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Managing Directors Discuss Going Nordic at AmCham Executive Forum
 
Forum host, Kenneth Jørgensen, Ford Motor Company; Claus Bretton-Meyer, Observer Denmark; Mark Luscombe, Citigroup; and Per Kogut, CA Northern Europe presented their Nordic models.

How can companies corral and harness the power of various operations spread across the Nordic region?

Managing directors, mostly of American subsidiaries, shared some answers to that and other questions at the founding meeting of AmCham’s Executive Forum on September 20. The 25 business leaders recounted their experiences and shared best practices of going regional in a time when most organizations are looking to do more, in more places, with less.

AmCham is working with member companies to plan other exclusive managing director sessions to generate ideas and spur conversations about topics of strategic interest.

Nordic Models

Ken Jørgensen, managing director, Ford Motor Company, said Ford built a robust European hub in the 1960s, but stayed with the model it had created for Europe for too long before going global in the mid-1990s. The company has since learned to develop products in other parts of the world while concentrating on selling and marketing in Europe, he added.

Mark Luscombe, managing director, Citigroup Denmark, said the company’s Nordic organization approaches things regionally while keeping key functions like sales and compliance local. Doing so enables Citigroup to leverage its position in each country and effectively cut costs. The model’s success helps the organization to make its case with the home office for more resources for the region. In this sense, regionalizing is a stepping stone to more resources, sales and overall growth, in Luscombe’s view.

Per Kogut, regional manager, CA Northern Europe, said his company’s regional operation, which encompasses 11 countries, shares resources and goals, sets a manager and marketing staff in each country, communicates a lot, and is proactive. Most importantly, the changes have boosted revenues 50 percent since 2001. CA Northern Europe built its model on the company’s fundamental premise: to unify and simplify IT management–the organization does the same for regional operations. Kogut said that beefed-up regional operations can leverage relationships with the parent company back in the United States. He said the successful formula for dealing with the American office is stepping up and being heard, and having all the facts and figures on hand.

Claus Bretton-Meyer, regional director, Observer Denmark (a Swedish company), said his company has applied a full functional model in the Nordics that consolidates sales and marketing, customer service, and supply and finance. In addition, using the Baltics as production hubs has cut costs significantly. Overall, the synergies are paying off for the company, which relies on highly trained and experienced managers to be the glue holding everything together.

Challenges

Regionalizing can work, but as the managing directors’ experiences have shown, it’s no walk in the park. There are formidable challenges, including:

  • Language and cultural barriers
  • Differing labor regulations
  • National tax authorities that have no concept of, or interest in, regional business models
  • Infighting and rivalries between offices sparked by the location of headquarters (offices in other countries can feel left out) and measurement techniques, among other things
  • A tough toll on managers who spend a significant amount of time traveling around their region
  • Multiple systems of red tape

Another wrinkle is finding the right location for regional headquarters. Locating in Sweden would seem to make sense because it is the largest market in the Nordics, but its labor regulations and hiring and firing rules complicate the decision for some companies. On the other hand, Denmark’s diminutive size would seem to count against it, but this aspect may be balanced out for some companies by its geographic location and flexible labor laws.

Steen Læssøe, managing director, Bentley Scandinavia, said the consensus recommendation at the Executive Forum seemed to be a model that consolidates and then applies key functions across a region, while leaving as local other functions, like sales and customer service.

Ford Motor Co.
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