The Return of the Country Manager

Abstract

Emerging consumer markets have confirmed their value And shown that the transnational model is slow and complex Do you want an entrepreneur or a team player? GLOBAL MARKETING Long accustomed to playing a pivotal role in corporate expansion overseas, traditional country managers began to fall from favor in the 1980s, branded as an obstacle to the spread of globalization. Seeking to exploit the promises of worldwide communication, product standardization, and economies of scale, many multinationals reduced their country managers' responsibility for decision making and profit and loss. Geographic power gave way to worldwide strategic business units or product directors operating from central headquarters. In managing this transition, many companies adopted the transnational model.(*) It held that customer needs were growing more homogeneous throughout the world, so companies should no longer duplicate their manufacturing and product development in each national market, but should instead leverage their capabilities across borders to achieve global economies, respond to local markets, and transfer best practices. To implement the model, senior managers were expected to think, operate, and communicate along three dimensions: product, geography, and function. The transnational model appealed to corporate management as a means of both rationalizing costs and increasing control over far-flung overseas subsidiaries. It also represented a golden opportunity to root out entrenched country managers who behaved like potentates in their local markets, blocking headquarters' efforts toward standardization, regional consolidation, or anything else that might encroach on their personal power bases. In superimposing product-dominated SBUs over their traditional geographical organizations, many multinationals relegated their country managers to little more than sales and distribution functionaries. Not surprisingly, the best and most entrepreneurial refused to accept demotion, and quit. Today, however, the role of country manager is again on the rise, powered by opportunities for growth in emerging markets. These opportunities have revealed serious weaknesses in the transnational model. The fall of the transnational The model's most fundamental problems are that it is based on two contradictions. First, though it viewed global rationalization as the key to success, it also sought to respond to local markets. In practice, people in the field were told to be creative about satisfying local customer needs with increasingly standardized products, over whose design and marketing they had little influence. Second, though the efficient transfer of best practices across a company's operations was supposed to be a means of benefiting the consumer, improving customer value was seldom the motive for organizational realignment. The emphasis was more on cost reduction and tightening central control. There were many other weaknesses in the transnational model which were not revealed until the early 1990s when Eastern European markets unexpectedly opened their doors. To grasp the new opportunities presented by these emerging and expanding markets the multi-nationals needed entrepreneurial managers in the field. Instead, what many had was HQ-oriented product managers who lacked the geographic knowledge, political know-how, flexibility, and cultural sensitivity to assess the evolving environment and take appropriate action. Multinationals began to miss their strong country managers. Enter the new species of country manager to improve company performance in many critical areas. Government relations Good government relations have always been important to multinationals, but they are now more critical than ever. Gaining market entry into emerging markets, making contacts, winning government contracts, and influencing regulations are all priorities. …