This document discusses the organizational structure changes underway at Jacobs Suchard, a Swiss confectionery company. It is transitioning from 19 autonomous business units catering to local markets to a more global structure. Key challenges include misaligned incentives between general managers focused on local profits and global brand sponsors pursuing standardization. There is also a lack of clarity around the roles and authority of global brand sponsors versus general managers. The document evaluates task force recommendations to address these issues through clearer role definitions, incentive alignment, and integrating manufacturing and sales leadership.

1. “Think global, act local”
Jacobs Suchard
Presented by:
Asmita Gupta
Harsha Mulchandani
Jaishri Rai
Parth Arora
Pranjal Singh

2. Towards a global organisation
Where we are?
Background:
• Swiss based manufacturer of
coffee, chocolate and confectionary
• Leading market share in
confectionary across EEC
Organizational Structure:
•19 business units autonomously
catering to local markets
• Each business unit producing the
entire basket of products,
customized according to local needs
and standards
• Flat organizational structure
Philosophy:
Entrepreneurial culture
‘People are the structure’
Where we aspire to be?
• Repositioning its brands in a global
perspective
• Avail the first mover advantage in
changed contexts
• Leveraging economies of scale by
cutting down primary factories from
19 to 6
• Each business unit produces one
brand and sells it globally
• Expect to maintain core philosophy
sustaining bottom up decision
making approach

3. Changing Context
Geo-political:
Unified EEC : removed customs, frontier controls and import restrictions
Impact: possibility to create a global strategy for the company across Europe
Social:
Consumer preference becoming uniform due to increased movement across borders
Impact: Increased acceptance for standardized products
Economic:
Integrated market with 320 million potential consumers
Impact: Optimal utilization of available resources to maximize output
Technology:
Standardized technical requirements for products
Impact: Uniform overall process contributes towards cost optimization and creation of
a global brand

4. Current Organizational Structure
Chairman
Chief Executive
officer(Jacob)
Business unit 1-5
Global
Sponser
General
Manager
IMC Manager
(Hermann Pohl)
Consumer
Marketing
Trade
Marketing
IMC
Business unit 6- 15
General
Manager
Consumer
Marketing
Trade
Marketing
Confectionary
(Zinser)

5. Systemic loopholes
Incentive misalignment
Incentive to coordinate?
1. General Manager
The general managers still were responsible for profit in their business units, and so when the IMC’s wanted do
something that would affect their bottom line, the general managers fought it.
The global brand sponsors understood the strong incentive their peers (general managers) had to maximize
profits, which would make them balk at standardization if it hurt local sales.
Incentive – Sales
maximization
2. International Manufacturing Centre
(local)
Coordination with
Global Brand Sponsors
and IMCs (global)
Incentive – Volume
maximization, cost
reduction via
standardization
Coordination with GM’s
pushing for distinctive
packaging

6. Hazy financial structure
Who pays and how much?
Product development, advertising, marketing costs for a global brand
•Sometimes a GBS and a GM would agree on a European advertising strategy but when the
time came to share costs some GM’s would refuse.
IMC’s don’t care about profits and don’t share in the risks/volatilities
of the business
• The IMC’s have good ideas, but they don’t care where the profit is.
Compensation of the IMC’s unclear
• How would IMC’s charge the general managers ; who would bear the risk of volatile price
swings?

7. Blurred lines of authority
Independence or confusion? -
The unwritten rule here is ‘Help yourself’. There is no formal decision structure.
Neither the Chief Executive Office nor Zinser specified what the job of the global brand sponsor would be.
• Conflict in authority of GM’s and GBS’s
- GBS held futile meetings with consumer marketing managers(CMM’s) of different business units
as the CMM’s decisions with overruled by the GM’s they reported to.
• Inherent conflict in the role of GBS’s
• Manufacturing aspect of business not integrated well with company management
• Company objectives overriding core values of entrepreneurship and decentralization
Owner to employee?!
• Core manufacturing decisions taken away from GM’s - resistance to loss of THE position
• Increased layers between GM’s and top management - GM becoming less independent and
more accountable

8. Cost Benefit Analysis
Issenmann Task Force
• Creation of Independent IMC:
 Costs : Could act against the profit goals of the GM
 Benefits: Manufacturing standardized, increasing possibility of developing global product
• General managers functioning as Global brand sponsors too:
 Costs: Inherent conflict in role, increased work load (“ Too much work”)
 Benefits: Lesser conflicts as GBS is also a party to risk, GBS understands local constraints better
• Clearer role definition
 Costs: Clearer role/incentive structure for the GM’s and IMC’s
 Benefits: GBS measured only upto the level of GM
Harvard Task Force
• Separation of roles of GBS and GM
 Costs : Further diminishing the role and say of GM in marketing decisions
 Benefits: Division of work would lead to reduced workload on GBS w.r.t Issenmann’s proposal
• Hierarchy levels increased
 Costs: Increased conflicts, no organizational link between core factory managers and sales managers
 Benefits: Functional speciality in sales

9. The road ahead…
What can be done?
• Selective centralization - decentralization scheme (drawing from Dashman case)
– GBS and General Manager to be the same person in the short term
• Incentive alignment for General Managers
– Higher weightage to overall corporate performance than status quo – encourage a global outlook
• Pull in IMCs closer to GM body through job rotation – induction of people with sales experience in IMCs
– IMCs do not solely focus on profits and do not share risks
– People with a wholesome idea of the business to be present in IMCs
•