is the degree of “coherence” in the portfolio: Do the categories and brands in the portfolio have any significant similarities—for instance, in consumer demand, technology platforms, or distribution networks? How much know-how can be shared across the portfolio? What are the expectations about the different businesses, in terms of growth and profitability around the globe? The answers to these questions will identify opportunities to cluster categories together and manage them accordingly.
Bringing together the portfolio- level and category-level assessment of global management allows a company to strike a balance between meeting the unique needs of individual brands and leveraging major synergies across brands and categories. The optimal operating model has to be based on a balanced consideration of both category requirements and corporate priorities, with the objective of avoiding unnecessary organizational complexity. When the analysis of individual categories suggests the development of a variety of global management models, the best way to reduce complexity is to limit the number of models coexisting within a given company and to keep them separate.
For example, Nestlé has opted for a hybrid organizational structure with two major global management models (see Exhibit 6). In the first, selected categories are managed globally. For instance, the company’s waters business, which has products and consumer preferences that
are highly similar from market to market, benefits from a global management model that allows it to capture synergies across markets. In addition, the separate global management model gives this high-growth business the management visibility and focus it requires to thrive. In the second model, the traditional food and beverage categories, which typically show much greater diversity across markets, are managed by geography. This hybrid organization recognizes the diverse needs of individual categories while limiting organizational complexity. Such balance is not easy to achieve— but is critical to the successful management of a global portfolio.
Best Practices for Successful Global Brand Coordination Through years of research and in our work with CPG companies, we have identified a series of operating principles that compa- nies typically employ to capture the full benefits of global brand coordination and management.
Where the characteristics of consumer demand and preferences justify it, support the development of truly global brands, as they can be the greatest source of long- term value creation for a CPG company. Take a broad perspective regarding new innovation that may shape global demand without losing perspective on the underlying consumer dynamics in a region. Actively look for opportunities to expand strong existing
brands into new markets to leverage the important benefits that global brand management offers and mere global category management does not—such as coordinated marketing and digital media platform sharing.
Focus on the areas of the value chain in which global brand management shows the highest potential for the company, given the specifics of its portfolio and its strategic agenda. Rather than issuing a universal decree for global brand management, understand how it benefits the company in each area of the value chain.
Assess the opportunity to establish a global category- management structure category by category, based on the degree of similarity of consumers and products and the importance of global brands for a given category; there is no single best model to be universally applied across categories.
Beyond structural lines and boxes, identify opportunities to coordinate activities by facili- tating communication across brands and markets along the entire value chain to leverage cross-category synergies.
Keep the organizational structure as simple as possible. In some cases, it may be better to give up scale for the sake of organizational simplicity and quick decision making.
Define P&L accountability in close alignment with strategic objectives, clearly
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