Page 191 - DMGT547_INTERNATIONAL_MARKETING

International Marketing

Notes
related factors deliver shareholder value, and which do not. This sounds easy, but isn’t.
Volumes excite the typical salesperson; profits are incidental. Everyone in Pluto, from the
CEO to the sales rep, needs to understand what drives profits.”
“I am quite clear in my mind that we need to change,” reiterated Saraf. “I believe there are
four things that any CEO should consider in a situation like this. Does the new structure
facilitate the development of competencies? Does it enhance our managerial abilities?
Does it provide for the transfer of knowledge across business units? And does it leverage
a company’s resources optimally? I think our profit-centre-CSO structure stands these
tests.”
“I am in favour of a CSO,” intoned Mullick, “I know of a few Indian companies, like BPL,
that have managed to centralise sales successfully. BPL calls its entity the Central Marketing
Organisation, and its activities aren’t restricted to sales, but extend to marketing and
brand-management too. There are also companies that have created centres of excellence
by building divisions that manage all their activities. GM’s Saturn division is, probably,
the best-known example of this. There have been instances of multi-divisional or multi-
product companies creating a CSO, only to realise that it doesn’t work for them. Cadbury
India is a case in point. The company had a short-fling with the CSO structure. But the
reasons that dictate the effectiveness of the CSO seem to go beyond product or industry-
characteristics. Nestle, which operates in the same markets as Cadbury, operates through
a CSO. I think the real issue is implementation. And managing change effectively. Not
that the CSO structure is perfect; there are several disadvantages associated with it.
Personality clashes between the head of the CSO and the heads of the other profit-centres
is one. I’m also not sure how your salespeople will react to this sudden change…”
Saraf stepped in quickly. “I don’t believe there will be any such problems here. We have
all worked together for more than a decade, and understand each other pretty well. I think
our salespeople will welcome this move...”

Questions
1. Does Pluto really need to reconfigure its organisational structure if it wants to
realise its long-term strategy? Can’t these goals be achieved without doing so?
2. Are there any rollout problems that Saraf should be prepared for?

3. Is Saraf’s view of the CSO as a transient entity justified? Should it actually be disbanded
once the SBU structure matures? Will it create any reporting problems in the short
run?
4. Has the company done the right thing in identifying a HR professional to head its
CSO?
5. Can the CSO become a profit-centre by focusing on trading operations? Are there
alternative organisational structures that Saraf could consider?
Source: P K Vasudeva, International Marketing, Excel Books.

10.7 Summary

This unit attempts to give an overview of the functions in as simple manner as possible.

Distribution is the course that goods take between production and the final consumer.
This course often differs on a country by country basis and MNCs will spend a considerable
amount of time in examining the different systems that are in place, the criteria to choose
distributors and channels and how distribution segment will be employed.

186 LOVELY PROFESSIONAL UNIVERSITY