the companies profiled in this book uphold the perspective that a transnational corporation requires overall global strategies to bind the corporation together, but that these strategies should be capable of reflecting the local culture when implemented. Shell (referred to in Chapter 1) is a global company that has linked its ideas on appropriate structure with its thoughts on strategic thinking. It made the corporation more decentralized so it could reflect local culture when implementing its strategy. This is true of BMW as well. A transnational corporation's global strategy has to be complemented by an appropriate organizational structure as well as core values if it is to be effective in intercultural management.

The current strategy of transnational corporations is to be market-driven. This entails being sensitive to different local markets, each coloured by a different set of cultural factors. Each local market has to be understood thoroughly, and the preferences of the customer base taken into account. At the same time, the same levels of quality have to be maintained worldwide. The demands made on transnational corporations are thus extraordinary.