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Organizational Issues

Multi-channel integration requires a new organizational model: one that adapts people, processes and technology to meet this coordinated approach to channel management. Redefining the organization, and processes and technology that support it, to meet the multi-channel challenge, requires strong support of the CEO and his or her management team. They need a clear vision of how channel integration will generate business value for the organization and where the main changes need to be in the organization. Decisions will need to be taken on the size of team and skills to ensure the necessary resources and flexibility. Employees must have the right skills to understand increasingly sophisticated customers, analyse customer preferences, and create value from these customer relationships, while organizations must train their employees to develop the right skills. Organizational processes must be redefined to overcome organizational barriers, reduce operational costs, increase efficiency and improve the cross-channel customer's experience.

Organizational structures can be a barrier to multi-channel integration when a company is product or function-focused rather than customer-focused, so organizations need to consider whether to establish a separate company to exploit a new channel. This may be suitable where a single-channel strategy is appropriate to one or more customer segments, but a hybrid organizational strategy might be appropriate to meet the different channel needs of the company's target customer groups.

While developing a new organizational model for multi-channel integration, organizations should consider cross-channel opportunities generated through channel cooperation: 'Retailer-manufacturer relationships based on shared data, technology, and investments ... to create coordinated efforts that leverage discrete assets to better focus on the customer'. [11] Thus, research showed that online cooperation of retailers with their manufacturers could enhance sales through referrals. Fifty per cent of retailers and manufactures surveyed by Forrester said that their online sales increased by collaborating, for some by as much as 25 per cent. While online cooperation between retailers and manufacturers allows channel-hopping Internet customers a fuller product selection, it also minimizes channel conflict between retailers and manufacturers. Both the manufacturer and the retailer benefit, as they give each other the opportunity to increase online and offline sales by providing each other with customer referrals. 'Manufacturers will close US $50 billion in online sales ... but influence US $235 billion in other sales. The power of manufacturers online lies in their ability to affect retailers' sales, both online and offline. Consumers will take what they've learned while visiting manufacturer sites and spend almost US $90 billion online and US $147 billion in brick and mortar stores and catalogues.' [12]


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