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CRAVENS

PIERCY

8/e
McGraw-Hill/Irwin

2006 The McGraw-Hill Companies, Inc., All

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Chapter
Fourteen
Designing
Market-Driven
Organizations

McGraw-Hill/Irwin

2006 The McGraw-Hill Companies, Inc., All

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Designing MarketDriven Organizations

Considerations in
organizational design
Organizational design
options
Selecting an organizational
design
Global dimensions of
organizations

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Considerations in Marketing
Organization
Matching structure
to strategic goals
Extent of need to
alter vertical
structures
CONSIDERATIONS
IN ORGANIZATION
DESIGN

Extent of processtype organizational


design
Extent of
partnering with
other organizations
Need to integrate
value-creating activities
around customers
Impact of Internet on
organizational processes

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Alternative Organizational
Structures
Traditional
Hierarchy

Process
Overlay

Functional
Structure

Process
Structure
Functional
Overlay

Horizontal
Structure

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The Challenge of
Integration
Integration problems
Marketings 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:
Johnson Controls

Executives from marketing and sales


meet frequently, collaborate on
promotions, take training courses
together, make sales calls together,
share information freely
Customer visits often involve executives
from sales, marketing, engineering and
design working togther
Johnsons teamwork philosophy
extends to alliances and underpins its
product development strategy

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Illustrative
Example: GEs
Philosophy
One clear message in our approach
is the value of the borderless culture
which breaks down the horizontal
barriers between functions and the
vertical barriers between organizational
levels. This means that employees are
encouraged to collaborate with others
and given considerable freedom to
turn their creativity into productivity.
Source: Robert Nardelli, GE, 1993

Impact of the Internet


on Organization

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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
Marketings corporate role
New forms of marketing
organizations

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Traditional Marketing
Organization Designs

Functional

Matrix

TRADITIONAL
DESIGNS

MarketFocused

ProductFocused

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Product-Focused
Structure

Marketing 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

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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.

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 Turbulent
Environments, Journal of Marketing, October 1991, 88.

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Selecting an
Organization Design
Organizing concepts
Organizing the sales force

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Organizing Concepts
Centralized
Formalized
Nonspecialized

BUREAUCRATIC

TRANSACTIONAL

Internal
(hierarchical)
Organization
of Activity

External
(market)
Organization
of Activity

ORGANIC

RELATIONAL

Decentralized
Nonformalized
Specialized

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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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Global Marketing Organization

Executive
Qualifications

Standardized
Versus
Customized
Strategies

Alternative
Organization
Forms

GLOBAL
ORGANIZING
ISSUES
Strategic
Alliances

Coordination
and
Communication