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BUS ADM/GLOBAL 541 – Case Study #4
“United Cereal: Lora Brill’s Eurobrand Challenge”
Case Questions
Question #1: United Cereal Europe (led by Lora Brill) is a subsidiary of United Cereal
serving European countries. Which of the following describes the structure of United Cereal
Europe before the proposed organization change and why? Use examples from the case the
demonstrate the advantages and disadvantages associated with such a design.
• Global product design
• Global function design
• Global area design
(15 points)
What the Europe Division was using before the proposed organization change was global area
design. The reason this was the design I assumed they used was because “cold meats and cheese
in the Netherlands, pastries in Greece, bacon and eggs in britain and croissants in France”.
Advantages:
Global division mangers are responsible for all business operations in designated geographic
area: This means that “UC to establish national subsidiaries, each by a country manager who
operated with wide latitude to make product and marketing decisions that would maximize the
subsidiary local profit”. This means that the geographical CM is responsible for everything that
goes on in their region. Also, “CMs were able to customize products, adjust manufacturing
processes, and adapt advertising and promotions, they had to do so while respecting the UC
way”.
Disadvantages:
Difficult to reconcile a product emphasis with geographic orientation: This approach “led to a
strong penetration in most national markets.. over time wide differences in product profiles and
market strategies became problematic”. The different nations were selling extremely different
products, which became hard to distinguish.
Division manager may pursue currently attractive geographic prospects and neglect others with
long-term potential: In the case “the companys focus on local products and markets in the UK,
with its need for significant marketing and product development teams in each country, had lead
to a situation where sales, expenses were 25% higher than the U.S operations”. Meaning that
they neglected the U.S markets.
Question #2: The “brand management” system (refer to page 2 of the case) pioneered by
United Cereal (Note: the entire UC company) is an example of which of the following
organizational design?
• Global product design
• Global function design
• Global area design
Based on the case, what are the advantages associated with this design? (10 points)
The Brand Management was focused on the global product design: Managers must comprehend
such factors as technological trends, customer needs, and competitive forces affecting the goods
the firm produces and sells. (according to lecture).
The reason why I came to the conclusion that this was the design is because, “through
continuous innovation in marketing and product development, many of its products remained
market leaders despite being more than half a century old”. Therefore they were divided into
products and different managers were in charge of different products. Another give away that
they used product design was the fact that R&D was effectively used.
Advantages:
Provides a direct line of communication from customer: One of their phrases was “Listen to the
customer” saying that it “was deeply rooted belief that led UC to become a pioneer in the use of
customer research and focus groups”. Meaning that they had a direct line or correlation with the
consumers in order to enhance their products.
Helps R&D to work on development of products that serve the world customer:”During its 100
year R&D labs had secured more product and process patents than any of other competitor”. This
allowed them to expand their R&D department and make it more value to the customer
compared to any of their competitors.
Question #3: With regards to their marketing strategy, which of the following approaches
(refer to Chapter 5 Strategic Predispositions for definitions) did United Cereal Europe
utilize in marketing its products in Europe?
• Ethnocentric
• Polycentric
Provide at least one example to support your answer for each of the following 3 “P’s” –
Product, Pricing, and Promotion. Use examples from the case to illustrate the problems
associated with such a marketing approach. (10 points)
The approach that I think UC Europe utilized is the polycentric approach. The reason why I
think they used this approach is because polycentric is:
“A company following this orientation gives an equal importance to every country’s
domestic market, as there is a belief in uniqueness of every market and its need to be
addressed in an individual way. “The plans are devised to operate through individually
established businesses, i.e. either by wholly owned subsidiaries or through marketing
subsidiaries, separately in each country, allowing complete autonomy to units to operate as
separate profit centres independent of head office” (Paul, 2008).When following this
approach a company has to be a leader in technological leadership, produce high quality
products or its production costs should be very low. It can also concentrate its attention on
foreign markets which have similar consumer needs and conditions similar to domestic
market” (eleedan.com).
They organized their products to certain regions based on what was popular there. Meaning
that they valued the customer decision instead of just doing what the U.S did.
Product: “had been overlaid by a variety of national tastes and breakfast traditions - cold
meats and cheese in the Netherlands, pastries in Greece, bacon and eggs in Britain and
croissants in France”. Reinforcing that the products changed based on what the customers
want and the flavor in that country.
Problem: Spending too much time on that one country and what product fits the demographic
best. A lot of research that goes into just one region.
Price: The prices varied in different countries based on what the item and currency of that
country was “Mother Hubbards Pies resulted in it being offered as a high-end dessert in
Germany, while in the UK it was priced aggressively and positioned as ‘a convenient
everyday treat”’.
Problem: Higher prices of products due to the high investments in the R&D of foreign
markets and adoption of needs to those foreign countries. Prices vary per country.
Promotions: Each CM was in charge of the way that product was promoted in their area with
the respect of following the UC Way. Promotion pressure was put on by Kellogg and other
cereal partners.
Problem: The managers are in charge of that whole product because everyone is busy
managing their own product in their country. Could have a big mishap within the company or
a product can fail due to poor management.
Question #4: Based on information regarding Olsen’s “Europeanization Initiative” (page 4 of
the case), answer the following questions.
a. UC’s frozen juice line is an example of “standardization” or “customization”?
• It is an example of standardization because “he was convinced that there was little
difference in tastes for fruit juices across markets, and that there were significant benefits
from standardizing the products as well as their marketing and promotion and
advertising”. Nobody agreed with him but they did it anyways.
b. What benefits did Olsen attempt to achieve from launching such a juice line?
• He had hoped to revive the languishing of the line and rebrand it in a more standardized
way. In hopes that this would become a major hit in their product lines.
c. With regards to such a juice product line, do you see a mismatch between the
marketing approach and organizational structure? Provide examples to illustrate.
• Yes, standardizing was something that they did not do in the UC Europe. That is why
they were polycentric because they believed each country wanted and would thrive off of
different options that fit their traditions and tastes. Again, “overlaid by a variety of
national tastes and breakfast traditions - cold meats and cheese in the Netherlands,
pastries in Greece, bacon and eggs in Britain and croissants in France”. Where as to
standardize he is using the “one size fits all” branch. Which is why the “experiment was a
disaster. Local CMs perceived the initiative as a direct challenge to their local autonomy.
Also, he had the senior manager from Germany to standardize the products when he put
together an entire ETT team to figure out tastes and do research. It just did not all add up.
(15 points)
Question #5: If Lora Brill decides to launch Eurobrand “Healthy Berry Brunch,” in your
opinion, what potential challenges should Lora expect and how should she proactively deal
with them? Use a table or bullet points to organization your answer. Do not write long
paragraphs. (10 points)
• Getting little notice with competitors such as special K
• CM’s getting mad over local authority and want to leave the company
• Be careful not to standardize the new product
• To have a slow start and potentially pick up as marketing campaigns launch
• Negative reaction from US UC
• Be ready to take negative feedback and support answers with research found that this was
a smart move
Sources:
http://eleedan.com/articles/international-marketing-orientations/