CORPORATE OVERVIEW

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Eaton is a manufacturer of highly engineered and technologically advanced products serving world markets in the fields of transportation, industrial automation, electronic and electrical systems, and materials handling. Of $3.3 billion in 1979 sales, $787 million or 23% were outside the US. The company employs over 60,000 people in 23 countries.

Eaton is organized in five worldwide product groups, all reporting to the president:

Three staff services groups-engineering and corporate development, finance and administration, and law and corporate relations-report directly to the chairman.

Eaton created an international division in the early 1960s, following several overseas acquisitions. Because of product diversity, the division was structured along product, rather than geographic, lines. A direct link was thus forged between each domestic product group and its overseas activities. In fact, the link shortly became strong enough to drop the international division and move to a global product structure. Since then, Eaton has found that a worldwide product format best meets the needs created by its product and customer diversity. As one executive stated, "Our customers are becoming world customers. This means that the company must be able to provide a world perspective on Eaton products and services, which can best be done at headquarters. "

While worldwide product structure has proven to be an acceptable format, it was felt that some amount of geographic input was required when, in the 1970s, Eaton had to respond to such common environmental issues as political conditions, codetermination, taxes, labor relations, joint ownership, energy conservation and inflation. Another executive noted, "In a country where there are many company operations and diversified corporate representatives, where there is a variance in performance among the units, and where the government imposes price controls and import restrictions and is somewhat inhospitable to MNCs, a need for corporate assessments and strategies exists." One solution, utilized in Europe and South America, was to create coordinating committees (examined below). While these increased communication among all units, it was still felt that monitoring and assessment of the issues from a corporate perspective was required.

In 1976, therefore, Eaton created the position of vice-president, international, reporting to the executive vice-president, engineering and corporate development. [See Figure 11.9] His duties are to keep track of Eaton's investments and evaluate the potential for additional investment outside the US; further the growth of worldwide export sales; represent the company in international organizations and institutions; and maintain direct international coordinating responsibility for Canada and Mexico. He does not have operating responsibilities but serves in an advisory capacity to the company's worldwide operations.

Reporting to the vice-president, international, are several regional coordinators, the head of Eaton-Japan, an international planning director (who also reports administratively to the head of corporate planning), and a political! economic information and analysis unit. The regional coordinators have three major responsibilities:

Some of the coordinators perform these duties on a full-time basis; others work part-time, depending on the region and the company's needs. The part-time coordinators are mainly line operations managers who are expected to spend about 10% of their time on their coordination duties.

Since it was created ... , the international organization has been able to increase the amount of coordination and communication among diverse product operations; factor more comprehensive international elements into functional strategic plans; and provide for better company representation overseas. A key issue is effective planning so that optimal decisions can be made for overseas markets: "Environmental factors are complex and important for Eaton; we must see that they are properly considered in the planning and strategy process." As noted above, an international planner reports to the vice-president, international, as well as to corporate planning. In addition, the company now holds quarterly worldwide operating reviews, at which executives from Asia, Europe and Latin America meet with the product group executives and the president. Such meetings help further the goals of planning and communication.

Figure 11.9 Eaton Corporation 

 

The international organization is still evolving. Since the need for the kinds of services it provides is increasing, the future may require the creation of more full-time regional coordinator positions. Also, more extensive regional and country plans may come from overseas regional planners rather than from the office of the international planner.