The Power of Managing Brands Globally

8/22/2019 The Power of Managing Brands Globally

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Perspective DeAnne Aguirre

Paul Leinwand

Sudeshna Saha

Aurelie Viriot

The Power of ManagingBrands GloballyLessons from theCPG Sectors MostSuccessful Players


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Booz & Company is a leading global management consultingrm, helping the worlds top businesses, governments,and organizations.

Our founder, Edwin Booz, dened the profession when heestablished the rst management consulting rm in 1914.

Today, with more than 3,300 people in 58 ofces around theworld, we bring foresight and knowledge, deep functionalexpertise, and a practical approach to building capabilitiesand delivering real impact. We work closely with our clientsto create and deliver essential advantage.

For our management magazine strategy+business, visitwww.strategy-business.com.Visit www.booz.com to learn more about Booz & Company.

CONTACT INFORMATION

ChicagoPaul [email protected]

Sudeshna [email protected]

San FranciscoDeanne AguirreSenior [email protected]

Aurelie ViriotSenior [email protected]


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As CPG companies have turned todeveloping markets and regionalexpansion as their primary pathsto growth, their ability to developtruly global brands and to manageportfolios of brands globally hasbecome essential. The geographicdiversity of CPG companiesbusinesses, as well as the rela-tive importance of internationalbusiness to the overall portfolio,has reached unprecedented levels.For instance, European companiesUnilever and Nestl have long hadglobal reach, but their interna-

tional business is on the rise: Uni-lever now derives 62 percent ofits revenues from outside Europe,compared to 54 percent a decadeago, while Nestl has seen a simi-lar increase to 63 percent from58 percent. Meanwhile, Wrigleyand Procter & Gamble now see67 percent and 54 percent oftheir sales, respectively, comingfrom outside North America (upfrom 52 percent and 50 percent a

decade ago).

There are clear benets to thedevelopment of global brandsand, more broadly speaking, toglobal coordination across brandsand markets. Companies can

THE POWEROF MANAGING

BRANDSGLOBALLY

Lessons from the CPGSectors MostSuccessful Players

Executive Summary

The question of how to manage

global brandssuch as Coca-

Cola, Gillette, and Nestl, as

well as those with less global

recognition, such as Wrigley,

Avon, and Campbellsacross

a set of diverse geographies has

spurred significant debate among

consumer packaged goods (CPG)

companies. The complexity stems

in part from the fact that there are

very few truly global brands: CPG

global brands are more often

multinational or regional. Of the

top 100 recognized global brands,just 21 are from the CPG sector,

and only 14 of them have a value

of more than US$5 billion (see

Exhibit 1, page 2).


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nd synergies all along the value

chain, from consumer insights, toinnovation, to sourcing, to mar-keting. However, they must walka ne line in developing thesecapabilities globally: On the onehand, doing so allows companiesto achieve the benets of scale,

and speed their expansion in new

markets by quickly applying bestpractices learned in one region toother geographies. On the otherhand, without the right structurein place to manage these capabili-ties, companies are likely to seeincreased organizational complex-

itywhich brings its own chal-

lenges in terms of local marketrelevance and speed-to-market.In managing these tradeoffs, CPGcompanies have been experiment-ing with a variety of structuresin the oversight of their globalbrands. Many have gone from

Exhibit 1Top CPG Global Brands

* CPG encompasses the food, beverage, alcohol, personal care, and tobacco sectors

Sources: Interbrand Best Global Brands 2007; Booz & Company

Top 100 Global Brands: Breakdown by Sector

100%

Total: 100brands

100%

0%

20%

40%

60%

80%

100%

Other

Diversified

Consumer Electronics

Financial Services

IT

Automotive

CPG*

Percentage of Value ofTop 100 Global Brands

Percentage of Brands inTop 100 Global Brands

Total:US$1.156

billion

Best Global Brands2007 Interbrand Ranking

21 CPG Brands in Top 100, Valued at $220 billion

Rank Brand

12

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

1819

20

24

26

30

40

51

53

57

59

63

65

67

70

85

86

8790

91

96

Coca-ColaMicrosoft

IBM

GE

Nokia

Toyota

Intel

McDonald's

Disney

Mercedes

Citi

HP

BMW

Marlboro

American Express

Gillette

Louis Vuitton

CiscoHonda

Google

Nescaf

Pepsi

Budweiser

Kellogg's

LOral

Heinz

Colgate

Wrigley

Nestl

Avon

Danone

Kleenex

Mot & Chandon

Kraft

HennessyJ&J

Smirnoff

Nivea

65.358.7

57.1

51.6

33.7

32.1

31.0

29.4

29.2

23.6

23.4

22.2

21.6

21.3

20.8

20.4

20.3

19.118.0

17.8

13.0

12.9

11.7

9.3

7.0

6.5

6.0

5.8

5.3

5.1

5.0

4.6

3.7

3.7

3.63.4

3.4

3.1

Brand Value

(Dollars in Billions)


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a regional approach to a globalapproach; some have evenreverted to a regional approach toget the balance right.

Clearly, a one-size-ts-all structureis not an option for the industry,

and likely not for any complexportfolio. In this article, wereview the potential benets andchallenges of developing globalbrands and coordinating brandportfolios globally; identify thefactors that drive the appropriatelevel of global brand managementacross the value chain; and reviewkey implications and principlesfor successful implementation.

Global Management ofBrand Portfolios HasClear Benefts

There have been some fantasticstories of well-managed globalbrands, both inside and outsidethe CPG industry. Some arewell known: For example, atApple, a great majority of R&D,innovation, and even marketingis organized centrally; Procter &

Gambles strong arsenal of globalbrands benets from its use ofopen innovation, in whicha central R&D hub oversees apipeline of ideas generated bothwithin the company and withexternal partners. Other exampleshave received less publicity, suchas the use of consumer insightthat parlayed the brand equity ofKimberly-Clarks Huggies diapersinto other successful products

for babies, including Pull-Upsand toiletries.

Though CPG companiesapproaches to managing globalbrands vary, they generallylook to gain three particular

advantages from whatever modelthey choose: better results fromtheir innovation investment, morerapid geographic expansion, andgreater global brand equity.

Innovation investment: In todays

CPG environment, competitiveadvantage and meaningfuldifferentiation are increasinglydependent on superior R&D. Infact, companies greatest gainsfrom global brand managementstem from their ability tocoordinate innovation activitiesacross products, brands, andmarkets, and thus amortizethe investment. There has beensome debate about whetherinnovation can really be globallyapplicable, given the widelyvarying needs of particular brandsand the differences betweenmarkets. However, we nd thatcore technologies and productinnovations have far more globalreach than some have assumed.Innovation and consumerinsight can be broadly relevantacross markets; both P&G and

Kimberly-Clark have used insightsfrom emerging markets to developand market products for low-income consumers in developedcountries. For instance, theygained a deeper understandingin emerging markets of howconsumers must make trade-offsbetween the cost of diapers andthe cost of child care, and usedthis knowledge to inform theirpricing and marketing for

low-income segments in theUnited States.

Speed of geographic expansion:Global coordination allowscompanies to more easily shareinsights across brands and

markets, thereby enabling teamsto learn from one another aboutnew product ideas and innovativeways to connect with customers.Additionally, global coordinationcan make for more rapid and

cost-efcient expansion into newmarkets with existing products.This is particularly true in thecase of global brands with aunique name and positioning,as well as similar executionacross markets, from pricing topackaging to advertising. Look,for example, at the successfulrollout of the innovative Air WickFreshmatic automatic aerosol.Reckitt Benckiser, the brands

parent, was able to roll out theproduct worldwide in less than ayear, during which time it foundthe product in Korea, tested andlaunched it in Europe, adaptedit to meet U.S. environmentalregulations, and quickly made itthe number two air-care productglobally. The products rapidglobal expansion gave it a clearcompetitive edge in the newlycreated air-care segment.

Global brand equity: Brands thatare proven to have internationalacceptance and appeal areinherently stronger than nationalor regional brands. Interbrand,in determining the value of theworlds best brands, uses a brandsinternationality to determine25 percent of its brand strength,making that factor as importantin Interbrands estimation

as leadership (i.e., marketshare). Greater global reachand recognition make a brandmore sustainable and indicatepotential for further internationalexpansion. Furthermore, a brandsglobal status can, in itself, be a


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key differentiator to consumersfor example, a customer whowants to have global bankingservices will be attracted toHSBC, which bills itself as theworlds local bank. To fully

capture these potential benetsand enhance brand equity, it iscritical for CPG companies tocoordinate the communicationand messaging related toglobal brands. Leveraging allthese benets, the portfolio ofInterbrands Best Global Brandshas consistently outperformed themarkets by a considerable margin.Where the characteristics ofconsumer demand and preferences

justify it, companies can generatesignicant value by supporting thedevelopment of global brands.

The Challenges of GlobalBrand Management

Although coordinating brandsglobally has clear benets, itoften comes with two unintendedconsequences that have to becarefully addressed: increasedorganizational complexity and

the potential for lack of focus inindividual markets.

Organizational complexity:Adding global structures tocoordinate activities across brandsand markets where coordinationdoes not add signicant valuecan actually create unnecessaryorganizational complexity.Such complexity can result inan inated organization and

shadow staff. It can hampermarket responsiveness ifcoordination processes, decisionrights, and information ows

between global and local teamsare not dened clearly. Unclearaccountability for performance,a natural consequence of poorlydened global structures, canmake the situation worse and

cause ineffective execution andloss of speed. Even P&Gs globalstructure, which is well dened,has troubles with accountabilitiesrelated to the P&L between theglobal business units (GBUs) andmarket development organizations(MDOs): The GBUs own theP&Ls for particular product lines,but the MDOs own the P&Ls forregional execution. If results donot meet expectations, its often

unclear where the problem lies.Was the product, owned by theGBU, inadequate for local needs,or was there poor pricing in themarket or poor execution inthe store?

Diminished local focus: GlobalCPG companies face a major chal-lenge in nding the right balancebetween global coordination andthe local exibility needed to

adapt to market-specic tastesand preferences (e.g., packaging,colors, avors, and messaging). Aglobal strategy that does not leavesufcient room for local marketcustomization may diminishbrands and products localrelevance to an extent that sur-passes the benets expected fromglobal coordination. Althoughcertain global brands (such asCoca-Cola and McDonalds)

are still largely associated withtheir home market in the eyes ofconsumers worldwide, othersin a variety of industriesare

attempting to appear more localas a way to be better connectedto consumers in each market. LGElectronics, for example, aims tomake it completely unimportantto consumers where LG is head-

quartered.1

Finally, there is alsoa risk that the companys globalcore may focus excessively on acompanys largest markets andmay not give smaller markets theresources they need to grow. Para-doxically, the opposite can also bea riska companys position in itshome market may be threatenedif its resources are spread too thinby global expansion.

Leading CPG CompaniesTake Diverse Approaches toGlobal Brand Management

Faced with these complex trade-offs between the potential benetsof global brand managementand the possibility of greatercomplexity and lack of exibility,CPG companies have adopteda wide variety of approachesto global brand management,reecting the diversity of their

situations (see Exhibit 2).

A companys organizationalfocus will be largely determinedby the way it structures itsbrand-management model. Somecompanies, such as Procter &Gamble and LOral, are primarilyorganized around powerfulcentralized category-managementteams, which determine prioritiesfor the category as a whole and

leverage synergies across markets.Other companies, such as Ferreroand Heinz, have adopted a moredecentralized approach, aligned

1 Yong Nam, CEO of LG Electronics.


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Exhibit 2Organizational Focus: Choices of Leading CPG Companies

Source: Booz & Company

CentralizedCategory

Management

Procter & Gamble

LOral

Nestl (waters, nutrition)

Newell Rubbermaid

Sara Lee

Unilever

Nestl (food and beverages)

Ferrero

Heinz

BIC

Reckitt Benckiser

Kimberly-Clark

DecentralizedCategory

Management

PrimarilyCategoryManaged

Primarily globally managed, withpowerful global categorymanagement units that leveragebrand and customer preferencesimilarities across markets

Execution driven by strong local arms

Managed through matrix of category-and geography-focused teams

Extensive use of coordinatingmechanisms (e.g., councils, stronginnovation processes)

Primarily managed through strong regionalcommercial organizations in entrepreneurialculture

High focus on geographic P&Laccountability for fast local decision makingon heterogeneous products and customersacross countries

Process-Based

Coordination

PrimarilyGeographically

Managed

primarily along geographies, inwhich the bulk of decisions andactivities are managed locallywith minimal coordination acrossmarkets. In between these twomodels of P&L accountability,with fully centralized categorymanagement at one extreme andgeography-centered decentralized

management at the other, arenumerous other options inthe continuum.

Similarly, leading CPG companieshave made different choicesin terms of decision-making

processes. Whereas somecompanies have favored a modelin which the dominant categoryor brand sets goals and isresponsible for their attainment,others have opted for a council-based model in which interestgroups are represented, or fora steward-driven process with

a facilitator who coordinatesresources across functionalgroups. Some companies relyheavily on formal structures andprocesses (e.g., explicit lines ofcontrol and measures), and others

primarily leverage incentives orfavor more informal structures.

These major differences amongleading CPG companies suggestthat there is no single best model.The optimal level of globalcategory management and,more generally speaking, central

coordination of activities isspecic to each company.

Identifying the Right GlobalManagement Model

Are there opportunities to lever-age scale for certain brand-related


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functions or activities in differentmarkets? Are product and cus-tomer insights from one marketrelevant and meaningful to othermarkets? Are speed-to-market andthe ability to roll out products

quickly across markets a key com-petitive advantage? If a companyanswers yes to these questions,then it will nd signicant valuein coordinating brands and cat-egories across markets. For thesecompanies, the question is oftennot Should we set up a globalmanagement structure? Rather,they need to ask, Which parts ofthe value chain and which specicbusinesses should be managed

Exhibit 3Global Brand Management Strategy: Key Building Blocks


Global Brand Management Model

Global Portfolio View

Which specific businesses should bemanaged globally?

Which parts of the value chain shouldbe managed globally?

Corporate growth strategy

Role of expansion into new markets Role of new capability building

Management of organizational complexity

How can global brand management support the

companys overarching strategy?

Category-Specific Views

Category dynamics

Does the category showsimilarities across marketsthat can be leveraged?

Where in the value chain

can it most benefit fromglobal coordination?

Category strategy

What are the strategicpriorities for the category?

Which level and type ofglobal coordination do

they call for?

To what extent can each individual category benefitfrom global brand management?

globally? To answer this ques-tion, they must take into accountconsiderations involving both theglobal portfolio and individualcategories (see Exhibit 3).

Global Portfolio ViewAn

Overarching Approach: Theglobal brand portfolio is aprimary driver of corporategrowth and should be a majorfactor in determining priorities.It is important, then, to have aholistic understanding of how acompanys approach to portfoliomanagement can support orundermine its overall strategy.

First, companies must look at therole of growth in new markets:If this is a critical componentof the enterprise strategy, thencompanies should choose anoperating model that facilitates

focus in these areas. A globaloperating model will allow forthe rapid expansion of existingproducts, whereas a regionalmodel will enable a highlycustomized and fast approach inindividual growth markets.

Second, companies need to lookat the capabilities that will becritical to support the globalstrategy they have selected. For


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instance, the development andglobal rollout of a new productwill require, rst, coherentinnovation capabilities that cancreate breakthrough products;second, the ability to customize

those products by geographicsegment; and third, the consumerinsight necessary to addressdiverse customer needs.

Category-Specifc ViewsAssessment of Global BrandManagement by Category:Once a company understandshow its approach to globalbrand management can supportits overall strategy, it can beginto consider the benets of itsapproach to individual categories.The type and magnitude ofthe benets will vary widely.Opportunities for globalcoordination at the varioussteps of the value chain differfrom one category to the next,depending on the intrinsiccharacteristics of each categoryand strategic priorities:

Similarity of consumer demand

characteristics across geogra-phies presents the opportunityto coordinate consumer andshopper insights, key mes-sages, and, most important, theinnovation engine. For globalbrands, where a consistentname and positioning are usedaround the world, aspects ofmarketing communication canand should be coordinatedglobally; of course, in somecases, strong local adaptationis criticalfor language, atan absolute minimum. Typi-cally, investments in creative

development, digital media,and multicultural marketingcan also be leveraged globally.Companies can use insightsfrom each market in whichthey operate to understand

what might appeal to consum-ers in comparable markets.One lens through which to seethese insights is that of the lifecycle of emerging markets: Theconsumption of staples likewheat reveals how consumerstastes change, following a pre-dictable pattern, as an economymatures (see Exhibit 4, page8). First, wheat consumptionrises (tracked here with the

data for China and India), thenit falls (China, Turkey, Brazil),and nally, levels off (Poland,Hungary). Companies that takea global view of their customerbase can track how demandfor their own products mightfollow similar trajectories.2Recognizing these similaritiescan help companies better man-age the tremendous demandfor resources in innovation and

take a long-term approach toleveraging the output.

Similarity of product charac-teristics across geographies,in terms of underlyingproduct formulation, processtechnology, or broader supplychain approaches, enablescompanies to leverage scaleglobally for activities suchas product development,

technology platforms,procurement, manufacturing,and logisticseven whenconsumer needs may vary. Forexample, atbread may take

the form of naan in India,tortillas in Mexico, and wrapsin the United Statesbutthese variations use largelythe same ingredients, servesimilar consumer needs, and

even share similar processingapproaches. Companies can usetheir knowledge of needs acrossthe value chaininnovation,supply chain, packaging,partnerships, and shelfassortmentto determine anddevelop the capabilities thatwill support a winning strategy.

Powerful global retailers thatdominate a particular categorycreate a need for global coor-dination in the areas of supplychain, customer management,in-store marketing, and prod-uct development (especially forretailer-specic SKUs).

Analysis of the characteristics ofa given category along these threedimensions gives an indicationof where in the value chain thebenets of global coordination aregreatest for a given category (see

Exhibit 5, page 9).

Analyzing a category along thesedimensions also provides guidanceas to the best management model.For categories that are composedof highly similar products andthat rely heavily on global brandsserving similar consumer demandcharacteristics across geographies,a formal coordination system withpowerful global category manage-

ment is generally most effective. Incontrast, categories with a rangeof highly diverse products mar-keted mostly through local brandsare typically best coordinated

2 Alonso Martinez and Ronald Haddock, The Flatbread Factor,strategy+business, Spring 2007.


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through lighter and less formalmechanisms. These may includecenters of excellence, which arepopulated with thought leaderswho research best practices in aparticular area and disseminatethem throughout the company, orvirtual teams, which are cross-functional, cross-geographic

teams that come together regu-larly to share information.

Although a categorys intrinsiccharacteristics are a keyconsideration in developing aglobal management structure for

that category, companies alsoneed to take into account theirstrategy in the category: Is thecategory mostly a commodity playfor the company, which wouldimply that category managementshould focus on cost efciency?Or are innovation and speed-to-market the top strategic priorities?

Is global expansion a majorgrowth avenue for the category?The answers to these questionsare crucial to determining thebest management structure andleadership style for each category

in which the company operates(see Seeking the Best Fit).

Defning the CompanysGlobal Management Model

Because the ideal globalmanagement structure mayvary from business to business,there is a real risk of developing

an overly complex operatingmodel at the corporate level,with a multitude of coexistingmanagement structures tailored tot the diverse needs of individualcategories. The key question here

Exhibit 4The Wheat Wave: Common Patterns of Consumption

Sources: Food and Agriculture Organization of the United Nations FAOSTAT, online database (19612003); International Monetary Fund, World Economic Outlook Database, April 2006;

Booz & Company

Normalized GDP per Capita

60%

60%

$0 $5,000

Survival

Quality

Convenience Customization

$10,000 $15,000

40%

40%

20%

20%

0%

Cumulative Change in Total Wheat Consumption per Capita19802003

China India Turkey Brazil Poland Hungary


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Exhibit 5Opportunities for Global Coordination Across the Value Chain: Key Drivers


Consumer andshopperinsightsdevelopment

Breakthroughinnovation

Brand positioningdefinition

For global brands Messaging Advertising

strategy,marketingplatform

Digital mediastrategy andplatform

Platform/breakthroughinnovation

Productdevelopment

Processingtechnology

Raw material

procurement

Regional supplychain services

Productdevelopment forretailer-specificSKUs

Customerrelationshipmanagement

Corporatepricing/contractmanagement

Category advisory

Supply chainservices

Logistics

In-store marketing

Activities to Be CoordinatedKey Drivers

ConsumerInsights

SimilarConsumerDemand

Characteristics

SignificantGlobalCustomers

(Retailers)

Similar

Products

ProductDevelopment

CustomerManagement

Marketing Logistics

Manufacturing

andProcurement

Seeking the Best Fit

One large CPG company had a number of factors to consider in determining the best approach tomanaging a particular category. It was successful and well established as a player in this categoryin developed markets, but had virtually no footprint in emerging markets. Customer preferences,

occasions of use, and types of products differed signicantly from country to countrywhich wouldsuggest at rst glance that rollout of existing products to emerging markets had limited potential and

that there were few benets to be gained from global category management.

However, the company saw signicant potential for growth in emerging markets. Accordingly,it opted for a strategy that made the most of its strong innovation capabilities and was able to

introduce a game-changing product that would appeal to consumers across markets.

Even though the denition of the category itself was initially different between markets, the companychose to drive innovation centrally for the category. In doing so, it developed a product that

changed consumer habits and preferenceswhich enabled the company to create a protablecategory in emerging markets where it had not previously existed.


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is the degree of coherence inthe portfolio: Do the categoriesand brands in the portfolio haveany signicant similaritiesforinstance, in consumer demand,technology platforms, or

distribution networks? Howmuch know-how can be sharedacross the portfolio? What are theexpectations about the differentbusinesses, in terms of growth andprotability around the globe?The answers to these questionswill identify opportunities tocluster categories together andmanage them accordingly.

Bringing together the portfolio-level and category-levelassessment of global managementallows a company to strike abalance between meeting theunique needs of individual brandsand leveraging major synergiesacross brands and categories. Theoptimal operating model has to bebased on a balanced considerationof both category requirementsand corporate priorities, withthe objective of avoiding

unnecessary organizationalcomplexity. When the analysis ofindividual categories suggests thedevelopment of a variety of globalmanagement models, the best wayto reduce complexity is to limitthe number of models coexistingwithin a given company and tokeep them separate.

For example, Nestl has optedfor a hybrid organizationalstructure with two major globalmanagement models (see Exhibit6). In the rst, selected categoriesare managed globally. Forinstance, the companys watersbusiness, which has productsand consumer preferences that

are highly similar from marketto market, benets from a globalmanagement model that allowsit to capture synergies acrossmarkets. In addition, the separateglobal management model

gives this high-growth businessthe management visibility andfocus it requires to thrive. In thesecond model, the traditionalfood and beverage categories,which typically show muchgreater diversity across markets,are managed by geography. Thishybrid organization recognizesthe diverse needs of individualcategories while limitingorganizational complexity. Such

balance is not easy to achievebut is critical to the successfulmanagement of a global portfolio.

Best Practices forSuccessful GlobalBrand Coordination

Through years of research and inour work with CPG companies,we have identied a series ofoperating principles that compa-nies typically employ to capture

the full benets of global brandcoordination and management.

Where the characteristicsof consumer demand andpreferences justify it, supportthe development of trulyglobal brands, as they can bethe greatest source of long-term value creation for aCPG company. Take a broadperspective regarding new

innovation that may shapeglobal demand without losingperspective on the underlyingconsumer dynamics in a region.Actively look for opportunitiesto expand strong existing

brands into new markets toleverage the important benetsthat global brand managementoffers and mere global categorymanagement does notsuchas coordinated marketing and

digital media platform sharing. Focus on the areas of the

value chain in which globalbrand management showsthe highest potential for thecompany, given the specics ofits portfolio and its strategicagenda. Rather than issuinga universal decree for globalbrand management, understandhow it benets the company ineach area of the value chain.

Assess the opportunity toestablish a global category-management structurecategory by category, basedon the degree of similarityof consumers and productsand the importance of globalbrands for a given category;there is no single best modelto be universally appliedacross categories.

Beyond structural lines andboxes, identify opportunities tocoordinate activities by facili-tating communication acrossbrands and markets along theentire value chain to leveragecross-category synergies.

Keep the organizationalstructure as simple as possible.In some cases, it may be betterto give up scale for the sake oforganizational simplicity andquick decision making.

Dene P&L accountabilityin close alignment withstrategic objectives, clearly


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Exhibit 6Nestls Hybrid Category Management Model

* Previously FoodServices; provides solutions to food and beverage professionals


CEO

Nestl

Dairy SBU Coffee and

Beverages SBU Chocolate,

Confectionary,and Biscuits SBU

Managed through Three Geographic Zones Global Category Management through SBUs

Ice Cream SBU Food SBU PetCare SBU Nespresso Nescaf

Consumerinsights

Businessstrategydevelopment

Innovationmanagement

Brand equitymanagement

Food and Beverages

ZoneAmericas

NestlWaters

NestlNutrition

NestlProfessional*

Pharma andCosmetics

ZoneEurope

ZoneAsia, Oceania,

Africa,Middle East

Strategic Business Units,Marketing and Sales

Managed Globally

Other Categories

Innovation,Technology,

R&D

Finance andControl

HR

Central Functions

delineating the decision rightsof the various global and localteams to maintain speed indecision making. Dene whois responsible for the results ofeach business, and be carefulto ensure that the ownership

does not get fragmented amongvarious entities.

Establish streamlined processesfor coordination betweenglobal and local teams.

Align the incentive structurefor all teams involved with thechosen P&L accountabilitymodel to encourage thebehaviors that will strike anoptimal balance betweenglobal coordination and local

exibility. For example, in acentralized structure, employeesshould be encouraged topay special attention to theneeds of local markets; ina decentralized structure,employees should be rewarded

for efforts to share informationwith peers in other units.

If a companys portfolioincludes a diverse set ofbusinesses, all of which mayrequire different models, itshould consider clustering

them by their status as global,regional, or multiregionalbrands. Doing so will greatlysimplify information ows toand from the local markets.


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The challenges associatedwith the coordination of ever-increasing numbers of productsand markets are real, but thepotential benets of global brands

and global category managementare considerable. There is noquestion that the majority ofoverall growth in the CPG sectorwill come from international

marketsand those that getthe formula right in terms ofmanaging that growth will seedisproportionate success.


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The Power of Managing Brands Globally