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Balancing Integration and Responsiveness in Case of the Sales Function within the FMCG Industry: A Study of Foreign Subsidiaries in Germany

Reichstein-Scholz, Harriet Anni

[Thesis]. Manchester, UK: The University of Manchester; 2017.

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Abstract

Significant structural changes in the retail sector, due to retailer consolidation within and across countries as well as retailer internationalisation, lead to significant changes of the sales function within the FMCG industry. Whilst formally sales functions acted traditionally predominantly locally, manufacturers are recently pressured to act more integrated, i.e. centrally, regarding its sales function.From an IB perspective this study strives to investigate into the result of the competing forces for integration and responsiveness at the manufacturers side in the special context of Germany, being a pivotal market for this industry. Identifying the potential division of strategic sales activities between subsidiary and HQ, the study investigates into how such division impacts on the subsidiary market performance. Using the I/R framework as a starting point, network theory and the concept of subsidiary importance are utilized to understand the interrelationships a subsidiary is embedded in and its potential strategic importance to the wider MNE. The framework connects the antecedents of the division of strategic sales activities between HQ and subsidiary, to subsidiary market performance.The research follows a mixed-method approach using contextualising interviews and a quantitative survey. The data analysis has been conducted with PLS SEM reflecting both the more explorative character of the study and the relatively small sample size. Empirical evidence showed that most strategic sales decisions are still made at subsidiary level, pointing at a low level of division between HQ and subsidiary. The results show that strong customer relationships as well as the positive impact of a formalised sales strategy, which ideally follows a global strategic framework, seem to be the main contributors to subsidiary market performance. Unexpectedly, subsidiary importance, the visibility and relevance of sales capabilities to other subsidiaries, fails to be a driver for the subsidiary strategic role within the MNE, mainly due to the functional (sales competencies stay rather local) and country (sheer importance of the German market) context of the study.The key contributions of this study are related to the area of IB and the sales literature. This study adds to the extant IB literature from a downstream value chain perspective supporting existing findings regarding the network theory and subsidiary market performance. The irrelevance of the concept of subsidiary importance highlights the importance of the empirical context in IB research. Finally, the study sheds light on the sales function from a strategic perspective in the IB context and thus adds to the sparse literature regarding the sales strategy as well as it starts bridging both fields.