17 Leadership, Organization, and Corporate Social Responsibility Learning Objectives 1. 17-1 Identify the names and nationalities of the chief executives at five global companies discussed in the text. 2. 17-2 Describe the different organizational structures that companies can adopt as they grow and expand globally. 3. 17-3 Discuss the attributes of lean production, and identify some of the companies that have been pioneers in this organizational form. 4. 17-4 List some of the lessons regarding corporate social responsibility that global marketers can take away from Starbucks’ experience with Global Exchange. Case 17-1 A Changing of the Guard at Unilever Unilever, the global food and consumer packaged goods powerhouse, markets a brand portfolio that includes such well-known names as Axe, Ben & Jerry’s, Dove, Hellmann’s, Lipton, and Magnum. The company has approximately 167,000 employees and 2016 sales of €52.7 billion (about $60 billion); Unilever can trace its roots, in part, to the northern English town of Port Sunlight on the River Mersey. There, in 1888, Lever Brothers founder William Hesketh Lever created a garden village for the benefit of his employees. Before retiring at the end of 2008, Unilever Group chief executive Patrick Cescau wanted to reconnect the company with its heritage of sustainability and concern for the environment. These and other values reflect Unilever’s philosophy of “doing well by doing good.” One example: the “Campaign for Real Beauty,” which was launched by managers at the company’s Dove brand. To prepare for their first presentation to management, Dove team members videotaped interviews with teen girls who talked about the pressures they felt to conform to a certain look and body type. The interviewees included Cescau’s daughter as well as the daughters of Unilever’s directors. Later, when the CEO recalled watching the video, he explained, “It suddenly becomes personal. You realize your own children are impacted by the beauty industry, and how stressed they are by this image of unattainable beauty which is imposed on them every day.” The Dove team was given the green light to launch a new advertising campaign based on this insight; in the years since, Dove has won numerous awards and accolades for the positive body image campaign. Cescau’s vision of “doing well by doing good” manifested itself in other ways, too. For example, he guided the company’s detergent business toward using fewer chemicals and less water, plastic, and packaging. In addition, he recognized that today’s “conscience consumers” look to a company’s reputation when deciding which brands to purchase. Paul Polman, Cescau’s successor, built on another of the former chief executive’s priorities: business opportunities in emerging markets such as India and China (see Exhibit 17-1). However, Polman also took the top job in the middle of the recent global recession. He is set to retire in 2019; to find out more about Unilever’s commitment to global social responsibility and the challenges facing Polman’s successor, turn to Case 17-1 at the end of the chapter. Exhibit 17-1 Former Unilever CEO Patrick Cescau put corporate social responsibility at the top of his agenda. Paul Polman, the company’s chief executive from 2009 to 2019, built on Cescau’s initiatives while expanding into key emerging markets. Sources: Hindustan Times/Newscom. This chapter focuses on the integration of each element of the marketing mix into a total plan that addresses opportunities and threats in the global marketing environment. Cescau’s achievements as the head of Unilever illustrate some of the challenges facing business leaders in the twenty-first century: They must be able to articulate a coherent global vision and strategy that integrate global efficiency, local responsiveness, and leverage. The leader is also the architect of an organizational design that is appropriate for the company’s strategy. For large global enterprises such as ASEA Brown Boveri (ABB), General Electric (GE), Koninklijke Philips, Tesco, Toyota, and Unilever, the leader must ensure that size and scale are assets that can be leveraged rather than encumbrances that slow response times and stifle innovation. Finally, the leader must ensure that the organization takes a proactive approach to corporate social responsibility. 17-1 Leadership 1. 17-1 Identify the names and nationalities of the chief executives at five global companies discussed in the text. Global marketing demands exceptional leadership. As noted throughout this book, the hallmark of a global company is its capacity to formulate and implement global strategies that leverage worldwide learning, respond fully to local needs and wants, and draw on the talent and energy of every member of the organization. This daunting task requires global vision and sensitivity to local needs. Overall, the leader’s challenge is to direct the efforts and creativity of everyone in the company toward a global effort that best utilizes organizational resources to exploit global opportunities. As Carly Fiorina, former CEO of Hewlett-Packard, said in her 2002 commencement address at the Massachusetts Institute of Technology: Leadership is not about hierarchy or title or status: It is about having influence and mastering change. Leadership is not about bragging rights or battles or even the accumulation of wealth; it’s about connecting and engaging at multiple levels. It’s about challenging minds and capturing hearts. Leadership in this new era is about empowering others to decide for themselves. Leadership is about empowering others to reach their full potential. Leaders can no longer view strategy and execution as abstract concepts, but must realize that both elements are ultimately about people. 1 An important leadership task is articulating beliefs, values, policies, and the intended geographic scope of a company’s activities. Using the mission statement or similar document as a reference and guide, members of each operating unit must address their immediate responsibilities and at the same time cooperate with functional, product, and country experts in different locations. Of course, it is one thing to spell out a vision, and another thing entirely to secure commitment to that vision throughout the organization. As noted in Chapter 1, global marketing also entails engaging in significant business activities outside the home country, which means exposure to different languages and cultures. In addition, global marketing involves the skillful application of specific concepts, insights, and strategies. Such endeavors may represent substantial change, especially in U.S. companies with a long tradition of a domestic focus. When the “go global” initiative is greeted with skepticism, the CEO must be a change agent who prepares and motivates employees. Former Whirlpool CEO David Whitwam described his own efforts in this regard in the early 1990s after he had approved the acquisition of Royal Philips Electronics’ European home appliance division: When we announced the Philips acquisition, I talked with our people, explained why it was so important. Most opposed the move. They thought, “We’re spending a billion dollars on a company that has been losing money for 10 years? We’re going to take resources we could use right here and ship them across the Atlantic because we think this is becoming a ‘global’ industry? What the hell does that mean?”2 Jack Welch encountered similar resistance when he was chief executive at GE: “The lower you are in the organization, the less clear it is that globalization is great,” he said. As Paolo Fresco, a former GE vice chairman, explained: To certain people, globalization is a threat without rewards. You look at the engineer for X-ray in Milwaukee and there is no upside on this one for him. He runs the risk of losing his job, he runs the risk of losing authority—he might find his boss is a guy who does not even know how to speak his language.3 In addition to “selling” their visions, top management at Boeing, Coca-Cola, GE, Unilever, Whirlpool, Tata Group, and other companies face the formidable task of building and maintaining organizational cultures that emphasize good corporate governance and reward creativity and nimbleness. A new generation of CEOs are making their mark by upending the strategic decisions that their predecessors made. For example, former Coca-Cola CEO Muhtar Kent was intent on putting more “fizz” into sales of Coke’s flagship cola. By contrast, James Quincey, the new CEO, is focusing on juices, teas, protein shakes, and other drinks with healthier ingredients. Some observers denounced Quincey’s decision to eliminate the position of chief marketing officer as “cretinous”; Quincey defended the move, noting that Coke’s advertising model had not adapted sufficiently rapidly to the digital age. In place of the CMO, Quincey established a new C-level post, chief growth officer.4 The Coca-Cola example underscores the fact that corporate leaders in all parts of the world face challenges that include dealing with fast-moving changes in consumer behavior. The rejection of mature brands in favor of more on-trend, exciting ones is just one example. Add to this the increased fragmentation of markets and the dismantling of previously defensible barriers to industry entry, and today’s corporate chiefs have plenty to keep them awake at night! Top Management Nationality Many globally minded companies realize that the best person for a top management job or board position is not necessarily someone born in the home country. Coca-Cola’s James Quincey is a case in point: He is British. Speaking of U.S. companies, Christopher Bartlett of the Harvard Business School has noted: Companies are realizing that they have a portfolio of human resources worldwide, that their brightest technical person might come from Germany, or their best financial manager from England. They are starting to tap their worldwide human resources. And as they do, it will not be surprising to see nonAmericans rise to the top.5 The ability to speak foreign languages is one difference between managers born and raised in the United States and those born and raised elsewhere. For example, the U.S. Department of Education has reported that 200 million Chinese children are studying English; by contrast, only 24,000 American children are studying Chinese! Fluency in English is a prerequisite for managerial success in many global organizations, irrespective of the language of the headquarters country. A decade ago, Yong Nam, CEO of LG Electronics, stipulated that English would be required throughout the company. He explained: English is essential. The speed of innovation that is required to compete in the world mandates that we must have seamless communication. We cannot depend on a small group of people who are holding the key to all communication throughout the world. That really impedes information sharing and decision making. I want everybody’s wisdom instead of just a few.6 Sigismundus W. W. Lubsen, the former president and CEO of Quaker Chemical Corporation, is a good example of today’s cosmopolitan executive. Born in the Netherlands and educated in Rotterdam as well as New York, Lubsen speaks Dutch, English, French, and German. He recalled, “I was lucky to be born in a place where if you drove for an hour in any direction, you were in a different country, speaking a different language. It made me very comfortable traveling in different cultures.”7 PepsiCo’s Indra Nooyi is also bilingual (see Exhibit 17-2). Table 171 gives other examples of corporate leaders who are not native to the headquarters country. Exhibit 17-2 Indra Nooyi, chair and chief executive of PepsiCo, is faced with rising commodity prices and weak demand for carbonated soft drinks in the United States. Despite these threats, Nooyi believes the snack-and-beverage giant’s current strategy is on track. In recent quarters, the strongest results have come from PepsiCo’s fast-growing international division. Snack sales are particularly strong in Mexico and Russia; international sales volume for beverage brands is also increasing, particularly in the Middle East, Argentina, China, and Brazil. Source: Manish Swarup/Associated Press. Table 17-1 Who’s in Charge? Executives of 2017 Company (Headquarters Country) Executive/Nationality 3M (United States) Inge G. Thulin (Sweden) ABB (Switzerland) Ulrich Spiesshofer (Germany) Adidas (Germany) Kasper Rorsted (Denmark) Chrysler (United States) Sergio Marchionne (Italy) Coca-Cola (United States) James Quincey (United Kingdom–England) Microsoft (United States) Satya Nadella (India) Company (Headquarters Country) Executive/Nationality Monsanto (United States) Hugh Grant (United Kingdom–Scotland) Nissan Motor (Japan) Carlos Ghosn (Brazil) PepsiCo (United States) Indra K. Nooyi (India) Reckitt Benckiser (United Kingdom) Rakesh Kapoor (India) Tapestry (United States) Victor Luis (Portugal) Wolters Kluwer NV (Netherlands) Nancy McKinstry (United States) Generally speaking, Japanese companies have been reluctant to place non-Japanese nationals in top positions. For years, only Sony, Mazda, and Mitsubishi had foreigners on their boards. Recently, some Japanese companies have made hiring and promotion decisions aimed at increasing the diversity of their top-management ranks. For example, Didier Leroy recently became the most-senior non-Japanese executive at Toyota; an American, Julie Hamp, is the company’s first Western female senior executive.8 Similarly, after Renault SA bought a 36.8 percent stake in Nissan Motor in 1999, the French company installed Carlos Ghosn as Nissan’s president. Born in Brazil, raised in Lebanon, and educated in France, Ghosn’s outsider status at the Japanese company enabled him to move aggressively to cut costs and make drastic changes in the organizational structure. He also introduced two new words into Nissan’s lexicon: speed and commitment. Ghosn’s turnaround efforts have been so successful that his life story and exploits are featured in Big Comic Story, a comic that is popular with Japan’s salarymen. Today, Ghosn is chairman and CEO of Groupe Renault as well as chairman of both Nissan Motor and Mitsubishi Motors.9 Taken together, these companies form a global strategic partnership known as the Renault–Nissan–Mitsubishi Alliance. Leadership and Core Competence In the 1980s, many business executives were assessed on their ability to reorganize their corporations. In the 1990s, global strategy experts C. K. Prahalad and Gary suggested that executives would be better judged on their abilities to identify, nurture, and exploit the core competencies that make growth possible. Simply put, a core competence is something that an organization can do better than its competitors. According to Prahalad and Hamel, a core competence has three characteristics: • It provides potential access to a wide variety of markets. • • It makes a significant contribution to perceived customer benefits. It is difficult for competitors to imitate. Few companies are likely to build world leadership in more than five or six fundamental competencies. In the long run, an organization derives its global competitiveness from its ability to bring high-quality, low-cost products to market faster than its competitors do. To achieve this goal, an organization must be viewed as a portfolio of competencies rather than as a portfolio of businesses. In some instances, a company has the technical resources to build competencies, but key executives lack the vision to do so. Sometimes the vision is present, but is rigidly focused on existing competencies even as market conditions are changing rapidly. For example, in the early 2000s, Jorma Ollila, then chairman of Finland’s Nokia, noted, “Design is a fundamental building block of the [Nokia] brand. It is central to our product creation and is a core competence integrated into the entire company.” 10 The chairman was right— 10 years ago. Design did help Nokia secure its position as the worldwide leader in handset sales. But Apple’s introduction of the game-changing iPhone in 2007 caught Nokia off guard. Nokia clung to its proprietary Symbian operating system even as smartphones running Google’s Android operating system exploded in popularity. Nokia responded by launching new, mid-priced smartphone models; in addition, new CEO Steven Elop announced an alliance with Microsoft to develop new phones using Windows OS. Despite these moves, by early 2011 Nokia was issuing profit warnings. In 2014, Microsoft acquired Nokia’s handset business and Elop was named executive vice president of the newly formed Devices Group. In 2016, the Nokia brand reverted back to Finnish ownership when Microsoft sold it to a new venture called HMD. Nokia’s reversal of fortune in the wake of innovations introduced by Apple and Google underscores the fact that today’s executives must rethink the concept of the corporation if they wish to operationalize the concept of core competencies. In addition, the task of management must be viewed as building both competencies and the administrative means for assembling resources spread across multiple businesses.11 Table 17-2 lists some of the individuals currently responsible for global marketing at selected companies. Table 17-2 Responsibility for Global Marketing Company (Headquarters Country) Executive Position/Tit Amway (United States) Su Jung Bae Chief marke Apple (United States) Phil Schiller Senior vice p Coca-Cola (United States) Francisco Crespo Chief growth Company (Headquarters Country) Executive Position/Tit Facebook (United States) Rebecca Van Dyck Chief marke Ford (United States) Kumar Galhotra Chief marke General Motors (United States) Deborah Wahl Global chief Levi’s (United States) Jennifer Sey Global chief L’Oréal (France) Gretchen Saegh-Fleming Chief marke McDonald’s (United States) Morgan Flatley Global chief Procter & Gamble (United States) Marc Pritchard Global mark Starbucks (United States) Sharon Rothstein Global chief 17-2 Organizing For Global Marketing 1. 17-2 Describe the different organizational structures that companies can adopt as they grow and expand globally. The goal in organizing for global marketing is to find a structure that enables the company to respond to relevant market environment differences while ensuring that corporate knowledge and experience from national markets becomes diffused throughout the entire corporate system. The struggle between the value of centralized knowledge and coordination and the need for individualized response to the local situation creates a constant tension in the global marketing organization. A key issue in any global organization is how to achieve a balance between autonomy and integration. Subsidiaries need autonomy to adapt to their local environments, but the business as a whole needs to be integrated to implement global strategy. 12 When management at a domestic company decides to pursue international expansion, the issue of how to organize arises immediately. Who should be responsible for this expansion? Should product divisions operate independently or should an international division be established? Should individual countries’ subsidiaries report directly to the company president or should a special corporate officer be appointed to take full-time responsibility for international activities? After the firm reaches a decision about how it will organize the initial international operations, a growing company is faced with a number of reappraisal points during the development of its international business activities. Should the company abandon its international division, and, if so, which alternative structure should be adopted? Should it form an area or regional headquarters? What should be the relationships among staff executives at the corporate, regional, and subsidiary offices? Specifically, how should the company organize the marketing function? To what extent should regional and corporate marketing executives become involved in subsidiary marketing management? Even companies with years of experience competing around the globe find it necessary to adjust their organizational designs in response to environmental changes. It is perhaps not surprising that, during his tenure at Quaker Chemical, Sigismundus Lubsen favored a global approach to organizational design over a domestic/international approach. He advised Peter A. Benoliel, his predecessor CEO, to have units in the Netherlands, France, Italy, Spain, and England report to a regional vice president in Europe. “I saw that it would not be a big deal to put all of the European units under one common denominator,” Lubsen recalled.13 As markets globalize and as Japan opens its own market to more competition from overseas, more Japanese companies are likely to break from their traditional organization patterns. Many of the Japanese companies discussed in this text qualify as global or transnational companies because they serve world markets, source globally, or do both. Typically, knowledge is created at these companies’ headquarters in Japan and then transferred to other country units. For example, Canon enjoys a strong reputation for world-class, innovative imaging products such as bubble-jet printers and laser printers. In the past two decades, Canon’s management has shifted more control to subsidiaries, hired more nonJapanese staff and management personnel, and assimilated more innovations that were not developed in Japan. In 1996, for example, research and development (R&D) responsibility for software was shifted from Tokyo to the United States, responsibility for telecommunication products to France, and computer-language translation to Great Britain. As Canon president Fujio Mitarai explained, “The Tokyo headquarters cannot know everything. Its job should be to provide low-cost capital, to move top management between regions, and come up with investment initiatives. Beyond that, the local subsidiaries must assume total responsibility for management. We are not there yet, but we are moving step by step in that direction.” Toru Takahashi, director of R&D, shared this view: “We used to think that we should keep research and development in Japan, but that has changed,” he said. Despite these changes, Canon’s board of directors includes only Japanese nationals.14 No single correct organizational structure exists for global marketing. Even within a particular industry, worldwide companies have developed different strategic and organizational responses to changes in their environments.15 Even so, it is possible to make some generalizations. Leading-edge global competitors share one key organizational design characteristic: Their corporate structure is flat and simple, rather than tall and complex. The message is clear: The world is complicated enough, so there is no need to add to the confusion with complex internal structure. Simple structures increase the speed and clarity of communication and allow organizational energy and valuable resources to concentrate on learning, rather than on controlling, monitoring, and reporting.16 According to David Whitwam, former CEO of Whirlpool, “You must create an organization whose people are adept at exchanging ideas, processes, and systems across borders, people who are absolutely free of the ‘not-invented-here’ syndrome, people who are constantly working together to identify the best global opportunities and the biggest global problems facing the organization.” 17 A geographically dispersed company cannot limit its knowledge to product, function, and the home territory. Instead, company personnel must acquire knowledge of the complex set of social, political, economic, and institutional arrangements that exist within each international market. Many companies start with ad hoc arrangements, such as having all foreign subsidiaries report to a designated vice president or to the company president. Eventually, such companies establish an international division to manage their geographically dispersed new businesses. It is clear, however, that the international division in the multiproduct company is an unstable organizational arrangement. As a company grows, this initial organizational structure frequently gives way to various alternative structures. In the fast-changing, competitive global environment of the twenty-first century, corporations will have to find new, more creative ways to organize. New forms of flexibility, efficiency, and responsiveness are required to meet the demands of globalizing markets. In particular, today’s global realities include the need to be costeffective, to be customer driven, to deliver the best quality, and to deliver that quality quickly. Over the past quarter century, several authors have described new organizational designs that represent responses to today’s competitive environment. These designs acknowledge the need to find more responsive and flexible structures, to flatten the organization, and to employ teams. There is also recognition of the need to develop networks, to develop stronger relationships among participants, and to exploit technology. The new designs reflect an evolution in approaches to organizational effectiveness. Early in the twentieth century, Frederick Taylor claimed that all managers had to see the world the same way. Then came the contingency theorists, who said that effective organizations design themselves to match their conditions. These two basic theories are reflected in today’s popular management writings. As Henry Mintzberg observed, “To Michael Porter, effectiveness resides in strategy, while to Tom Peters it is the operations that count—executing any strategy with excellence.”18 The Cultural Context Can New Leaders Reinvent Sony, the “Apple of the 1980s,” in the Twenty-First Century? Sony Corporation is a legend in the global consumer electronics industry whose reputation for innovation and engineering has made it the envy of rivals. For decades, quality-conscious consumers paid premium prices for the company’s Trinitron color televisions. In 1979, Sony created the personal stereo category with its iconic Walkman. By the early 2000s, however, Sony’s vaunted innovation and marketing machine was faltering. The company had not anticipated the rapid consumer acceptance of flat-panel, wide-screen TV sets, and the Sony Walkman was eclipsed by Apple’s iPod and iTunes Store. In 2005, tumbling stock prices resulted in the resignation of chairman and CEO Nobuyuki Idei. Sir Howard Stringer, a Welsh-born American who had been knighted in 2000, was named as Idei’s replacement. One of Stringer’s first priorities was to bridge the divide between Sony’s media businesses, which included music, games, and motion pictures, and its hardware businesses. As Stringer himself declared, “We’ve got to get the relationship between content and devices seamlessly managed.” Management writers often use terms like silos, stovepipes, or chimneys to describe an organization in which autonomous business units operate with their own agendas and a minimum of horizontal interdependence. This was the situation at Sony, where the internal rivalries between different engineering units—the PC and Walkman groups, for example—were ingrained in the corporate culture and regarded as healthy. As Osamu Katayama, author of several books about Sony, notes, “Instead of working together, the managers of the different businesses fought to keep their independence.” Because Sony’s consumer products businesses have historically accounted for a significant proportion of the company’s worldwide sales, breathing new life into the home entertainment and mobile products units was important. To do this, Stringer developed a restructuring plan: He cut 28,000 jobs, reduced the number of manufacturing sites, and eliminated some unprofitable products. Cost cutting was only part of the story. Boosting revenues with new products was also crucial to Sony’s recovery. Stringer was convinced that Sony’s TV business would recover, thanks in part to the new Bravia line of HDTVs. As it turned out, the television business continued to lose money. The company also launched an e-book reader and, in 2006, the PlayStation 3 (PS3) game console. After seven years, it was clear Stringer’s turnaround effort was still a work in progress. He had successfully negotiated Sony’s withdrawal from a smartphone partnership with Sweden’s Ericsson. He had restructured the TV business and ended an expensive LCD screen partnership with Samsung. Sony’s Blu-ray DVD format had gained widespread acceptance, but Sony, Sharp, Panasonic, and other Japanese manufacturers were all experiencing declining sales of traditional electronics products. Meanwhile, Apple and Samsung had risen to prominence in the competitive landscape once dominated by the Japanese. In 2012, Stringer relinquished the chief executive role to Kazuo Hirai (see Exhibit 17-3). One problem facing the company going forward is that Sony has lost its lead in flat-panel television technology to Samsung. In addition, the one–two punch of Apple’s iPod/iTunes combination has upstaged Sony’s Walkman personal stereo brand. Contributing to its status as a laggard in these markets was the reality that Sony’s various divisions—for example, Home Entertainment and Sound; Mobile Products and Communication; and Entertainment—did not work well together. Exhibit 17-3 In 2012, Kazuo Hirai (shown at right) was named president and CEO of Sony Corporation. The new boss faced many challenges, as Japan’s once-vaunted electronics industry had fallen behind in the fast-changing tech world. In 2018, Kenichiro Yoshida became president and CEO. Source: Agencja Fotograficzna Caro/Alamy Stock Photo. In 2013, Hirai presided over the launch of the Xperia Z smartphone, an event that provided tangible evidence of a reduction in divisional rivalries. In 2018, new CEO Kenichiro Yoshida took on the task of returning the company to profitability by infusing employees with entrepreneurial spirit while trimming the bureaucracy and speeding up decision making. Sources: Eric Pfanner and Takashi Mochizuki, “Sony Pares down before Rebuilding,” The Wall Street Journal (November 17, 2014), pp. B1, B4; Daisuke Wakabayashi, “Japan’s Electronics under Siege,” The Wall Street Journal (May 15, 2013), pp. B1, B4; Andrew Edgecliffe-Johnson and Jonathan Soble, “Channels to Choose,” Financial Times (February 28, 2012), p. 9; Jonathan Soble, “Sony Chief Looks to Secure Legacy,” Financial Times (May 23, 2011), p. 11; Yukari Iwatani Kane, “Sony Expects to Trim PS3 Losses, Plans More Games, Online Features,” The Wall Street Journal (May 18, 2007), p. B4; Phred Dvorak, “Sony Aims to Cut Costs, Workers to Revive Its Electronics Business,” The Wall Street Journal (September 23, 2005), p. A5; Dvorak, “Out of Tune: At Sony, Rivalries Were Encouraged; Then Came iPod,” The Wall Street Journal (June 29, 2005), pp. A1, A6; Lorne Manly and Andrew Ross Sorkin, “Choice of Stringer Aims to Prevent Further Setbacks,” The New York Times (March 8, 2005), pp. C1, C8. Kenichi Ohmae has written extensively on the implications of globalization on organization design. He recommends a type of “global superstructure” at the highest level that provides a view of the world as a single unit. The staff members at this level are responsible for ensuring that work is performed in the best location and coordinating efficient movement of information and products across borders. Below this level, Ohmae envisions organizational units assigned to regions “governed by economies of service and economies of scale in information.” In Ohmae’s view of the world, there are 30 regions with populations ranging from 5 million to 20 million people. For example, China would be viewed as several distinct regions; the same would be true of the United States. The first task of the CEO in such an organization is to become oriented to the single unit that is the borderless business sphere, much as an astronaut might view the earth from space. Then, zooming in, the CEO attempts to identify differences. As Ohmae explained: A CEO has to look at the entire global economy and then put the company’s resources where they will capture the biggest market share of the most attractive regions. Perhaps as you draw closer from outer space you see a region around the Pacific Northwest, near Puget Sound, that is vibrant and prosperous. . . . In parts of New England you will see regions that are strong centers for health care and biotechnology. As a CEO, that’s where you put your resources and shift your emphasis.19 Your authors believe that successful companies, the real global winners, must have both good strategies and good execution. Patterns of International Organizational Development Organizations vary in terms of the size and potential of targeted global markets and local management competence in different country markets. Conflicting pressures may arise from the need for product and technical knowledge; functional expertise in marketing, finance, and operations; and area and country knowledge. Because the constellation of pressures that shape organizations is never exactly the same, no two organizations pass through organizational stages in exactly the same way, nor do they arrive at precisely the same organizational pattern. Nevertheless, some general patterns hold. A company engaging in limited export activities often has a small in-house export department as a separate functional area. Most domestically oriented companies undertake initial foreign expansion by means of foreign sales offices or subsidiaries that report directly to the company president or other designated company officer. This person carries out his or her responsibilities without assistance from a headquarters staff group. Many other design options are available to companies that seek to extend their reach internationally without creating separate divisions. For example, Des Moines, Iowa–based Meredith Corporation participates in international markets by means of licensing agreements developed and managed by the Corporate Development group, and further supported by various operating departments within the company (see Exhibit 17-4). Exhibit 17-4 With more than 7 million U.S. subscribers, Better Homes and Gardens is the flagship publication of Des Moines, Iowa–based Meredith Corporation. Meredith licenses BH&G and other titles in numerous international markets, including Europe, the Middle East, and Asia. Shown here is the Chinese edition of the magazine, published under license by SEEC Media. Source: November 2012 Better Homes and Gardens Magazine China edition. Photo courtesy of Meredith Corporation ©2017. All rights reserved. ® International Division Structure As a company’s international business grows, the complexity of coordinating and directing this activity extends beyond the scope of a single person. Pressure is created to assemble a staff that will have responsibility for coordination and direction of the growing international activities of the organization. Eventually, this process leads to the creation of the international division, as illustrated in Figure 17-1. Best Buy, Hershey, Levi Strauss, Under Armour, Walmart, and Walt Disney are some examples of companies whose structures include international divisions. Figure 17-1 Functional Corporate Structure, Domestic Corporate Staff Orientation, and International Division When Hershey announced the creation of its international division in 2005, J. P. Bilbrey, the division’s senior vice president, noted that Hershey would no longer utilize the extension strategy of exporting its chocolate products from the United States. Instead, the company would tailor products to local markets and also manufacture locally. As Bilbrey explained, “We’re changing our business model in Asia. The product was not locally relevant and it also got there at an unattractive cost.”20 Currently, international sales make up only 15 percent of Hershey’s sales; the company’s strategic goal is to boost that figure to 25 percent in the near future. China is the world’s fastest-growing candy market, so it is no surprise that Hershey is ramping up efforts to penetrate the Middle Kingdom. Until recently, Hershey had only about a 2.2 percent share of China’s chocolate market; by contrast, Mars commands 43 percent of this market with its M&M’s and Dove brands. In 2013, Hershey rolled out a new line of condensed-milk candies specifically targeting China’s premium candy segment. Lancaster (as in “Lancaster, Pennsylvania,” the company’s hometown) is the English-language name; in Chinese, the brand is Yo-man (see Exhibit 17-5). Hershey has opened its second-largest R&D facility, Asia Innovation Center, in Shanghai.21 Exhibit 17-5 Hershey has rolled out its Lancaster brand in China. Flavors include Original Pure Nai Bei, Pure Nai Bei filled with Rich Nai Bei, and Pure Nai Bei with Strawberry. “Nai Bei” refers to a slowcooking process using imported milk. Lancaster is the first completely new brand launched outside the United States in Hershey’s 120-year history. Lancaster was recently introduced in the United States as well. Source: Daniel Acker/Bloomberg via Getty Images. Several factors contribute to the establishment of an international division. First, top management’s commitment to global operations has increased enough to justify an organizational unit headed by a senior manager. Second, the complexity of international operations requires a single organizational unit whose management has sufficient authority to make its own determinations on important issues such as which market-entry strategy to employ. Third, an international division is frequently formed when the firm has recognized the need for internal specialists to deal with the special demands of global operations. A fourth contributing factor is management’s recognition of the importance of strategically scanning the global horizon for opportunities and aligning them with company resources, rather than simply responding on an ad hoc basis to opportunities as they arise. Regional Management Centers When business is conducted in a single region that is characterized by similarities in economic, social, geographic, and political conditions, there is both justification and need for a management center. Thus, another stage of organizational evolution is the emergence of an area or regional headquarters as a management layer between the country organization and the international division headquarters. For example, the increasing importance of the European Union as a regional market prompted a number of companies to change their organizational structures by setting up regional headquarters there. In the mid-1990s, Quaker Oats established its European headquarters in Brussels; Electrolux, the Swedish home appliance company, has also regionalized its European operations.22 Two decades later, Procter & Gamble (P&G) began to shift its global skin, cosmetics, and personal-care unit from Cincinnati to Singapore; Asia-Pacific countries account for approximately half of the $100 billion global skin-care market.23 A regional center typically coordinates decisions on pricing, sourcing, and other matters. Executives at the regional center also participate in the planning and control of each country’s operations with an eye toward applying company knowledge on a regional basis and optimally utilizing corporate resources on a regional basis. This organizational design is illustrated in Figure 17-2. Figure 17-2 Functional Corporate Structure, Domestic Corporate Staff Orientation, International Division, and Area Divisions Regional management can offer a company several advantages. First, many regional managers agree that an on-the-scene regional management unit makes sense where there is a real need for coordinated, pan-regional decision making. Coordinated regional planning and control are becoming necessary as the national subsidiary continues to lose its relevance as an independent operating unit. Regional management can probably achieve the best balance of geographic, product, and functional considerations required to implement corporate objectives effectively. By shifting operations and decision making to the region, the company is better able to maintain an insider advantage.24 Of course, a major disadvantage of a regional center is its cost. The cost of a two-person office can be as much as $500,000 per year. The scale of regional management must also be in line with the scale of operations in a region. A regional headquarters is inappropriate if the size of the operations it manages is inadequate to cover the costs of the additional layer of management. The basic issue with regard to the regional headquarters is “Does it contribute enough to organizational effectiveness to justify its cost and the complexity of another layer of management?” Geographic and Product Division Structures As a company becomes more global, management frequently faces the dilemma of whether to organize by geography or by product lines. The geographically organized structure involves the assignment of operational responsibility for geographic areas of the world to line managers. The corporate headquarters retains responsibility for worldwide planning and control, and each area of the world—including the “home” or base market—is organizationally equal. Take the case of a company with French origins. France is simply another geographic market under this organizational arrangement. This structure is most common in companies with closely related product lines that are sold in similar end-use markets around the world. For example, the major international oil companies utilize the geographic structure, which is illustrated in Figure 17-3. McDonald’s organizational design integrates the international division and geographic structures. McDonald’s U.S. has three geographic operating divisions, and McDonald’s International has three. Figure 17-3 Geographic Corporate Structure, World Corporate Staff Orientation, and Area Divisions Worldwide When an organization assigns regional or worldwide product responsibility to its product divisions, manufacturing standardization can result in significant economies. For example, Whirlpool recently reorganized its European operations, switching from a geographic or country orientation to one based on product lines. One potential disadvantage of the product approach is that local input from individual country managers may be ignored, with the result that products are not sufficiently tailored to local markets. The essence of the Ford 2000 reorganization initiated in 1995 was to integrate the automaker’s North American and European operations. Over a three-year period, the company saved $5 billion in development costs. However, by 2000, Ford’s European market share had slipped nearly 5 percent. In a shift back toward the geographic model, then CEO Jacques Nasser returned to regional executives some of the authority they had lost.25 The challenges associated with devising the structure that is best suited to improving global sales can be seen in Procter & Gamble’s ambitious Organization 2005 plan. Initiated by then CEO Durk Jager in 1999, this reorganization entailed replacing separate country organizations with five global business units for key product categories such as paper products and feminine hygiene. A number of executives were reassigned; in Europe alone, 1,000 staff members were transferred to Geneva, Switzerland. Many managers, upset about the transfers and news that P&G intended to cut 15,000 jobs worldwide, quit the company, and the resulting upheaval cost Jager his job. To appease middle managers, new CEO A. G. Lafley restored some of the company’s previous geographic focus.26 The Matrix Design In the fully developed large-scale global company, product or business, function, area, and customer know-how are simultaneously focused on the organization’s worldwide marketing objectives. This type of total competence underlies the matrix organization. Management’s task in the matrix organization is to achieve an organizational balance that brings together different perspectives and skills to accomplish the organization’s objectives. “GE is managing its worldwide organization as a network, not a centralized hub with foreign appendages.”27 Christopher A. Bartlett, Emeritus professor, Harvard Business School In 1998, both Gillette and Ericsson announced plans to reorganize into matrix organizations. Ericsson’s matrix is focused on three customer segments: network operators, private consumers, and commercial enterprises.28 Gillette’s matrix structure separates product-line management from geographic sales and marketing responsibility.29 Likewise, Boeing has reorganized its commercial transport design and manufacturing engineers into a matrix organization built around five platform or aircraft model–specific groups. Previously, Boeing was organized along functional lines; the new design was expected to lower costs and accelerate updates and problem solving. It was also expected to unite essential design, engineering, and manufacturing processes between Boeing’s commercial transport factories and component plants, thereby enhancing product consistency.30 Why are executives at these and other companies implementing matrix designs? The matrix form of organization is well suited to global companies because it can be used to establish a multiplecommand structure that gives equal emphasis to functional and geographic departments. Professor John Hunt of the London Business School has suggested four considerations regarding the matrix organizational design. First, the matrix is appropriate when the market is demanding and dynamic. Second, employees must accept higher levels of ambiguity and understand that policy manuals cannot cover every eventuality. Third, in country markets where the commandand-control model persists, it is best to overlay matrices on only small portions of the workforce. Finally, management must be able to clearly state what each axis of the matrix can and cannot do, albeit without creating a bureaucracy.31 Having established that the matrix is appropriate, management can expect the matrix to integrate four basic competencies on a worldwide basis: 1. Geographic knowledge. An understanding of the basic economic, social, cultural, political, and governmental market and competitive dimensions of a country is essential. The country subsidiary is the major structural device employed today to enable the corporation to acquire geographic knowledge. 2. Product knowledge and know-how. Product managers with a worldwide responsibility can achieve this level of competence on a global basis. Another way of achieving global product competence is simply to duplicate product management organizations in domestic and international divisions, thereby achieving high competence in both organizational units. 3. Functional competence in such fields as finance, production, and, especially, marketing. Corporate functional staff with worldwide responsibility contribute to the development of functional competence on a global basis. In some companies, the corporate functional manager, who is responsible for the development of his or her functional activity on a global basis, reviews the appointment of country subsidiary functional managers. 4. A knowledge of the customer or industry and its needs. Certain large and extremely sophisticated global companies have staff with the responsibility for serving industries on a global basis to assist the line managers in the country organizations in their efforts to penetrate specific customer markets. Under the matrix arrangement, instead of designating national organizations or product divisions as profit centers, both are responsible for profitability—the national organization for country profits and the product divisions for national and worldwide product profitability. Figure 17-4 illustrates the matrix organization. This organizational chart starts with a bottom section that represents a single-country responsibility level, moves to representing the area or international level, and finally moves to representing global responsibility from the product divisions, to the corporate staff, to the chief executive at the top of the structure. Figure 17-4 The Matrix Structure At Whirlpool, North American operations are organized in matrix form. Whirlpool managers from traditional functions such as operations, marketing, and finance also work in teams devoted to specific products, such as dishwashers or ovens. To encourage interdependence and integration, the cross-functional teams are headed by “brand czars,” such as the brand chief for Whirlpool or Kenmore. As Whitwam explained, “The Whirlpool-brand czar still worries about the Whirlpool name. But he also worries about all the refrigerator brands that we make because he heads that product team. It takes a different mind-set.”32 The key to successful matrix management is ensuring that managers are able to resolve conflicts and achieve integration of organization programs and plans. The mere adoption of a matrix design or structure does not create a true matrix organization. Instead, evolution of a matrix organization requires fundamental changes in management behavior, organizational culture, and technical systems. In a matrix, influence is based on technical competence and interpersonal sensitivity, not on formal authority. Moreover, managers in a matrix culture recognize the absolute need to resolve issues and choices at the lowest possible level and do not rely on higher authority for making decisions. The matrix structure is not always appropriate, however. Indeed, some companies are moving away from the matrix in response to changing competitive conditions. Heineken and EMI are two examples; ABB is another.33 For nearly a decade, ABB was a matrix organized along regional lines. Local business units—factories that make motors or power generators, for example—reported both to a country manager and to a business area manager who set strategy for the whole world. This structure allowed ABB to execute global strategies while still thriving in local markets. But in 1998, new chairman Göran Lindahl dissolved the matrix. As the chairman explained in a press release, “This is an aggressive move aimed at greater speed and efficiency by further focusing and flattening the organization. This step is possible now thanks to our strong, decentralized presence in all local and global markets around the world.” In January 2001, Lindahl stepped down and his successor, Jorgen Centerman, revamped the organizational structure yet again. The new design was intended to improve the focus on industries and large corporate customers; Centerman wanted to ensure that all of ABB’s products were designed to the same systems standards. In 2002, with the chief executive under pressure to sell assets, ABB’s board replaced Centerman with Jürgen Dorman. Dorman stepped down in 2005 and was succeeded by Fred Kindle. Although ABB returned to profitability under his leadership, Kindle left after three years. The official reason: irreconcilable differences about the best way to lead the company. Michel Demaré, ABB’s chief financial officer, was named interim CEO. Then, in fall 2008, Joe Hogan was selected as ABB’s new CEO. Hogan, an American, was a 23-year veteran of GE whose most recent assignment had been running GE Healthcare. ABB’s board was impressed by Hogan’s performance at the U.S. industrial giant: During his 8 years at GE Healthcare, the unit’s sales more than doubled, from $7 billion to $18 billion. These results were due, in part, to several major acquisitions engineered by Hogan.34 By the time Hogan stepped down as CEO of ABB in 2013, he had made a number of acquisitions to position the company as a leader in industrial automation (see Exhibit 17-6). Exhibit 17-6 Industrial robots such as ABB’s YuMi are playing an increasingly important role in factories in China and elsewhere. Source: CTK/Alamy Stock Photo. In the twenty-first century, an important task of top management is to eliminate a onedimensional approach to decisions and to encourage the development of multiple management perspectives and an organization that will sense and respond to a complex and fast-changing world. The challenges facing Sony, discussed earlier, are a case in point. By thinking in terms of changing behavior rather than changing structural design, management can free itself from the limitations of the structural chart and focus instead on achieving the best possible results with the available resources. 17-3 Lean Production: Organizing The Japanese Way 1. 17-3 Discuss the attributes of lean production, and identify some of the companies that have been pioneers in this organizational form. In the automobile industry, a comparison of early craft production processes, mass production, and modern “lean” production provides an interesting case study of the effectiveness of new organizational structures in the twenty-first century.35 Dramatic productivity differences existed between craft and mass producers in the first part of the twentieth century. The mass producers—most notably Ford Motor Company—gained their substantial advantage by changing their value chains so that each worker was able to do far more work each day than was possible with the craft producers. The innovation that supported this workflow was the moving assembly line, which required the originators to conceptualize the production process in a totally new way. The assembly line also required a new approach to organizing people, production machinery, and supplies. By rearranging their value chain activities, the mass producers were able to achieve substantial reductions in effort compared with the craft producers. These productivity improvements provided an obvious competitive advantage. The advantage of the mass producers lasted until the Japanese auto companies further revised the value chain and created lean production, thereby gaining for themselves the kinds of dramatic competitive advantages that mass producers had previously gained over craft producers. For example, the Toyota Production System (TPS), as the Japanese company’s manufacturing methods are known, achieves efficiencies of approximately 50 percent over typical mass production systems. TPS is based on two concepts. First is jidoka, which involves visualizing potential problems. Jidoka also means that quality is built into the company’s vehicles during the manufacturing process. Just-in-time (JIT), the second pillar of the TPS, means that Toyota produces only what is needed, when it is needed, in the amount that is needed. Toyota’s training programs ensure that all employees understand the Toyota Way. Future factory workers attend the Toyota Technical Skills Academy in Toyota City, Japan. Executive training takes place at the Toyota Institute. Even with the reduced assembly time, the lean producer’s vehicles have significantly fewer defects than mass-produced vehicles. The lean producer also uses approximately 40 percent less factory space and maintains only a fraction of the inventory stored by the mass producer. Again, the competitive advantages conferred by these outcomes are obvious. Whether the strategy is based on differentiation or low cost, the lean producer has the advantage. To achieve these gains at Toyota, production gurus Taiichi Ohno and Shigeo Shingo challenged several assumptions traditionally associated with automobile manufacturing. First, they made changes to operations within the auto company itself, such as reducing setup times for machinery. The changes also applied to operations within supplier firms, as well as to the interfaces between Toyota and its suppliers and to the interfaces with distributors and dealers. Ohno and Shingo’s innovations have been widely embraced in the industry; as a result, individual producers’ value chains have been modified, and interfaces between producers and suppliers have been optimized to create more effective and efficient value systems. Assembler Value Chains Employee ability is emphasized in a lean production environment. Before being hired, people seeking jobs with Toyota participate in the Day of Work, a 12-hour assessment test to determine who has the right mix of physical dexterity, team attitude, and problem-solving ability. Once hired, workers receive considerable training to enable them to perform any job in their section of the assembly line or area of the plant, and they are assigned to teams in which all members must be able to perform the functions of all other team members. Workers are also empowered to make suggestions and to take actions aimed at improving quality and productivity. Quality control is achieved through kaizen, a devotion to continuous improvement that ensures every flaw is isolated, examined in detail to determine the ultimate cause, and then corrected. Mechanization, and particularly flexible mechanization, is a hallmark of lean production. For example, a single assembly line in Georgetown, Kentucky, that produces Toyota’s Camry sedan also produces the Sienna minivan. The Sienna and Camry share the same basic chassis and 50 percent of their parts. Of the 300 different stations on the line, only 26 stations require different parts to assemble minivans. Similarly, Honda has invested hundreds of millions of dollars to introduce flexible production technology in its U.S. plants. In an era of volatile gasoline prices and fluctuating exchange rates, production flexibility becomes a source of competitive advantage. For example, when the weak dollar put pressure on margins for vehicles imported into the United States, Honda shifted production of CR-V crossovers from the United Kingdom to a plant in Ohio. Within a matter of minutes, Honda can switch from producing Civic compacts to CR-V crossovers as demand or other market conditions dictate.36 In contrast to the lean producers, U.S. mass producers typically maintain operations with greater direct labor content, less mechanization, and much less flexible mechanization. They also divide their employees into a large number of discrete specialties with no overlap. Employee initiative and teamwork are not encouraged. In addition, quality control is expressed as an acceptable number of defects per vehicle. Even when the comparisons are based on industry averages, the Japanese lean producers continue to enjoy substantial productivity and quality advantages. Again, these advantages put the lean producers in a better position to exploit low-cost or differentiation strategies. They are getting better productivity out of their workers and machines, and they are making better use of their factory floor space. The relatively small size of the repair area reflects the higher quality of their products. A high number of “suggestions per employee” provides some insight into why lean producers outperform mass producers. First, they invest a great deal more in the training of their workers. They also rotate all workers through all jobs for which their teams are responsible. Finally, all workers are encouraged to make suggestions, and management acts on those suggestions. These changes to the value chain translate into major improvements in the value of the lean producers’ products. It should come as no surprise that many of the world’s automakers studied lean production methods and introduced them in both existing and new plants throughout the world. In 1999, for example, General Motors (GM) announced plans to spend nearly $500 million to overhaul its Adam Opel plant in Germany. Pressure for this change came from several sources, including increasingly intense rivalry in Europe’s car market, worldwide overcapacity, and a realization that price transparency in the euro zone would exert downward pressure on prices. GM’s goal was to transform the plant into a state-of-the-art lean production facility with a 40 percent workforce reduction. As GM Europe president Michael J. Burns said at the time, “Pricing is more difficult today. . . . You have to work on product costs, structural costs. . . everything.”37 Even so, despite nearly two decades of investment in new models and new, cleaner engines, GM’s European business was a money loser. In 2017, GM sold the Opel business to Peugeot. Downstream Value Chains The differences between lean producers and U.S. mass producers in the way they deal with their respective dealers, distributors, and customers are as dramatic as the differences in the way they deal with their suppliers. U.S. mass producers follow the basic industry model and maintain an “arm’s-length” relationship with dealers that is often characterized by a lack of cooperation and even open hostility. There is often no sharing of information because there is no incentive to do so. In many cases, the manufacturer tries to force on the dealer models that the dealer knows will not sell. The dealer, in turn, often tries to pressure the customer into buying a model he or she does not want. All parties are trying to hide information about what they really want from their supposed partners. This kind of disingenuous behavior does little to ensure that the industry is responsive to market needs. The problem starts with the market research, which is often in error. The faulty research is compounded by lack of feedback from dealers regarding real customer desires. Matters continue to worsen when the product-planning divisions make changes to the models without consulting the marketing divisions or the dealers. This process invariably results in production of models that are unpopular and almost impossible to sell. The manufacturer then uses incentives and other schemes, such as making a dealer accept one unpopular model for every five hot-selling models it orders, to persuade the dealers to market the unpopular models. The dealer then has the problem of persuading customers to buy the unpopular models. Within the mass assembler’s value chain, the linkage between the marketing elements and the product planners is broken. The external linkage between the sales divisions and the dealers is also broken. The production process portion of the value chain is broken as well, in that it relies on the production of thousands of models that won’t sell and that will then sit on dealer lots, at enormous cost, while the dealer works to find customers. Within the dealerships, there are even more problems. The relationship between the salesperson and the customer is based on sparring and trying to outsmart each other on price. When the salesperson gets the upper hand, the customer gets stung. It is very much like the relationship between the dealer and the manufacturer. Each is withholding information from the other party in the hope of outsmarting the other. Too often, salespeople do not investigate customers’ real needs and try to find the best product to satisfy those needs. Rather, they provide only as much information as is needed to close the deal. Once the deal is closed, the salesperson has essentially no further contact with the customer. No attempt is made to optimize the linkage between dealers and manufacturers or the linkage between dealers and customers. The contrast with the lean producer is again striking. In Japan, the dealer’s employees are true product specialists. They know their products and deal with all aspects of those products, including financing, service, maintenance, insurance, registration and inspection, and delivery. A customer deals with one person in the dealership, and that person takes care of everything from the initial contact through eventual trade-in and replacement and all the problems in between. Further, dealer representatives are included on the manufacturer’s product development teams and provide continuous input regarding customer desires. The linkages between dealers, marketing divisions, and product development teams are totally optimized. The stress caused by large inventories of unsold cars is also absent. A car is not built until a customer places an order for it. Each dealer has only a stock of models for the customer to view. Once the customer has decided on the car he or she wants, the order is sent to the factory and in a matter of weeks, the salesperson delivers the car to the customer’s house. Once a Japanese dealership gets a customer, it is absolutely determined to hang on to that customer for life. It is also determined to acquire all of that customer’s family members as customers. A joke among the Japanese says that the only way to escape the salesperson who sold a person a car is to leave the country. Japanese dealers maintain extensive databases on actual and potential customers; the databases include both demographic data and preference data. Customers are encouraged to help keep the information in the database current, and they do so. This extensive store of data becomes an integral part of the market research effort and helps ensure that products match customer desires. There are no inventories of unpopular models because every car is custom ordered for each customer. This factor, combined with the dealer’s detailed data on the needs and desires of its customers, changes the whole nature of the interaction between the customer and the dealer. The customer decides which car she or he wants and can afford, and the company then builds that car to order. There is no need for the salesperson and the customer to try to outsmart each other. The differences between U.S. mass producers and Japanese lean producers reflect their fundamental differences in business objectives. U.S. producers focus on shortterm income and return on investment. Today’s sale is a discrete event that is not connected to upstream activities in the value chain and has no value in tomorrow’s activities. Efforts are made to reduce the cost of the sales activities. In contrast, Japanese automakers see the process in terms of the long-term perspective. There are two major goals of the sales process: to maximize the income stream from each customer over time, and to use the linkage with the production processes to reduce production and inventory costs and to maximize quality and therefore differentiation. 17-4 Ethics, Corporate Social Responsibility, and Social Responsiveness in the Globalization Era 1. 17-4 List some of the lessons regarding corporate social responsibility that global marketers can take away from Starbucks’ experience with Global Exchange. Today’s chief executive must be a proactive steward of the reputation of the company he or she is leading. This entails, in part, understanding and responding to the concerns and interests of a variety of stakeholders. A stakeholder is any group or individual that is affected by, or takes an interest in, the policies and practices adopted by an organization.38 Top management, employees, customers, persons or institutions that own the company’s stock, and suppliers constitute a company’s primary stakeholders. Secondary stakeholders include the media, the general business community, local community groups, and nongovernmental organizations (NGOs). NGOs focus on human rights, political justice, and environmental issues; examples include Global Exchange, Greenpeace, Oxfam, and others. Stakeholder analysis is the process of formulating a “win–win” outcome for all stakeholders.39 U2 singer Bono and Bobby Shriver are cofounders of Product (RED), a partnership with well-known global companies to raise money to fight disease in Africa. Apple, American Express, Emporio Armani, Converse, Gap, and Motorola all offer (RED)-themed merchandise and services to their customers. The partners are demonstrating their commitment to corporate social responsibility by pledging to donate a percentage of the profits generated to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. To launch its (RED) line, Gap’s advertising campaign used celebrities and one-word headlines consisting of verbs that end in “-red.” For example, one ad featured the word “INSPI(RED)” superimposed over a photo of director Steven Spielberg wearing a Product (RED) leather jacket (see Exhibit 17-7). Exhibit 17-7 Product (RED) has a number of stakeholders, including the companies that market (RED)branded products, the customers who buy them, and the people who benefit from the funds raised. To date, the initiative has raised $500 million to fight disease in Africa. Source: Tony Cenicola/The New York Times/Redux Pictures. The leaders of global companies must practice corporate social responsibility (CSR), which can be defined as a company’s obligation to pursue goals and policies that are in society’s best interests. A key issue for a company contemplating its CSR is whose interests come first. That is, how does a company find the right balance between competing points of view? Peter Brabeck, former chairman and CEO of Nestlé, summarized the situation this way: “The unique role of business is to create social, economic and environmental value for the countries where we operate.”40 Organizations can demonstrate their commitment to CSR in a variety of ways, including cause-marketing efforts or a commitment to sustainability. Subaru, a unit of Japan’s Fuji Heavy Industries, enjoys strong demand in North America for its Crosstrek hatchback and Forester SUV. Subaru’s Indiana plant currently produces 400,000 vehicles per year; part of the brand’s appeal is its reputation for eco-awareness and family-friendly values. The company maintains a zero landfill approach to manufacturing (see Exhibit 17-8). Exhibit 17-8 The Subaru nameplate is synonymous with the brand’s Symmetrical All-Wheel Drive and Partial Zero Emissions Vehicle (PZEV) engineering. The company’s U.S. assembly plant, Subaru of Indiana Automotive, Inc., has been awarded ISO 140001 and ISO 50001 certification for its energy management systems and environmental management systems. Source: Subaru of America. In some companies, such policies play an important internal role with primary stakeholders, especially employees drawn from the ranks of Generation Y. As Kevin Havelock, president of refreshment at Unilever, has noted: We are seeing, particularly with the new generation of young businesspeople and young marketers, that they are only attracted to companies that fit with their own value set. And the value set of the new generation is one that says this company must take a positive and global view on the global environment. . . . The ethical positions we take on brands like Dove, the positions we take on not using [fashion] models of size zero across any of our brands, the positions we take in terms of adding back to communities. . . these all underpin an attractive proposition for marketers.41 Similarly, Starbucks founder and CEO Howard Schultz’s enlightened human resources policies have played a key part in the company’s success. Partners, as the company’s employees are known, who work 20 hours or more per week are offered health benefits; partners can also take advantage of an employee stock option plan known as Bean Stock. As noted on the company’s Web site: Consumers are demanding more than “product” from their favorite brands. Employees are choosing to work for companies with strong values. Shareholders are more inclined to invest in businesses with outstanding corporate reputations. Quite simply, being socially responsible is not only the right thing to do; it can distinguish a company from its industry peers. Schultz takes advantage of every opportunity to repeat his message. In interviews and personal appearances, CSR is a constant theme. Here’s a typical example, from a 2005 interview with Financial Times: Perhaps we have the opportunity to be a different type of global company, a global brand that can build a different model, a company that is a global business, that makes a profit, but at the same time demonstrates a social conscience and gives back to the local market.42 As noted in Chapter 1, one of the forces restraining the growth of global business and global marketing is resistance to globalization. In a wired world, a company’s reputation can quickly be tarnished if activists target its policies and practices. The antiglobalization movement constitutes an important secondary stakeholder for global companies; this movement takes a variety of forms and finds expression in various ways. In developed countries, its concerns and agenda include cultural imperialism (e.g., the French backlash against McDonald’s), the loss of jobs due to offshoring and outsourcing (e.g., the furniture industry in the United States), and a distrust of global institutions (e.g., anti-globalization protests). “Coke has become a whipping boy for globalization, just as Nike and McDonald’s have been for years.”43 Tom Pirko, president, BevMark In developing countries, globalization’s opponents accuse companies of undermining local cultures, placing intellectual property rights ahead of human rights, promoting unhealthy diets and unsafe food technologies, and pursuing unsustainable consumption.44 Environmental degradation and labor exploitation are also key issues for activists (see Exhibit 17-9). Exhibit 17-9 Designer Stella McCartney created one of the fashion world’s first socially conscious luxury brands. She does not use fur or leather as materials in her collections; also, McCartney is an advocate for a “circular economy” that reduces energy use and minimizes waste. Source: Victor VIRGILE/Gamma-Rapho via Getty Images. In a socially responsible firm, employees conduct business in an ethical manner. In other words, they are guided by moral principles that enable them to distinguish between right and wrong. At many companies, a formal statement or code of ethics summarizes core ideologies, corporate values, and expectations. GE, Boeing, and United Technologies Corp. are some of the American companies offering training programs that specifically address ethics issues. For many years, Jack Welch, the legendary former CEO of GE, challenged his employees to take an informal “mirror test.” The challenge: “Can you look in the mirror every day and feel proud of what you’re doing?”45 Today, GE uses more formal approaches to ethics and compliance; it has produced training videos and instituted an online training program, and also provides employees with a 64-page guide to ethical conduct titled The Spirit & The Letter. The document provides guidance on potentially illegal payments, security and crisis management, and other issues. At Johnson & Johnson (J&J), the ethics statement is known as “Our Credo”; first introduced in 1943, the credo has been translated into dozens of languages for Johnson & Johnson employees around the world (see Figure 17-5 and the Appendix at the end of this chapter). As management guru Jim Collins notes in his book Built to Last, J&J’s credo is a “codified ideology” that guides managerial actions. J&J operationalizes the credo in various ways, including through its organizational structure and its planning and decision-making processes. The credo also serves as a crisis management guide. For example, during the Tylenol crisis of the early 1980s, J&J’s adherence to the credo enabled the company to mount a swift, decisive, and transparent response to what might have been a devastating blow to its business. Figure 17-5 Johnson & Johnson Credo Johnson & Johnson’s credo is woven into the fabric of the company’s organizational structure, planning and decision-making processes. The credo also serves as a crisis management guide. Source: Courtesy of Johnson & Johnson. As we have seen, the issue of corporate social responsibility becomes complicated for the global company with operations in multiple markets. When the chief executive of a global firm in a developed country or government policymakers attempt to act in “society’s best interests,” the question arises: Which society? That of the home-country market (see Exhibit 17-10)? Other developed countries? Developing countries? For example, in the late 1990s, in an effort to address the issue of child labor, the U.S. government threatened trade sanctions against the garment industry in Bangladesh. Thousands of child workers lost their jobs, and their plight worsened. Whose interests were served by this turn of events? In addition, as noted in Chapter 1, companies that do business around the globe may be in different stages of evolution. Thus, a multinational firm may rely on individual country managers to address CSR issues on an ad hoc basis, while a global or transnational firm may create a policy at headquarters. Exhibit 17-10 New Balance Athletic Shoe is the only major footwear company in the United States that manufactures athletic shoes domestically. Management believes that creating jobs at home is an important aspect of corporate citizenship. As a company spokesman has noted, if maximizing profit were the sole objective, it would be more advantageous to source shoes in low-wage countries. This corporate image print ad encourages other U.S. companies to follow New Balance’s example. Source: New Balance Athletic, Inc. Consider the following facts: • The fashion industry has come under fire from critics who allege poor working conditions are rampant in the factories that make clothes for well-known brands. • Walmart has been the target of criticism for a variety of reasons. In particular, activists have targeted the company, urging management to pay higher wages to hourly employees. Walmart CEO Doug McMillan has responded by raising the minimum wages of its employees and launching a number of ecofriendly initiatives. • CEO pay in the United States is rising faster than average salaries and much faster than inflation. A study by the Economic Policy Institute found that, in 2016, CEOs were paid 271 times more than the average worker. 46 What is the best way for a global firm to respond to such issues? Table 17-3 provides several examples. Using Starbucks as a case study, Paul A. Argenti explains how global companies can work collaboratively with NGOs to arrive at a “win–win” outcome. As previously noted, with no external prompting, Starbucks CEO Schultz uses enlightened compensation and benefits packages to attract and retain employees. Despite the fact that Starbucks is widely admired for such forward-thinking management policies, Global Exchange pressed the company to further demonstrate its commitment to social responsibility by selling Fair Trade coffee. Schultz was faced with three options: ignore Global Exchange’s demands, fight back, or capitulate. In the end, Schultz pursued a middle ground: He agreed to offer Fair Trade coffee in Starbucks’ company-owned U.S. stores. He also launched several other initiatives, including establishing long-term, direct relationships with suppliers. Argenti offers seven lessons from the Starbucks case study:47 • Realize that socially responsible companies are likely targets but also attractive candidates for collaboration. • Don’t wait for a crisis to collaborate. • Think strategically about relationships with NGOs. • Recognize that collaboration involves some compromise. • Appreciate the value of the NGOs’ independence. • Understand that building relationships with NGOs takes time and effort. • Think more like an NGO by using communication strategically. Table 17-3 Global Marketing and Corporate Social Responsibility Company Nature of CSR Initiative (Headquarters Country) *Edward Luce, “IKEA’s Grown-up Plan to Tackle Child Labor,” Financial Times (September 15, 2004), p. 7. Company Nature of CSR Initiative (Headquarters Country) IKEA (Sweden) IKEA’s primary carpet supplier in India monitors subcontractors to ensure that they do their indebtedness to moneylenders. In an effort to create a more child-friendly environ literacy so young people—including girls and untouchables—can enroll in regular scho Avon (United States) The company’s Breast Cancer Awareness Crusade has raised hundreds of millions of Subaru (Japan) Subaru’s assembly plant in Indiana is the first “zero landfill” auto plant in the United Sta recycled. Subaru also partners with key organizations such as the Leave No Trace Cen brand. In an article in Business Ethics Quarterly, Arthaud-Day proposed a three-dimensional framework for analyzing the social behavior of international, multinational, global, and transnational firms.48 These different stages of development constitute the first dimension. The second dimension of the model includes CSR’s three “content domains”: human rights, labor, and the environment. These are the universal concerns for global companies established by the United Nations Global Compact. The third dimension in Arthaud-Day’s framework consists of three perspectives. The ideological dimension of CSR pertains to the things a firm’s management believes it should be doing; the societal dimension consists of the expectations held by the firm’s external stakeholders; and the operational dimension includes the actions and activities actually taken by the firm. The interactions among the dimensions can result in several conflict scenarios. Conflict may arise if there is an incongruity between those things a company’s leadership believes it should be doing and the expectations of stakeholders. Conflict can also arise when there is an incongruity between those things a company’s leadership believes it should be doing and the things it actually is doing. Finally, conflict can arise from an incongruity between society’s expectations and actual corporate practices and activities. Summary To respond to the opportunities and threats in the global marketing environment, organizational leaders must develop a global vision and strategy. Leaders must also be able to communicate that vision throughout the organization and build core competencies on a worldwide basis. Global companies are increasingly realizing that the “right” person for a top job is not necessarily a home-country national. In organizing for the global marketing effort, the goal is to create a structure that enables the company to respond to significant differences in international market environments and to extend valuable corporate knowledge. Alternatives include an international division structure, regional management centers, geographic structure, regional or worldwide product division structure, and the matrix organization. Whichever form of organization is chosen, balance between autonomy and integration must be established. Many companies are adopting the organizational principle of lean production that was pioneered by Japanese automakers. Many global companies are paying attention to the issue of corporate social responsibility (CSR). A company’s stakeholders may include nongovernmental organizations (NGOs); stakeholder analysis can help identify others. Consumers throughout the world expect that the brands and products they buy and use will be marketed by companies that conduct business in an ethical, socially responsible way. Socially conscious companies should include human rights, labor, and environmental issues in their agendas. These values may be spelled out in a code of ethics. Ideological, societal, and organizational perspectives can all be brought to bear on CSR. Discussion Questions 1. 17-1. Are top executives of global companies likely to be home-country nationals? 2. 17-2. In a company involved in global marketing, which activities should be centralized at headquarters and which should be delegated to national or regional subsidiaries? 3. 17-3. “A matrix structure integrates four competencies on a worldwide scale.” Explain. 4. 17-4. In the automobile industry, how does “lean production” differ from the traditional assembly-line approach? 5. 17-5. Identify some of the ways the global companies discussed in this text demonstrate their commitment to CSR. 6. Case 17-1 (Continued refer to page 548) Unilever 7. After Cescau was elevated to the top job, Unilever’s board streamlined the company’s management structure. Now there is a single chief executive; previously, there had been one in Rotterdam and one in London. Cescau asserted that, with a single chief executive, the need for consensus was replaced by speed at making decisions. As noted, many of those decisions concerned “doing good.” However, some observers were skeptical of Cescau’s determination to operationalize a responsible business philosophy. Cescau recalled, “The company was not doing well. There was an article saying that I was draping myself in a flag of corporate social responsibility to excuse poor performance. I was so angry with that.” 8. Cescau’s commitment was put to the test in 2008, his final year as CEO. Greenpeace launched an advertising campaign alleging that Unilever’s purchases of Indonesian palm oil were contributing to rain forest destruction. Palm oil, a key ingredient in Dove soap, Magnum ice cream bars, and Vaseline lotion, comes from oil palm trees that grow in Indonesia and Malaysia. Unilever is the world’s biggest palm oil customer, buying approximately 1.4 million tons each year. Rising world prices for the commodity prompted Indonesian farmers to cut down large swaths of old-growth rain forest and plant fast-growing oil palms. Specifically, Greenpeace identified the operations of Sinar Mas, an Indonesian company that is a major palm oil supplier, as contributing to deforestation. 9. The media strategy for the Greenpeace campaign included newspaper ads in London and a video on YouTube. Fliers parodied Unilever’s Campaign for Real Beauty; for example, they showed pictures of orangutans juxtaposed with the headline “Gorgeous or gone?” John Sauven, executive director of Greenpeace, explained why his organization had targeted Unilever: “Everyone has heard of those brands. They are the public face of the company” (see Exhibit 17-11). 10. Exhibit 17-11 11. Unilever has been targeted by activist groups concerned about sustainability issues. For example, palm oil is a key ingredient in several of Unilever’s brands, but orangutan habitat in Indonesia has been cleared to make room for oil palm plantations. Greenpeace and other NGOs have staged protests; here, an activist dressed as an orangutan is shown outside Unilever House in London. Unilever has pledged that, by 2020, all its palm oil will come from sustainable sources. 12. Source: Stephen Hird/Reuters. Cescau responded by calling for a moratorium on rain forest destruction by Indonesian oil producers. The Unilever chief also pledged that his company would buy palm oil only from producers who could prove that the rain forest had not been sacrificed in the production process. The move allied Unilever with the Roundtable on Sustainable Palm Oil (RSPO), an organization that certifies palm oil producers. A Unilever spokesperson also indicated that the proposed change in Unilever’s palm oil sourcing strategy had been in the works for months. Nevertheless, Greenpeace and other NGOs claimed victory. Unilever brought its message to the public with a print ad campaign featuring the headline “What you buy in the supermarket can change the world.” The body copy outlined Unilever’s pledge that “by 2015 all our palm oil will come from sustainable sources.” The ads ended with the tagline “Small actions, big difference.” By 2011, however, only 2 percent of Unilever’s palm oil purchases were coming from traceable sources. Even so, as chief procurement officer Marc Engel said, “I’m not aware of anyone else who has made that commitment, particularly on our scale.” In an effort to achieve its goals, Unilever began buying GreenPalm certificates, which are sold by growers certified by the RSPO. “Doing well” is also part of the leadership equation at Unilever. Cescau understood the importance of improving Unilever’s profitability. To this end, he continued a restructuring drive that was initiated by his predecessor, co-chairman Niall FitzGerald. Specific actions included reducing Unilever’s bureaucracy by removing several management layers. Cescau also reduced the top management head count from 25 people to 7 and narrowed the vertical distance between management and marketing. In addition, the company shed hundreds of brands and closed dozens of factories in France, Germany, and elsewhere. In Cescau’s view, the new, leaner structure would translate into a more rapid response to changing market trends and consumer preferences and ensure quicker rollouts of new products. Cescau also bet heavily on emerging markets to jump-start sales growth. Rising incomes mean that many people purchase consumer packaged goods for the first time. One scenario: As increasing numbers of people in developing countries buy their first washing machines, they will need to buy laundry detergent. To capitalize on such trends, Cescau shifted budgetary resources out of mature markets such as Europe, instead using those funds to support research in India and other emerging markets. Brand managers were instructed to innovate by taking a “clean slate” approach to developing new products for emerging markets. As Steph Carter, packaging director for deodorant brands, noted, “Traditionally, we would have taken existing products and then tried to fathom how to adapt them for the developing world. Our thinking has changed.” The Polman Decade Begins Paul Polman took over as CEO in January 2009; a former Nestlé executive, he was the first outsider to lead Unilever in its 80-year history. In his first months on the job, Polman initiated a shift in Unilever’s core strategy. In the past, the company had generated sales growth by increasing prices. Noting that this was the wrong strategy for recessionary times, Polman said the new priority would be to increase sales volumes. The change entailed some risk: Holding the line on prices could put pressure on margins, given the trend of rising costs for the agricultural commodities that are key ingredients in Unilever’s products. Polman was also keenly aware that many budget-conscious shoppers were choosing less expensive, private-label supermarket products instead of well-known name brands. Polman vowed to improve product quality across the board and to boost marketing and advertising spending. To support the increased investment, he accelerated some of the cost-cutting measures that his predecessor had initiated. For example, the timetable for planned factory closures and job cuts was moved up; Polman also froze executive salaries and changed the bonus policy. He established 30-day action plans for managers of brands with flagging sales. He also replaced nearly one-third of Unilever’s top 100 executives, including the chief marketing officer. When it came to demonstrating Unilever’s commitment to its customers, Polman sent clear signals to his employees. He spent about 50 percent of his time on the road, with regular stops in Asia, Latin America, and, of course, Europe. In a recent interview, he noted that he would meet with consumers in every country that he visited. Polman believes strongly that the leader must set an example from the top of the organization. That passion is evident in a flurry of marketing activities orchestrated by Polman. One is the quick pace of new-product rollouts, especially in emerging markets. For example, Unilever’s home care unit was the first to market with liquid laundry detergent in China; it also introduced a dishwashing liquid in Turkey in less than 30 days. In addition, innovation has become a key element for shoring up the value proposition of Unilever’s brands, with existing brands such as Surf laundry detergent getting an upgrade in the African market. Driving growth in the personal-care category has been another priority for Polman. By itself, the global deodorant segment represents an estimated $17 billion in annual sales. To tap into that market, the Dove brand has been extended to men’s products. Dove for Men has been rolled out in dozens of countries. Meanwhile, Dove’s product managers devised a new strategy for persuading women to switch deodorant brands. Dove Ultimate Go Sleeveless resulted from company research designed to discover insights about consumer attitudes toward underarms. What the researchers learned is that 93 percent of women think their armpits are not attractive. Dove Ultimate Go Sleeveless is formulated with moisturizers that, the company claims, will result in nicer-looking underarms after just a few days’ use. The ice cream and beverage unit is also on the move. Unilever’s Magnum brand premium ice cream bars are the world’s top-selling ice cream novelty. Although Magnum enjoys great popularity in Europe, it was not introduced in the United States until 2011. Häagen-Dazs and Mars were already entrenched in the market; undaunted, the Magnum marketing team is confident its brand will stand out. One manager explained that an important part of the brand’s equity is the loud cracking sound heard when someone bites through Magnum’s thick chocolate shell. It must be helping: In its first year on the U.S. market, Magnum rang up $100 million in sales. Between 2015 and 2017, Polman presided over an ambitious schedule of mergers and acquisitions. Many of the 18 acquisitions represented relatively small investments in fast-growing niche businesses. Case in point: Unilever paid $1 billion for Dollar Shave Club, the upstart e-commerce company offering personal products by subscription that disrupted a sleepy consumer category dominated by Gillette. Other investments such as Carver Korea are bringing Unilever into regional and local markets around the globe. Meanwhile, Unilever itself became the target of a takeover bid. Polman turned down Kraft Heinz’s offer of £115 billion ($143 billion) on the grounds that the bid “drastically undervalued” Unilever’s assets. Analysts wondered whether Unilever’s new CEO would seek a major acquisition such as Colgate-Palmolive or Estée Lauder. And, as Brexit talks continued, Unilever postponed the decision regarding streamlining its corporate structure. For years, the company commonly known as the “Anglo-Dutch consumer products giant” consisted of two parent companies and headquarters locations in both London and Rotterdam. In addition, Unilever stock was listed on two separate European exchanges. This dual structure was due in part to differing regulations in the United Kingdom and the Netherlands concerning taxation of investor dividends. By 2017, as the Dutch government undertook tax reform to attract more foreign investment, top management at Unilever prepared to shift to a unified structure headquartered in one country only. The question was: Which one? Renewing the Commitment to Sustainability Even while overseeing these and other management and marketing activities, Polman has made sure that former CEO Cescau’s commitment to corporate social responsibility is maintained. Summarizing his views on sustainability and environmental impact, Polman said: [T]he road to well-being doesn’t go via reduced consumption. It has to be done via more responsible consumption. . . . So that’s why we’re taking such a stand on moving the world to sustainable palm oil. That’s why we work with small-hold farmers, to be sure that people who don’t have sufficient nutrition right now have a chance to have a better life. In 2012, Unilever announced plans to build a $100 million palm oil processing plant in Indonesia. Having a company-controlled plant near the source should make the task of tracing oil to sustainable sources easier. It is currently common practice at processing plants to combine oil from different sources—both sustainable and not—in the same vat. That makes it difficult to trace any individual batch of oil to its origins. Marc Engel, chief supply chain officer, draws an analogy between palm oil processing and crude oil processing used to make gasoline. “When you actually want to know where the gas in your car is coming from—from which oil well—it’s very hard to see,” he says. To hedge its bets, Unilever has also invested in Solazyme, a California-based company that produces oil from algae. What kind of potential does this technology hold? “We’ve made all kinds of food products,” says Solazyme CEO and cofounder Jonathan Wolfson. “We’ve used the oil for frying. We’ve made mayonnaises, ice creams. And they work, taste good and are functional.” Discussion Questions 1. 17-6. If a company such as Unilever has to make trade-offs between being a good corporate citizen and making a profit, which should be the higher priority? 2. 17-7. Assess Cescau’s response to the Greenpeace palm oil protest. Was it appropriate? Which types of relationships should Unilever cultivate with Greenpeace and other NGOs in the future? 3. 17-8. Do you think that a streamlined management structure and emphasis on emerging markets and niche acquisitions will help a big company like Unilever increase revenue growth by a significant amount? Or, will a much larger acquisition be required? 4. 17-9. As you read this, has Unilever decided on a single headquarters country? If so, which one, and why? Sources: Saabira Chaudhuri, “Nipped by Upstarts, Unilever Decides to Imitate Them,” The Wall Street Journal (January 3, 2018), pp. A1, A8; Scheherazade Daneshkhu, “Unilever Uses Deals Strategy to Enter Niche Markets,” Financial Times (December 1, 2017), p. 18; Michael Skapinker and Scheherazade Daneshkhu, “Man on a Mission,” Financial Times (October 1–2, 2016), p. 20; Paul Sonne, “Unilever Takes Palm Oil in Hand,” The Wall Street Journal (April 24, 2012), p. B3; Louise Lucas, “Growing Issue for Palm Oil Producers,” Financial Times (May 23, 2011), p. 22; Ellen Byron, “Unilever Takes on the Ugly Underarm,” The Wall Street Journal (March 30, 2011), p. B1; Paul Sonne, “To Wash Hands of Palm Oil, Unilever Embraces Algae,” The Wall Street Journal (September 7, 2010), p. B1; Louise Lucas, “Investors Skeptical as Unilever Pursues Bold Growth Plan,” Financial Times (November 16, 2010), p. 20; Stefan Stern, “The Outsider in a Hurry to Shake up His Company,” Financial Times (April 5, 2010), p. 4; Jenny Wiggins, “Unilever Vows to Focus on Cheaper Products,” Financial Times (August 7, 2009), p. 17; Jenny Wiggins, “Unilever’s New Chief Prepares to Brew up Changes,” Financial Times (February 6, 2009), p. 15; Michael Skapinker, “Taking a Hard Line on Soft Soap,” Financial Times (July 7, ...
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