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Moreover, the reduction of trade barriers and tariffs indicated that to retain a competitive advantage globally the company had to develop an effective International strategy, whilst benefitting from economies of scale. Cross-functional integration and speed of innovation increasingly became imperative to corporate strategy.
The cohesion between the strategy and the structure of the company is crucial. Procter and Gamble identified the increasing globalisation of business and resultantly altered their business strategy and structure in order to maximise exposure in more countries in order to: The nature of this strategy dictates that some functions are centralised and some are decentralised.
Lafley has suggested that this provides the ability to make faster, more locally responsive and efficient decisions, whilst autonomy was given to key functions that required local customisation.
The global-matrix structure that Lafley adopted to support the transnational strategy is a complex structure that requires significant cohesion from all members of the workforce and complex controls. Lafley is noted to have implemented pay-incentives that tied employees to the performance of the company.
The complementation of the culture and the global-matrix structure advanced the changing nature of the corporate strategy and developed their international competitive advantage.
However, crucial to these elements were sophisticated systems for co-ordination which Lafley recognised would be essential and championed the use of IT systems, even setting up a deal with Cisco systems to take full advantage of their complex systems, systems support; in order to reduce IT costs through economies of scale —spreading their system globally.
The global business units were reduced from five to three: This complimented the transnational global strategy well as providing sharper focus of the respective target consumers; whilst complimented by a decentralised empowerment of regional, subsidiary and functional managers, which was supported by the effectiveness of cross functional co-ordination and interlinking of complex IT systems.
The use of integrating mechanisms in general, and use of knowledge management in particular, to gain a competitive advantage. A transnational global strategy requires close co-ordination with key areas of the business for increased efficiency and competitiveness.
Additionally, inter-business function marketing, RnD, Logistics, Finance etc communication facilitates value creating propensity between manufacturing and marketing. This is a simple, cost effective way to communicate problems and ensures that opinions and concerns are voiced. Moreover, it is essential to have direct contact between different functions, especially those that must co-operate considerably.
Conversing directly between one another ensures cohesion of the products and the market, with the overall strategy.
However, this can increase bureaucratic costs and it may not always be viable to converse with different employees face to face all over the globe, although such technological advances, such as video Tele-conferencing may help.
Meeting at a regular time intervals ensure regularity. Additionally, liaison roles ease tensions between functions and can ferry information from one to another. Teams may provide insightful solutions to problems i. Furthermore, the importance of IT must be accredited to the effectiveness of this co-ordination; as many of the systems and integrating mechanisms rely heavily this interwoven web of technology.
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