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/