Global Strategic Management

P&G in Japan; Issues in Strategy,

Organization, and Country Management

Professor Jeff Dyer

Global Strategic Management 1
 P&G Japan Case Summary

• Each “affiliate” country has a strategic role that influences strategy,

structure, and the role of the country manager. The strategic role of
the country also influences which functions are duplicated within the
country (e.g., R&D, mfg., etc.). A lead market must have R&D.
• The country manager’s role is a function of the strategic role of the
country in the multinational firm’s overall strategy:
- Access new markets with existing products (Implementer)
- Develop new markets and adapt and develop new products for
those markets (Local Manager)
- Develop “lead” markets from which to learn and transfer
knowledge to other relevant markets (Global Network Manager)
• There are numerous potential competitive advantages that MNCs
can realize by thinking about their firm as a global network of
resources and capabilities.

Professor Jeff Dyer

Global Strategic Management 2
 P&G Update: Performance in Asia

• Opened technical center in Kobe in 1993; 3 mfg. plants

• Now sell 20 brands with market leadership in 1/3 of those.
• “P&G views Japan as one of the top two markets in Asia.
The Japanese market is made up of very discriminating
consumers, intense competition, and a need for constant
product innovation. If P&G can do well in Japan, P&G can
do well in any other market. We take the Japnese market
very seriously; although I wouldn’t consider it a major
growth market, I would consider it a market that we want to
maintain market leadership in.”
– P&G executive 4/21/98
• We use what we learn in one market to succeed in others
– P&G executive 4/9/01

Professor Jeff Dyer

Global Strategic Management 3
 Country Management Issues

 Issues:
– What is the role of a country organization?
 What activities, resources to locate within a country?
 How is an affiliate integrated into worldwide operations?
– What is the role of the country manager (CM)?
 How can a CM define and meet local and global goals?
 What role does the CM play in a firm’s worldwide strategy?
 Country Organization Role
– Traditional View
 Organization to sell products locally
– Emerging View (interdependent markets as part of global network)
 Pool of resources that happen to be located within a national market that
are used to compete locally and globally

Professor Jeff Dyer

Global Strategic Management 4
 Roles of Country Organizations

Le v e l o f lo c a l re s o u rc e s a n d
c a p a bilitie s

Lo w Hig h

S tra te g ic Lo w Im p le m e n to r Co n tribu to r
im p o rta n c e
o f lo c a l
m a rk e t Hig h B la c k S tra te g ic
h o le le a d e r

Source: Bartlett and Ghoshal Professor Jeff Dyer

Global Strategic Management 5
 Country Management Model
 Stage 1: Global Strategy/Structure
– Export focus on sales and distribution
– Worldwide units dominate structure (local staff report to global
units)
– Country manager as TRADER (implementer)
 Stage 2: Multinational Strategy/Structure
– Focus on developing, making, and selling broader line to locally
adapted products
– Country Manager as MANAGER (potentate)
 Stage 3: Transnational Strategy/Structure
– Focus on worldwide integration, reducing local authority,
standardizing systems
– Country manager as GLOBAL NETWORK MANAGER
(cabinet member)

Professor Jeff Dyer

Global Strategic Management 6
 Strategic Role of Country
Local Implementor (Trader)

• Country Strategy (Global)

– Implement common strategy in
new foreign market
Corporate
• Sale existing products in new
Headquarters
market
– Build up initial local infrastructure
– Control operations in line with
corporate strategy Country Local
• Country Manager Manager Market
– Expatriate
• Suppliers
• Experience with company • Customers
products, systems • Government
– Entrepreneur Local • Competitors
• Identify new business Operations
opportunities with existing
pdts./capabilities

Professor Jeff Dyer

Global Strategic Management 7
 Strategic Role of Country
Local Manager
• Country Strategy (Multi-Domestic)
– Develop and profitably expand local
business
• Adapt products Corporate
• Expand scope of local resources, Headquarters
activities
– Install local structure and systems in line
with local needs
• Country Manager Country Local
– Local Expertise is critical Manager Market
• Experience with local market
(customers, distribution network, • Suppliers
workers, government, etc.). • Customers
– Manager • Government
Local • Competitors
• Manage and coordinate various Operations
functions/entire business
– Entrepreneur
• Build business, new products, etc.

Professor Jeff Dyer

Global Strategic Management 8
 Strategic Role of Country
Global Network Manager (cabinet member)
 Country Strategy (Trans-national)
-Expand local business
- Integrate local business within
worldwide operations Corporate
-Develop “learning” routines (lead market) Headquarters
to transfer knowledge to other markets
-Access, leverage global resources
 Country Manager Country Local
– Local expertise, Global access
Manager Market
– Experience with local market and
• Customers
worldwide operations of the company. • Government
– “Ambassador” • Competitors
Local
 Manage local interests globally
Operations
 Manage global interests locally

Professor Jeff Dyer

Global Strategic Management 9
Why the Global Network (Transnational) is
Valuable
Where is the Value in a
Global Network Global Network?
Perspective
• Learning and capability
development (P&G, Bain)
• Options and access on large new
markets (Otis)
• Operating flexibility to shift
production to changing factor
conditions, exchange rates, etc.
(Nike)
• Ability to arbitrage differences in
tax regimes, transfer pricing, etc.

Professor Jeff Dyer

Global Strategic Management 10
Knowledge Requirements of a Global Manager

Strategic
Management
Concepts

Country-Specific Global
Knowledge Environment
(i.e., culture, gov’t (macroeconomic,
regulations, market financial, political,
conditions, etc.) competitive)

Firm-Specific
Knowledge
(capabilities,
products, etc.)
Professor Jeff Dyer
Global Strategic Management 11