Two managers in the Power Tools division of German multinational corporation Robert Bosch GmbH (Bosch) have been tasked with devising potential solutions for addressing tensions between the regional headquarters (RHQ) for the Eastern Europe and Middle East region of Bosch Power Tools' Blue Emerging Markets business unit. The RHQ faces challenges in managing its geographically dispersed subsidiaries, with the subsidiaries complaining about slow decision-making, a lack of efficiency, and a limited understanding of customer needs. Bosch Power Tools must rethink its approach to the Blue Emerging Markets unit and the organizational set-up of the RHQ. Thus, the two managers are meeting with senior managers from across the Eastern Europe-Middle East region and the board of management (Case A) in order to determine the best way to address the issues (Case B).
Two managers in the Power Tools division of German multinational corporation Robert Bosch GmbH (Bosch) have been tasked with devising potential solutions for addressing tensions between the regional headquarters (RHQ) for the Eastern Europe and Middle East region of Bosch Power Tools' Blue Emerging Markets business unit. The RHQ faces challenges in managing its geographically dispersed subsidiaries, with the subsidiaries complaining about slow decision-making, a lack of efficiency, and a limited understanding of customer needs. Bosch Power Tools must rethink its approach to the Blue Emerging Markets unit and the organizational set-up of the RHQ. Thus, the two managers are meeting with senior managers from across the Eastern Europe-Middle East region and the board of management (Case A) in order to determine the best way to address the issues (Case B).
Digital transformation is fundamentally changing the business landscape. It is also affecting the roles of top managers within firms. Our survey of more than 160 senior managers in Europe suggests that digitalization, rather than encouraging more decentralized forms of management, will lead to an expanded role for headquarters and further empowerment of top managers. While acknowledging the benefits of the digital transformation, in this Executive Digest we identify five key challenges for newly empowered top managers and offer solutions for these digitalization traps.
On a cold Monday morning in January 2018, the founder and chief executive officer of dcs plus was sitting in a taxi on his way to catch a plane to Dubai, United Arab Emirates. In Dubai, he would be visiting the Middle East subsidiary of his company, a Romanian technology start-up focused on business-critical enterprise software for the travel industry. The one-year-old subsidiary, which was responsible for marketing, sales, and customer support in the Middle East region, had experienced performance problems and managerial issues since the start, leading to major changes in the local management team. The Romanian company was planning to open two new subsidiaries in São Paulo, Brazil and in Singapore, so it was important to avoid similar problems to those incurred in Dubai. The founder was reflecting on the dcs plus approach to internationalization for the overall organization, as well as how to manage a subsidiary.
On a cold Monday morning in January 2018, the founder and chief executive officer of dcs plus was sitting in a taxi on his way to catch a plane to Dubai, United Arab Emirates. In Dubai, he would be visiting the Middle East subsidiary of his company, a Romanian technology start-up focused on business-critical enterprise software for the travel industry. The one-year-old subsidiary, which was responsible for marketing, sales, and customer support in the Middle East region, had experienced performance problems and managerial issues since the start, leading to major changes in the local management team. The Romanian company was planning to open two new subsidiaries in São Paulo, Brazil and in Singapore, so it was important to avoid similar problems to those incurred in Dubai. The founder was reflecting on the dcs plus approach to internationalization for the overall organization, as well as how to manage a subsidiary.
Case B complements Case A, describing pharmaceutical companies’ strategic responses—such as mega-mergers and acquisitions and specialization—to industry-wide global challenges and highlights strategic decisions by Pfizer’s chief executive officers between 2007 and 2018.
In 2018, President of the United States, Donald Trump, criticized the company Pfizer Inc. (Pfizer) for increasing drug prices—which had been a strategic move by Pfizer in response to industry-wide challenges. This announcement highlighted the complex dynamics of the pharmaceutical industry and the big challenges that innovative research and development (R&D)–intensive pharmaceutical companies faced. The entire pharmaceutical industry was being challenged by issues such as decreasing global average returns on investment and increased R&D costs. In addition, the company faced increased competition from companies from other industries and from emerging-market companies. Pfizer’s chief executive officer needed to determine whether or not these changes marked a turning point for the whole industry.
In 2018, President of the United States, Donald Trump, criticized the company Pfizer Inc. (Pfizer) for increasing drug prices-which had been a strategic move by Pfizer in response to industry-wide challenges. This announcement highlighted the complex dynamics of the pharmaceutical industry and the big challenges that innovative research and development (R&D)-intensive pharmaceutical companies faced. The entire pharmaceutical industry was being challenged by issues such as decreasing global average returns on investment and increased R&D costs. In addition, the company faced increased competition from companies from other industries and from emerging-market companies. Pfizer's chief executive officer needed to determine whether or not these changes marked a turning point for the whole industry.
Case B complements Case A (W19390), describing pharmaceutical companies' strategic responses-such as mega-mergers and acquisitions and specialization-to industry-wide global challenges and highlights strategic decisions by Pfizer's chief executive officers between 2007 and 2018.
In early 2015, the newly appointed country head of PharmaCorp's operating unit in Ukraine faced internal and external challenges in managing the global pharmaceutical company's operations in the crisis-ridden country. Since November 2013, Ukraine had undergone massive disruptions, including riots in Kiev, the annexation of Crimea by Russia, and a war in its easternmost region. Amid these economic and political turbulences, PharmaCorp Ukraine experienced plummeting sales, increased workload, amplified human resources issues, and decreased market share. Furthermore, the multinational corporation's internal routines became less effective in the context of the crisis. Although the regional headquarters in Lausanne, Switzerland, offered guidance and resources, inefficiencies in responding to local issues emerged during the crisis. Should PharmaCorp exit the market? Or should it stay in Ukraine and revise its local marketing strategy by offering more innovative products? Should it implement cost-saving measures? Should the business model be revised to gain more autonomy for its operations? The country head was scheduled to meet with representatives from the regional headquarters and needed to prepare a comprehensive strategy for improving the local situation.
In early 2015, the newly appointed country head of PharmaCorp’s operating unit in Ukraine faced internal and external challenges in managing the global pharmaceutical company’s operations in the crisis-ridden country. Since November 2013, Ukraine had undergone massive disruptions, including riots in Kiev, the annexation of Crimea by Russia, and a war in its easternmost region. Amid these economic and political turbulences, PharmaCorp Ukraine experienced plummeting sales, increased workload, amplified human resources issues, and decreased market share. Furthermore, the multinational corporation’s internal routines became less effective in the context of the crisis. Although the regional headquarters in Lausanne, Switzerland, offered guidance and resources, inefficiencies in responding to local issues emerged during the crisis. Should PharmaCorp exit the market? Or should it stay in Ukraine and revise its local marketing strategy by offering more innovative products? Should it implement cost-saving measures? Should the business model be revised to gain more autonomy for its operations? The country head was scheduled to meet with representatives from the regional headquarters and needed to prepare a comprehensive strategy for improving the local situation.
In 2015, DeliverMeal was a Norwegian online food delivery firm, mostly present in what could be considered emerging markets such as those in Africa. Founded in 2010, the company had experienced extremely rapid international expansion. DeliverMeal followed a global strategy, and standardized processes and turnkey solutions were provided from the headquarters to the subsidiaries.<br><br>The local business development manager at DeliverMeal's Ivory Coast subsidiary needed to make some decisions on how to react to three demands that had recently been passed down from corporate headquarters, all of which were at odds with the West African environment. How could the Ivory Coast manager meet her headquarters' corporate expectations and still conduct successful business operations within the local cultural context?
In 2015, DeliverMeal was a Norwegian online food delivery firm, mostly present in what could be considered emerging markets such as those in Africa. Founded in 2010, the company had experienced extremely rapid international expansion. DeliverMeal followed a global strategy, and standardized processes and turnkey solutions were provided from the headquarters to the subsidiaries.<br><br>The local business development manager at DeliverMeal’s Ivory Coast subsidiary needed to make some decisions on how to react to three demands that had recently been passed down from corporate headquarters, all of which were at odds with the West African environment. How could the Ivory Coast manager meet her headquarters’ corporate expectations and still conduct successful business operations within the local cultural context?
Palm Inc. was the “founder” of an entire industry. In the mid-1990s, the firm developed the first successful hand-held on the market. It became the uncontested leader within the young and extremely dynamic industry within a short time, both with regard to hardware as well as software. By 2010, however, Palm was not in good shape. The new product, a top-notch smart phone, was not very successful and there were signs of Palm’s bankruptcy on the horizon. Palm had been the leader in the market of hand-held computers with high market share and profitability, and a brand name recognition level of which many other firms could only dream. What had happened to Palm?
Palm Inc. was the "founder" of an entire industry. In the mid nineties, the firm had developed the first hand-held which could be marketed successfully. They became the uncontested leaders within the young and extremely dynamic industry within short time - both with regard to hardware as well as software. By 2010, however, Palm was not in a good shape. The new product, a top-notch smartphone was not very successful and there were even signs of Palm's bankruptcy on the horizon. But how could it have come this far? Palm had been the leader in the market of handheld computers with high market share and profitability, and a brand name recognition level many other firms could only dream of. So what had happened to Palm?