Country Manager and Corporate Strategy

Alternative paradigm to that of country manager

An alternative to having country managers is using a transnational model, such as that advanced by Bartlett and Ghoshal (1989). Instead of country managers who direct entire business operations for a branch, this model advocates centralizing strategic decision making at corporate headquarters. It holds that in the wake of globalization, customer preferences are becoming more similar, and hence companies need not engage in product development separately and independently for every branch. Instead global companies are advised to leverage their capabilities across borders, and transplant best practices from one country to another. Additionally, the transnational model recommends that:

1. Senior intercultural managers should think in terms of three dimensions: product, geography and function.

2. Costs should be rationalized and control over all branches, near and far, increased.

3. Well-entrenched country managers should be uprooted, especially if they behave like king-emperors with considerable authority over their branch.

4. Headquarters should try to encourage standardization to the extent possible.

Quelch and Bloom (1996) have advanced a few reasons why, in their view, the country manager model is the superior one. The first is that for success in local business, it is necessary to have good relations with local governments. Country managers will build up an extensive network of useful government contacts over the years they work for a particular global company. In Quelch's case study about Susana Elespuru, the advantage of opting for a local country manager was that she was Peruvian and understood how things worked within the Peruvian culture. Further, local customers want personal attention in the form of product adaptation to local cultures. Susana Elespuru succeeded in selling Pert Plus, Pantene and Head & Shoulders, the three leading brands of shampoo marketed by P & G, in the form of individual sachets. This was a reflection of the reality in Peru at that time: people could afford sachets but not bottles of shampoo.

Country managers are also well suited to taking on local competition, which consists of other global companies as well as local companies. While in Barcelona in 2001, the author of this book noticed that the Spanish fast food company Pans was giving the US fast food multinational McDonald's a run for its money. Local companies are often well placed to notice and take advantage of local trends. Pans did this when they introduced Spanish specialities like the long sandwich and other forms of tapas as part of their fast food offering with success. Naturally Pans had the necessary market knowledge and experience of Spanish culture to supplement standard fast food fare with typical Spanish items. If a multinational is to compete successfully against local heavyweights, country managers who have the required knowledge of the market and local culture serve them best.

There are other reasons the country manager model has its advocates. Global brands gain local appeal because of their brand image as qualitatively superior products with a worldwide following. By the same token, they lose ground when local brands are upgraded and are sold at lower prices. Culturally sensitive country managers can take stock of the situation. They know how to adapt global brands to local conditions, so that the best of both worlds is made available to consumers. This is borne out in Quelch's case study of Susana Elespuru. When Peru experienced a phase of relative economic stability two years after Elespuru became country manager, Elespuru had this to say, 'Peru's 23 million consumers represent an increasingly attractive target. We anticipate more multinational brands trying to enter this market. But we intend to capitalize on the fact that P & G has been here all along, through thick and thin, relentlessly building our brand equities.'

Country manager model versus transnational model

The country manager model suggests that good ideas and best practices can originate in emerging economies and be replicated in advanced economies. Quelch and Bloom (1996) have cited the example of the construction materials manufacturer Lafarge, which felt that cement plants could be built in the West using the stripped-down lines approach they incorporated in Turkey. They also quote the example of KFC, the food chain that operates primarily as a take-away in the United States and Europe. In Malaysia, KFC adopted the local practice of also operating as a restaurant. It is now considering introducing restaurants to its chains in the United States and Europe. However, this advantage of the country manager model, like so many of its other advantages, is not incompatible with the transnational model. The transnational model in fact advocates the replicating of best practices. Most of the companies profiled as chapter-opening case studies in this book employ a judicious mix of the transnational model and the country manager model.

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