Monday, June 23, 2008

Global Accout Management - Pitfalls

Can selling be globalized? The pitfalls of global account management
David Arnold, Julian Birkinshaw, Omar Toulan.
California Management Review. Berkeley:
Fall 2001. Vol. 44, Iss. 1; pg. 8, 15 pgs

There is a strong current trend towards globalization of the sales function, driven by increasing customer power, initiatives in customer relationship management, and the design of customer-centric organizations.

This article reports on a two-year research project examining the approaches taken by sixteen large multinational companies in developing global account management structures.

The research was conducted in two stages. Stage one involved face-toface interviews with 35 managers in ten companies-typically a mixture of global account managers, national sales managers, and executives responsible for overseeing global account organizations. Stage two involved sending questionnaires to the same three groups of people in sixteen companies, resulting in 107 completed questionnaires from global account managers, 55 from national sales managers, and 10 from executives responsible for overseeing the global account organization in their company. The perspectives of the national sales managers provide for a comparison between global accounts and non-global accounts.

In terms of the price of goods sold, the Global group experienced .much lower" or "slightly lower" prices, whereas the Non-Global group indicated "no change" in prices. In other words, the price erosion appeared to be significantly worse in the global accounts than in the non-global accounts.

In our field research, the more successful global account relationships were almost all ones that had been initiated by the vendor for strategic reasons. Their motivation for doing so, of course, was to increase their share of the customer's business, either through guaranteed minimum levels of business or through account penetration in country-markets where the share of the customer's business had been low because of local factors. However, this objective only proved achievable if there was a strategic logic behind the partnership, such as the development of innovative or customized offerings that benefited both parties.

Five prescriptions (lessons learnt during research) for buidling global account management function

1. Clarify the role of the global account management team

2. Make incentive structure realistic for both global team and national team members.

3. Pick the right global account managers, not just super-salesmen and train them in global account management philosophy and practices

4. Create a strong support network-Global account managers need a strong support network. They need mentors back at head office, they need information systems and communication materials to broadcast their activities, and they need regular meetings with each other at which they can compare notes and swap war stories.

5. Makes sure the customer relationship operates at more than one level-Support at the senior executive level usually gets established quite quickly. What usually gets neglected is the establishment of relationships underneath the global account manager.

Further reading on global account management and the antecedent literature on key account management,

M. McDonald, T. Millman, and B. Rogers, "Key Account Management: Theory, Practice and Challenges," Journal of Marketing Management, 13 (1997): 737-757;

D.C. Weilbaker and W.A. Weeks, "The Evolution of National Account Management: A Literature Perspective, Journal of Personal Selling &Sales Management," 17/4 (Fall 1997);

G. Yip and T. Madsen, "Global Account Management: The New Frontier in Relationship Marketing," International Marketing Review, 13/3 (1996): 24-42;

J.M. Birkinshaw, 0. Toulan, and D. Arnold, "Global Account Management in Multinational Corporations: Theory and Evidence," Journal of International Business Studies, 32/2 (Second Quarter 2001): 231248; the special issue of Thexis, 4 (1999);

D.B. Montgomery and G.S. Yip, "The Challenge of Global Account Management," Marketing Management, 914 (Winter 2000): 22-29.

David Arnold is an Assistant Professor of Marketing at Harvard Business School and course head of the International Marketing Management program. His research interests focus on international marketing organization, marketing in emerging markets, and global branding. His work has most recently been published in the Harvard Business Review and the Journal of International Business Studies.

Julian Birkinshaw is an Associate Professor of International and Strategic Management at the London Business School. His research focuses on entrepreneurship, knowledge management, and innovation within and between the units of multinational corporations. His most recent book is Entrepreneurship and the Global Firm (2000). He is also the author of numerous articles in Harvard Business Review, Sloan Management Review, Strategic Management Journal, Academy of Management Review, Organization Science, and other journals.

Omar Toulan is an Assistant Professor of Strategy at the Faculty of Management of McGill University. His research and teaching interests focus on two areas of international business: the structuring of inter-firm relationships in an international context; and the impact of market reform on firm behavior. He has published in Strategic Management Journal, Journal of International Business Studies, Journal of Industrial and Corporate Change, and the Journal of Latin American Studies.

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