584
&RQÀLFWV&RPSURPLVHVDQG3ROLWLFDO'HFLVLRQV
ownership of information, and organizational
responsibilities.
)LJXUHVKRZVFRQFLVHO\RXU¿QGLQJV:KHQ
creating e-business or enterprise architecture, the
major problems to be solved are organizational.
This does not align with the support that UML
and RUP provides, because they mostly concen-
trate on solving the problems in the language
and technical contexts. It is the task of future
research to provide improvements to this, but,
as can be seen from Table 2, it might need quite
radical extensions or changes to UML and RUP
to be able to support effectively the formation of
e-business architecture.
CONCLUSION
We have described a process where a large ICT
company is building architecture for a com-
prehensive e-business system. From the case,
we extracted 13 requirements for methodology
supporting integrated e-business systems de-
YHORSPHQW DQG FODVVL¿HG WKH UHTXLUHPHQWV WR
technology, language, and organization contexts.
We also compared the requirements to the support
that UML and RUP offers and concluded that the
HEXVLQHVVVSHFL¿FUHTXLUHPHQWVDUHQRWPHWLQ
UML and RUP. Successful e-business develop-
ment requires alternative approaches that support
better organization change, communication be-
tween stakeholders, systems integration, objective

formation, and evolutionary development.
In our study, architecture manifested itself as
a catalyst that makes business and organizational
FRQÀLFWVDQGSUREOHPVFRQFUHWH:KHQPDNLQJ
decisions about architecture, the systems archi-
tects had to take into account the organizational
situation in the company. At the same time the
architecture starts shaping and changing the or-
ganization, thus forming a double mangle (e.g.,
Jones, 1998). The architects also realized that
technical rationality is not enough for success in
this kind of a situation. To succeed in e-business
architecture development, one has to be aware
of the political and organizational forces that are
driving the development and its objectives. E-busi-
ness architecture development can therefore be
characterized as a process of seeking boundaries,
¿QGLQJVXI¿FLHQWFRQVHQVXVDQGLGHQWLI\LQJFRP-
monalities across organizational borders. Most
previous literature on architectural methods has
neglected this and sought to develop description
languages for describing the actual architec-
tures for systems with clear problem statements,
whereas we claim that it would be more important
to seek tools that aid in building common under-
standing about the system and its architecture
DQGWRROVIRUSURFHVVLQJWKHHPHUJLQJFRQÀLFWV
7KXVZHPDLQWDLQWKDWWKH¿HOGRIDUFKLWHFWXUH
IRUHEXVLQHVVZRXOGEHQH¿WIURPWRROVWKDWKHOS
WR LGHQWLI\ DQG SURFHVV WKH HPHUJLQJ FRQÀLFWV

than tools that aid in developing a technically
³SHUIHFW´DQGRSWLPL]HGVROXWLRQ7KHVHWRROV
could be used in early phases of development to
augment UML and RUP based tools. Examples
of such tools are group support systems and dif-
ferent participation facilitation systems. Thus we
do not call for replacing UML, but rather adding
tools that can be used to communicate with non-
technical people about the architecture.
ACKNOWLEDGMENTS
We would like to thank the anonymous reviewers
of this paper for their valuable instructions and
especially the reviewer that gave us the simple
idea of Figure 3.
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by I. Lee, pp. 71-93, copyright 2009 by Information Science Reference (an imprint of IGI Global).
589
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Chapter 2.16
Developing a Global CRM
Strategy
Michael Shumanov

Monash University, Australia
Michael Ewing
Monash University, Australia
ABSTRACT
While the managerial rationale for adopting cus-
tomer relationship management (CRM) has been
fairly well articulated in the literature, research on
strategy development is scant. Moreover, reports
RI³&50IDLOXUHV´LQWKHSRSXODUEXVLQHVVSUHVV
K DY HG R QH O LW W OH W RL Q V SLUH F RQ ¿GH QFH 7R G DW H ZK DW
little research has been conducted in the area of
&50VWUDWHJ\GHYHORSPHQWKDVEHHQFRQ¿QHGWRD
single country (often the U.S.). Global CRM strat-
HJ\GHYHORSPHQWLVVXHVKDYH\HWWREHVSHFL¿FDOO\
addressed, particularly which elements of CRM
strategy should be centralised/decentralised. The
present study examines the complexities of global
& 5 0 VW UDW HJ \X V L QJW K HFD V HR ID OHD G L Q J¿ QDQ F LD O 
services company. Interviews are conducted in
FRXQWULHV*OREDO+HDG2I¿FHDQGH[WHUQDO,7
consultant perspectives are also considered. Our
¿QGLQJVFRQ¿UPWKDWDK\EULGDSSURDFKKDVZLGH
practical appeal and that subsidiary orientation
towards centralisation/decentralisation is moder-
DWHGE\¿UPPDUNHWVL]HDQGVRSKLVWLFDWLRQ
INTRODUCTION
Recent advances in information technology (IT)
have enhanced the possibilities for collecting
customer data and generating information to
support marketing decision making. CRM has

been heralded by some as being the key to deliv-
ering superior business performance by focusing
organisational efforts towards becoming more
customer-centric and responsive (Davenport, Har-
ris, & Kohli, 2001; Puschman & Rainer, 2001).
However, others have cautioned that increasing
information may actually increase the complexity
of the decision-making process thereby adversely
affecting decision-making performance (Van
Bruggen, Smidts, & Wierenga, 2001).
590
Developing a Global CRM Strategy
Much of the extant academic literature on
CRM has focused on identifying antecedents
and consequences (e.g., Bull, 2003; Day & Van
den Bulte 2002; Kotorov, 2003; Ryals & Knox,
2001). CRM has been variously conceptualised
as (1) a process (e.g., Day & Van den Bulte, 2002;
Galbreath & Rogers, 1999; Srivastava, Shervani,
& Fahey, 1998); (2) a strategy (e.g., Croteau & Li,
2003; Verhoef & Donkers, 2001); (3) a philosophy
(e.g., Fairhurst, 2001; Reichheld, 1996); (4) a ca-
pability (e.g., Peppers, Rogers, & Dorf, 1999) and
(5) a technology (e.g., Shoemaker, 2001). Although
there is clearly more to CRM than technology
(Day & Van den Bulte, 2002; Reinartz, Krafft,
& Hoyer, 2004), it is important to recognise that
technology does play a central role in supporting
the seamless integration of multiple customer
touch points. IT also enables organisations to

collect, store, develop, and disseminate knowledge
throughout the organisation (Bose 2002; Crosby
& Johnson, 2001). Customer knowledge is critical
for successful customer relationship management
(Crosby & Johnson, 2000; Davenport et al., 2001;
Hirschowitz, 2001).
&50'H¿QHG
The importance of technology in enabling CRM
LV H[HPSOL¿HG E\ WKH DWWHPSWV DW GH¿QLQJ WKH
FRQFHSW&50KDVEHHQGH¿QHGDVWKHDOLJQPHQW
of business strategies and processes to create
customer loyalty and ultimately corporate
profitability enabled by technology (Rigby,
Reichheld, & Schefter, 2002). In a similar vain,
5\DOVGH¿QHVLWDVWKHOLIHWLPHPDQDJHPHQW
of customer relationships using IT. E-CRM is
GH¿QHGDVWKHDSSOLFDWLRQRIFXVWRPHUUHODWLRQ-
ship management processes utlising IT and relies
on technology such as relational databases, data
warehouses, data mining, computer telephony
integration, Internet, and multi-channel com-
munication platforms in order to get closer to
customers (Chen & Chen, 2004; Fjermestad &
Romano, 2003). In many respects e-CRM is a
WDXWRORJ\LQWKDWZLWKRXW³H´RUWHFKQRORJ\WKHUH
would be no CRM. We therefore standardise on
the term CRM throughout the paper.
As a business philosophy, CRM is inextricably
linked to the marketing concept (Kotler, 1967) and
PDUNHWRULHQWDWLRQZKLFKVWUHVVHVWKDW¿UPVPXVW

organise around, and be responsive to, the needs
of customers (Kohli & Jaworski, 1990; Narver &
Slater, 1990). From a capability perspective, CRM
needs to be able to gather intelligence about cur-
rent and prospective customers (Campbell, 2003;
Crosby & Johnson, 2000; Davenport et al., 2001;
Zablah, Bellenger, & Johnston, 2004) and apply
that intelligence to shape its subsequent customer
interactions. Furthermore, CRM processes need to
acknowledge that relationships develop over time,
have distinct phases, and are dynamic (Dwyer,
Schurr, & Oh, 1987). Adopting this view high-
lights that CRM processes are best thought of as
longitudinal phenomena. The interesting feature
IRU¿UPVLVWKDWWKH\VKRXOGLQWHUDFWDQGPDQDJH
relationships with customers differently at each
stage (Srivastava et al., 1998). Essentially, CRM
involves the systematic and proactive management
of relationships from initiation to termination
across all channels (Reinartz et al., 2004). Another
aspect of the relationship continuum is that not
all relationships provide equivalent value to the
¿UP&50UHTXLUHV¿UPVWRDOORFDWHUHVRXUFHV
to customer segments based on the value of the
FXVWRPHUVHJPHQWWRWKH¿UP=DEODKHWDO
Zeithaml, Rust, & Lemon, 2001).
CRM Strategy
A high degree of CRM process implementation
LVFKDUDFWHULVHGDVZKHUH¿UPVDUHDEOHWRDGMXVW
their customer interactions based on the life-

cycle stages of their customers and their capacity
WRLQÀXHQFHRUVKDSHWKHVWDJHVLHH[WHQGLQJ
relationships, Reinartz et al., 2004). Standardis-
ing CRM processes enables consistent execution
to customers across all delivery channels. Suc-
cessful CRM also requires organisational align-
591
Developing a Global CRM Strategy
ment (employee reward systems, organisational
structure, training procedures) and investments
in CRM technology. Interestingly, the level of
technological sophistication of CRM technology
makes no contribution to economic performance
and supports the view that CRM is more than just
software (Reinartz et al., 2004).
CRM can be conceptualised at three levels: (1)
company wide, (2) functional, and (3) customer
facing (Buttle, 2004). This study adopts the
FRPSDQ\ZLGHGH¿QLWLRQRI&50ZKLFKYLHZV
CRM as a core customer-centric business strategy
IRFXVHG RQ DFTXLULQJ DQG UHWDLQLQJ SUR¿WDEOH
customers (Buttle, 2004). This requires a
customer-centric business culture, formal reward
and recognition systems that promote employee
behaviours that enhance customer satisfaction
and the sharing of customer information and its
conversion into useful knowledge.
Unfortunately, CRM’s potential has, in
many instances, failed to be realised. Successful
implementation requires the adoption of a

customer-centric business strategy and a redesign
RIIXQFWLRQDODFWLYLWLHVZRUNÀRZVDQGSURFHVVHV
(Galami, 2000; Nelson & Berg, 2000). Some
organisations have begun focusing their business
strategy around their customers and capturing,
sharing, and applying customer knowledge
to deliver superior service and customisation
(Mitchell, 1998).
However, despite the rhetoric, empirical
research on CRM strategy development is scarce.
In particular, work on the vexing standardisation/
localisation issue is lacking. In this increasingly
globalised economy, it is surprising that
researchers have overlooked cross-national
differences and global CRM strategy issues.
To address these gaps, the present study will
seek to explore in depth the issues surrounding
standardisation versus localisation of CRM
strategy development. A case study of a leading
¿QDQFLDO VHUYLFHV FRPSDQ\ LV XVHG WR H[SORUH
these issues. The paper reviews the localisation/
centralisation literature, describes the study to
EHXQGHUWDNHQDQGEDVHGRQWKH¿QGLQJVGUDZV
a number of conclusions regarding global CRM
strategy development and highlights areas worthy
of future research.
GLOBAL CRM STRATEGY
In an increasingly competitive and complex
market environment, multi-national enterprises
(MNE’s) are under constant pressure to re-assess

the degree of autonomy they grant to their local
subsidiaries. While headquarters are likely to
have more expertise on strategic matters, local
subsidiaries are likely to have more information
on operational issues and be more responsive to
G\QDPLFVLPSDFWLQJWKHLUVSHFL¿FPDUNHW:LWKLQ
DVSHFL¿F01(FRQWH[WFHQWUDOLVDWLRQUHIHUVWR
where decision making is vested largely with the
global parent company (Cray, 1984). By contrast,
GHFHQWUDOLVHGRUJDQLVDWLRQVDUHGH¿QHGDVWKRVH
where each subsidiary has a high degree of au-
tonomy in making decisions on processes and
products relevant to the needs of the local market
(Edwards, Ahmad, & Moss, 2002).
There is some empirical evidence to suggest
that although subsidiaries of global parent organi-
sations may be given some autonomy in making
operating decisions, strategic decision making is
invariably controlled by the parent organisation
(Bowman, Farley, & Schmittlein, 2000), which
can be manifested through IT (Roche, 1996).
0RUHRYHU,7SURYLGHVDQHI¿FLHQWDQGHIIHFWLYH
decision support system to transfer information
from the local subsidiary into the parent company’s
reporting models, increasing the capacity of head-
quarter management to engage in local company
decision making (Clemmons & Simon, 2001;
McDonald, 1996). Using a case study approach,
Ciborra and Failla (2000) found that IBM failed
in its vision for global CRM because of their

¿[DWLRQIRUVWDQGDUGLVDWLRQDQGFHQWUDOLVDWLRQDQG
the use of IT to enforce behaviours. Furthermore,
they concluded that this variation in CRM adop-
592
Developing a Global CRM Strategy
tion at the country level and unique regulatory
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tenuous at best, although they acknowledge that
&50LVD³SRZHUIXOZHDSRQIRUFHQWUDOLVDWLRQ´
(Ciborra & Failla, 2000, p. 122).
This desire for greater parent company con-
trol is a function of perceived risk. That is, the
greater the perceived level of risk, the greater
the desire for active decision making (Garnier,
1982). The types of decisions likely to require
parent company decision making include capital
expenditure; acquisitions and divestments; and
funding. A criticism of centralised decision mak-
ing is that it is expensive and that local subsidiaries
are unable to react quickly to changes in local
market dynamics (Harris, 1992). There is some
empirical evidence to suggest that organisations
with decentralised decision making performed
better than those organisations characterised as
having centralised decision making with respect
to marketing (Ozsomer & Prussia, 2000). More-
over, highly centralised organisations make less
contribution to their host country in terms of
investment, knowledge transfer, and management
expertise than their decentralised counterparts

(Fina & Rugman, 1996).
We have adopted a typology developed by
Barlett and Ghoshal (1989) to classify the predis-
position of organisations for a globalised/localised
orientation. They describe organisations as: glob-
al, international, multi-national, and transnational.
A global organisation is characterised as driven
E\WKHQHHGIRUJOREDOHI¿FLHQF\ZKLOHKDYLQJ
structures that are more centralised in their stra-
tegic and operational decisions. An international
organisation is characterised as transferring and
adapting the parent company’s knowledge or ex-
pertise to foreign subsidiaries. The parent retains
LQÀXHQFHDQGFRQWUROEXWWRDOHVVHUH[WHQWWKDQD
classic global structure. A multi-national organisa-
tion manages its subsidiaries as though they were
components of a portfolio of multi-national entities
with headquarters exercising low control and low
coordination. Finally, a transnational organisation
seeks a balance between global integration and
local responsiveness. This type of organisation
has structures considered to be both centralised
and decentralised simultaneously. Transnational
¿UPVKDYHKLJKHUGHJUHHVRIFRRUGLQDWLRQZLWK
low control dispersed throughout the organisa-
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characterised as a global organisation. That is,
they employ structures that are more centralised
in their strategic and operational decisions, and
their products are homogenous throughout the

world. Given a centralised structure, most of
the decisions are made at headquarter level and
imposed on subsidiaries.
Agency Theory
We use agency theory (Ross, 1973) as the theo-
retical foundation for describing the relationship
between headquarters and country subsidiaries.
Agency theory refers to the basic agency struc-
ture of a principal and agent who are engaged in
cooperative behaviour, but having differing goals
and attitudes to risk (Ross, 1973). In our research,
the principal is headquarters and the agent is the
subsidiary organisation. Goal differences, risk
tolerance differences, and information asym-
metry can create problems in agency relations
(LVHQKDUGW7KH¿UVWJHQHUDOSUREOHPLV
differences in the goals of principal and agents.
Agents may act in their own self-interest at the
expense of the principal. Secondly, principals and
agents may have different tolerances towards risk.
In the context of CRM strategy development, the
principal is likely to have a lower risk tolerance
than the agent. The third problem, asymmetric
information arises when one party has more
information than the other, or when one party
prefers to keep some information private.
There are two types of agent behaviour that
FRXOGEHGHWULPHQWDOWRWKHSULQFLSDO7KH¿UVW
adverse selection might refer to a subsidiary’s
misrepresentation of its ability to undertake/imple-

ment CRM. The second moral hazard refers to
593
Developing a Global CRM Strategy
the fact that the agent may not act as diligently as
anticipated in carrying out the will of the princi-
pal. However, agency theory proposes that better
information management systems can reduce the
agency problem and provide the principal with
greater control and is consistent with our earlier
discussion on global CRM strategy development.
Control may take the form of behaviour-based
or outcome-based strategies. Both rely on the
principal’s ability to evaluate the performance of
the agent, either on a behaviour-by-behaviour basis
or at the end of the project based on its outcome
(Eisenhardt, 1985).
From the principal’s perspective, adopting an
outcome-based control strategy is likely to be
GLI¿FXOWJLYHQWKDWWKHSULQFLSDOZRXOGQHHGWR
wait until the long-term outcomes became known.
Consequently, a behaviour-based control strategy
may be preferred by the principal in CRM strat-
egy development. The degree of knowledge that
the principal (headquarters) has about the agent
(wholly owned subsidiary) in terms of market
FKDUDFWHULVWLFVFXVWRPHUSUR¿OHDQGSURFHVVHV
enables headquarters to more effectively moni-
tor and control a subsidiary’s behaviour (Kirsch,
1996). This is likely to mitigate the risk of sub-
sidiaries acting in their own self-interest at the

expense of the entire organisation. Agency theory
(Ross, 1973) is therefore useful in addressing our
research questions: what aspects of CRM strategy
should be centralised/localised? and what are some
of the complexities of cross-national CRM strategy
development? Another fundamental concept is the
level of involvement between the principal and
agent in implementation. For instance, if the agent
is able to customise the CRM implementation
WRUHÀHFWWKHLUFRXQWU\¶VUHTXLUHPHQWVWKHQWKH
principal has less ability to control the behaviour
of local country CRM managers compared to
where the local subsidiary is required to imple-
ment a standardised CRM solution. However, the
control dichotomy needs to be balanced to avoid
implementation failure particularly where head-
quarters does not have an in-depth understanding
of local market conditions. Furthermore, where
a standardised implementation is imposed, it is
important to consider the level of knowledge and
dynamic learning mechanisms that will need
to be created in the local subsidiary to address
system failures.
We also examined the channel coordination
literature (i.e., Frazier, 1999; Frazier & Rody,
1991; Hunt & Nevin. 1974), which describes the
relationship between buyer and seller involving
a distribution channel. However, given that this
research seeks to examine the relationship be-
tween headquarters and its subsidiaries, agency

theory offers a more robust theoretical founda-
tion with respect to CRM strategy development.
The channel coordination literature relates more
to relationships characterised as involving a
distribution channel, rather than describing the
parent-subsidiary relationship.
METHOD
Data Collection
Understanding both substantive and methodologi-
cal context permits the reader to put the research
into context and thus derive deeper meaning from
WKH¿QGLQJV-RKQV'DWDZHUHGHULYHGXVLQJ
the case study method and utilising a multi-sample
longitudinal research design (Yin, 1994). Case
studies enable the development of deep insights
into respondent beliefs and assist in theory de-
velopment (Beverland, 2001). Bonoma (1985),
Hirschman (1986), and Deshpande (1983) have
all advocated for greater application of qualitative
research methods in marketing. In order to avoid
cueing subjects into a desired response, respon-
dents were asked fairly general questions on the
topic in order to elicit themes (Strauss & Corbin,
6SHFL¿FDOO\WZR³JUDQGWRXU´TXHVWLRQV
0F&UDFNHQZHUHDVNHG7KH¿UVWUHODWHGWR
issues surrounding local subsidiary decision-mak-
ing empowerment in relation to CRM strategy.