Global Management, Article Review Example

Factors that propelled many U.S. and European multinational firms to success in the international markets in the 20^th century will not work in the 21^st century. This is due to the development of efficient supply chain networks on a global scale and greater demand for lower prices. Many major corporations have reduced the number of suppliers in their supply chain network by as much as 90 percent. The result is a tougher operating environment for the majority of the suppliers but those who do succeed in winning supply contracts reap huge profits. The suppliers have realized the commercial benefit of developing long term relationship with major global customers and are establishing presence in multiple countries. But the task of attracting as well as retaining global customers is not an easy one. Global Customer Management (GCM) programs may take as long as 10 to 15 years to be fully functional. Capon and Senn (2010) have proposed a four-stage framework to implement an effective GCM program (Capon & Senn, 2010).

Multinational companies are centralizing the task of purchasing supplies for their operations in different countries instead of negotiating purchases for each operating region on an individual basis. The goal is to standardize the quality of supplies as well as take advantage of discounted prices on volume purchases. For many multinational suppliers, just one or two customers often account for a major portion of the total revenues. Thus, the suppliers aiming to lock-in multinational customers will have to expand their global operations so that they are able to service their customers wherever the customers may need them. A supplier with limited global presence may lose the multinational customers to those who can service the customer in every region where the customer operates (Capon & Senn, 2010).

When forming GCM, an average firm goes through four stages which are Pilot, Dead-End, Spring-board, and Embedded. During Pilot, the firm makes a limited entry into GCM. In Dead-End, the senior management gets serious about commitment to GCM. In Spring-board, the firm fine-tunes its GCM strategy and carefully chooses customers to serve and in Embedded, the firm has successful implemented the GCM program. In addition, there are four types of stage change that ultimately lead to an Embedded program (Capon & Senn, 2010).

The first type of stage change is The Ice-Breaker which results from a dissatisfied customer. Initially the management tries to meet the needs of a dissatisfied customer without a formal GCM program but it soon realizes that GCM program is inevitable which leads to the initiation of the Pilot program. The second type of stage change is Full-Throttle Turn. In the Dead-End stage, the firm runs a general GCM program in which it gives special focus to no individual customer. Since the customers fail to receive value, the firm is forced to go back to the Pilot stage and rethink its GCM strategy. The third type of stage change is Value-Booster. After a firm has successfully implemented a Pilot program via an Ice-Breaker strategy, it may further enhance its successful Pilot program. The firm may identify best practices and cultivate deeper relationships with select global customers. The fourth type of stage change is One-Company. By evolving from Value Booster to Embedded, firm dedicates resources to continue satisfying the demand of its global customers. It can take a firm between ten and fifteen years to fully implement the GCM program (Capon & Senn, 2010).

Overall GCM program pays off for the firms that are able to successfully implement it. They enjoy higher customer satisfaction rates, higher revenues, and higher profits. Some firms even succeed in doubling revenue within three to five years. Customers report above-average cost savings, more innovations with commercial potential, and stronger competitive positions in their respective markets (Capon & Senn, 2010).

References

Capon, N., & Senn, C. (2010, Winter). Global Customer Management Programs: How To Make Them Really Work. California Management Review , pp. 32-55.