Table Of ContentConquering Global Markets
To my parents:
Bill and Liz Hubbard
Conquering
Global Markets
Secrets from the world’s
most successful multinationals
Nancy A. Hubbard
Miriam Katowitz (‘73) Chair in Management and Accounting,
Goucher College, USA
Palgrave
macmillan
© Nancy A. Hubbard 2013
Softcover reprint of the hardcover 1st edition 2013 978-0-230-29355-7
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First published 2013 by
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v
Contents
List of Graphs, Diagrams, and Tables viii
Acknowledgments x
Introduction 1
What is a globalizer? 3
1 The Economics of Globalization 6
Introduction 6
Patterns of globalization 7
Method of global expansion: Modes of entry overview 10
Conclusion 12
2 Trends in Globalization 13
Introduction 13
The facilitators of globalization 13
Trends in globalization 15
The changing nature of the international investor 19
Conclusion 25
3 The Risks, Challenges, and Benefits of Being Global 27
Introduction 27
How do participants see their businesses in a
global context 27
Key risks 29
So why go global? 36
Conclusion 39
4 How Do Companies Go Global: Choices and Issues
between Entry Strategies 40
Introduction 40
Theories to internationalization 40
Method of foreign direct investment 44
Four issues in entry-mode choices for survey participants 44
vi CONTENTS
Additional issues to consider in entry-mode choices 50
Conclusion 57
Case 4.1 Teva Pharmaceuticals 57
5 Nonequity Modes of Investment 59
Introduction 59
General strategic alliance research 59
Contractual strategic alliances: Nonequity modes of investment 61
Commercial contract or strategic alliance? 66
Collaborative strategic alliances: Nonequity position 67
Conclusion 70
Case 5.1 Nike 70
6 Equity Investment Alliances and Joint Ventures 72
Introduction 72
Collaborative strategic alliances: Equity investments 72
Cross-shareholdings and business groups 73
Minority equity stakes 73
Joint ventures 74
Future trends in strategic alliances 90
Conclusion 92
Case 6.1 Standard Bank and ICBC 92
Case 6.2 BP and TNK-BP 93
Case 6.3 Centrica and EDF 94
Case 6.4 Fast Retailing and Lotte 95
7 Mergers and Acquisitions 97
Introduction 97
Methods of expansion and reasons for acquiring 97
Degree of integration 100
Factors for acquisition success and failure 106
Conclusion 128
Case 7.1 Cadbury Schweppes and Adams 128
Case 7.2 Lonrho and Rollex 129
Case 7.3 Lafarge in India 130
8 Greenfield Expansion 132
Introduction 132
Greenfield versus acquisition versus strategic alliances 132
Why go greenfield versus other modes of entry 135
Successful conditions for greenfield expansion 136
Successful entry mode techniques in greenfield expansion 138
Key success factors in greenfield expansion 140
“Born globals” 145
(cid:2) CONTENTS vii
Conclusion 146
Case 8.1 Cargill in Vietnam 146
Case 8.2 Tele2 in Russia 147
9 Emerging Market Companies as Globalizers 149
Introduction 149
Emerging world globalizers 149
Types of emerging world globalizers 150
Characteristics of emerging world globalizers 151
In search of resources 154
Emerging world globalizer strategies for internationalization 156
Internationalization strategy 159
Conclusion 160
Case 9.1 Nidec Corporation 161
Case 9.2 JBS and Swift 162
Case 9.3 GMR Group 163
10 China as a Destination 165
Introduction 165
History of foreign investment in China 165
Role of government 170
Business groups 173
Chinese guanxi 174
The Chinese perspective 175
Issues and overcoming difficulties 176
Greenfield investment in China 177
Joint ventures in China 178
Acquiring in China 179
Survey participants in China to date: Success and failures 181
Issues in China 181
Conclusion 185
Case 10.1 Arc International 185
Case 10.2 IMAX 186
Case 10.3 Danone and Wahaha Group 187
Case 10.4 Chinese car industry 188
11 The Next Decade and Beyond 190
Introduction 190
Major themes 190
Future trends 197
Bibliography 202
Index 216
viii
List of Graphs, Diagrams,
and Tables
Graphs
1.1 L evels of foreign direct investment into both the developed
and emerging world, 1990–2011 8
1.2 The top 18 destinations for inflows of foreign direct
investment, 2010 8
1.3 Outflows of foreign direct investment from country of origin 9
2.1 Size and participants’ nationalities of acquisitions
greater than $1 billion 20
2.2 P ercentage of emerging market globalizers in M&A mega
deals worth greater than $1 billion 21
5.1 Estimated nonequity modes of investment in 2009 62
6.1 Reasons for last joint venture given by
survey participants 75
6.2 Reasons for joint venture given by survey participants 83
7.1 Reasons for acquiring, comparing domestic and
cross-border acquisitions 99
7.2 Survey participants’ reasons for acquiring 100
7.3 Reasons given by survey participants for acquisition success 108
7.4 Types of due diligence conducted before acquisition 112
7.5 Comparison of synergies sought between domestic and
cross-border acquisitions 115
7.6 Time necessary to get in place middle managers and
above into managerial positions 121
8.1 Reasons for greenfield market entry given by
survey participants 136
8.2 Key success factors given by survey participants 140
10.1 Rise in Chinese foreign direct investment, 1999–2010 169
Diagrams
1.1 Different types of nonequity and equity entry modes 10
2.1 Globalfocussing 16
(cid:2) LIST OF GRAPHS, DIAGRAMS, AND TABLES ix
3.1 Entry-mode choice and its relation to market tailorization
and control required 36
5.1 Differences in strategic alliances 66
7.1 Relationship between the degree of integration chosen
and reasons for acquiring 105
7.2 Relationship between organizational culture and the
degree of integration 116
9.1 Strategic commitment to internationalization 159
Tables
2.1 Total mega-deal acquisitions between 2007 and 2011
featuring emerging market countries 21
2.2 Thirty largest state-owned enterprises 24
3.1 Market perceptions of publicly quoted cinema chains
as of December 1, 2012 39
4.1 Telefonica Movile Espana’s mega deal acquisition history 41
4.2 ArcelorMittal’s overseas expansion, 1992–2012 43
4.3 Issues of market entry and the risk spectrum 55
5.1 Why companies enter collaborative strategic alliances 60
6.1 Research reasons leading to successful joint ventures 76
10.1 History of modern Chinese development 166
