Organizational Responses of U.S. Multinationals to EC-1992: An Empirical Study

Abstract

Issues of standardization of products and marketing programs, and the degree of centralization of marketing decision making and planning, are of vital interest to multinational corporations as they increasingly compete in world markets. Previous research has established the need for some degree of standardization and, therefore, for some degree of centralized decision making. The present study was designed to assess the implications that the creation of the Single Market in the European Community will have on the standardization/centralization issue. Specifically, the role of the European central offices of major U.S. multinational corporations is emphasized. The results of the in-depth study of 22 Fortune 500 U.S. corporations with European central offices located in the United Kingdom indicate a trend toward overall strategic planning at the European central office level. More centralization of the distribution and pricing decisions is also noted for fairly uniform products but, in general, the product part of the marketing mix seems more standardized than the pricing, promotion, and distribution aspects. The paper concludes with some suggestions for future research.

The Impact of a Centralised Organisational Structure on Marketing Standardisation Strategy and Performance: The Experience of Price, Place and Management Processes

“…This is not supported in regards to the element of place. This result might relate to the importance of employing a uniform place strategy in the EU (Krum and Rau, 1993). Despite operating in a highly different environment, firms still attempt to have a uniform place strategy.…”

“…As analysed, the existing empirical literature fails to confirm that the price and place decision structure is significantly related to their associated standardisation strategy, while that related to the management process is rarely reported (Krum and Rau, 1993;Quester and Conduit, 1996;Griffith et al, 2000). In their study of MNCs' operations in Australia, Quester and Conduit (1996) have been unable to confirm that organisational structure concerning price and place is significantly related to marketing standardisation strategy.…”

“…Past studies examining the relationship between organisational structure and performance have tended to suggest a nonsignificant relationship between price and place organisational structure, and performance. The relationship between management process decision structure and performance is not reported in the literature (Jain, 1989;Krum and Rau, 1993;Ozsomer et al, 1991;Griffith et al, 2000). Picard et al (1998) suggested that the organisational structure of price and place has no influence on performance.…”

“…In their thorough review of the previous literature, Aulakh and Kotabe (1992) indicated that previous marketing management studies have tended to focus more on the product and promotion elements, with less focus on the elements of price and place. Likewise, though management process has long been regarded as an important aspect of marketing standardisation, the relationship between the organisational structure and standardisation Chung 85 concerning the management process element is yet to be determined (Walters, 1986;Ozsomer et al, 1991;Krum and Rau, 1993;Griffith, Hu and Ryans, 2000). Thus, an examination of the issue of decision structure and marketing standardisation concerning the price, place and management processes seems warranted.…”

“…For example, in their study of US firms' operations in the European Union, Picard et al (1998) proposed that when the product decision is mainly made by the firm's HQ the firm tends to use a highly standardised product strategy. In their study of twenty-two US firms' operations in the EU region, Krum and Rau (1993) reported that product decisions are most likely to be centralised and uniform. In their study of MNCs' operations in the emerging markets, Ozsomer et al (1991) reached a similar conclusion by pointing out that product-related items are most likely to be centralised and standardised.…”