Table Of ContentThe Global Business Revolution and the Cascade Effect
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The Global Business
Revolution and the Cascade
Effect
Systems Integration in the Global Aerospace,
Beverage and Retail Industries
Peter Nolan, Jin Zhang and Chunhang Liu
© Peter Nolan, Jin Zhang, and Chunhang Liu 2007
Softcover reprint of the hardcover 1st edition 2007 978-0-230-01358-2
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Designs and Patents Act 1988.
First published 2007 by
PALGRAVE MACMILLAN
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PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd.
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ISBN 978-1-349-28486-3 ISBN 978-0-230-59744-0 (eBook)
DOI 10.1057/9780230597440
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A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Nolan, Peter, 1949–
The global business revolution and the cascade effect:systems
integration in the global aerospace, beverage and retail industries /
Peter Nolan, Jin Zhang, Chunhang Liu.
p. cm.
Includes bibliographical references and index.
ISBN 978-1-349-28486-3 (cloth)
1. Industrial organization (Economic theory) 2. Industrial
concentration. I. Zhang, Jin, 1967– II. Liu, Chunhang. III. Title.
HD2326.N65 2007
338.8—dc22 2006051449
10 9 8 7 6 5 4 3 2 1
16 15 14 13 12 11 10 09 08 07
Contents
List of Tables and Figures vii
Acronyms and Abbreviations x
Introduction 1
1 The Debate 6
1.1 The mainstream views 6
1.2 The non-mainstream views 10
1.3 Unanswered questions 13
2 The Global Business Revolution, Systems Integration
and the Cascade Effect 15
2.1 The merger wave at the end of the twentieth century 15
2.2 Systems integration and the emergence of the
external firm 26
2.3 The cascade effect 31
2.4 Summary 34
3 The Aerospace Industry 36
3.1 Consolidation of systems integrators 36
3.1.1 The global aerospace market 37
3.1.2 Consolidation in the United States 38
3.1.3 Consolidation in Europe 39
3.1.4 Transatlantic mergers and acquisitions 41
3.2 Systems integration 43
3.3 The ‘cascade’ effect in the aerospace value chain 49
3.3.1 Leading subsystems integrators 49
3.3.2 Niche subsystems integrators 52
3.3.3 Materials and major components 54
3.3.4 Maintenance, repair and overhaul 55
3.3.5 Major suppliers for the Airbus A380 and
Boeing 7E7 62
3.4 Summary 64
4 The Beverage Industry 67
4.1 Consolidation of system integrators 67
v
vi Contents
4.2 Systems integration: a case study of the Coca-Cola
value chain 71
4.2.1 The Coca-Cola value chain 71
4.2.2 Coca-Cola and its bottlers 75
4.2.3 Coca-Cola and the global consumer
packaging industry 77
4.3 Cascade effect in the beverage value chain 82
4.3.1 Global consumer goods packaging 83
4.3.2 PET machinery 101
4.3.3 Filling equipment 104
4.3.4 Ingredients: carbon dioxide 107
4.3.5 Advertising and marketing 109
4.3.6 Trucks 110
4.3.7 Retail 112
4.4 Summary 113
5 The Retail Industry 115
5.1 Consolidation among systems integrators 115
5.1.1 Increasing retail concentration in advanced
economies 117
5.1.2 International expansion of large retailers 121
5.1.3 Rise of global retail giants 126
5.2 Systems integration in the retail industry 127
5.3 Cascade effect 131
5.3.1 Food 132
5.3.2 Consumer products 139
5.3.3 Apparel 141
5.4 Summary 142
6 Implications for Firm-level Catch-Up in Developing
Countries 144
6.1 Competition, industrial concentration and technical
progress 144
6.2 Challenges of the global business revolution 149
6.2.1 Unequal regional distribution of large
capable firms 150
6.2.2 Difficulties of ‘catch-up’ 154
6.2.3 At the periphery 158
Bibliography 162
Notes 168
Index 173
List of Tables and Figures
Tables
2.1 Distribution of cross-border M&As by value, 1987–99 16
2.2 The 20 largest firms with cross-border M&A
activity, 1987–99 18
2.3 Top 50 restructurings undertaken by US firms,
1980–2004 19
2.4 Firm-level concentration in select global
industries 23
3.1 Major transatlantic acquisitions of aerospace
companies, 2001 and 2002 42
3.2 R&D expenses by Boeing’s main suppliers, 2003 45
3.3 M&A activities among major subsystems integrators
in Boeing’s supply chain 56
3.4 Select suppliers of niche subsystems, major components
and materials in Boeing’s supply chain 59
3.5 Aerospace prime contractors and major
suppliers, 2003 64
4.1 The world’s leading beverage companies, by sales
revenue (US$ billion, 2002: beverage sales only) 68
4.2 Global market share of leading soft drinks firms,
2002 (%) 69
4.3 Coca-Cola and PepsiCo in the global CSD
industry, 1999 69
4.4 Market share of leading beer companies in selected
countries, 2002 70
4.5 The world’s leading food companies, 2003 82
4.6 Global market share of top ten firms in different
packaging sectors 85
4.7 Market share of the world’s leading beverage can
makers in North America and the EU, 2003 (%) 85
4.8 Sales revenue share by world ten largest steel producers
(ranked by output) (US$ million) 92
vii
viii List of Tables and Figures
4.9 Market share of the world’s leading glass bottle
manufacturers, 2003 94
4.10 Market share of main PET bottle manufacturers, 2003
(% of resin consumption) 98
4.11 Global market share in industrial gases, 2003 108
5.1 Global concentration of consumer spending, 1998 116
5.2 Retail concentration in Germany, France and the
United Kingdom, 2004 118
5.3 The top ten retail M&As in the United States,
1994–2005 119
5.4 Increasing concentration in the US department store
sector 119
5.5 Increasing concentration in the US discount
store sector 120
5.6 International expansion of Royal Ahold and Carrefour,
1980–2003 122
5.7 Wal-Mart’s international expansion 125
5.8 The world’s largest retailers, 2003 126
5.9 Private labels of select large retailers 128
5.10 Select ‘exclusive brand’ arrangements 131
5.11 Wal-Mart’s US market share in select merchandise 132
5.12 Cash spending on acquisitions by the largest US
packaged food manufacturers, 2000–05 134
5.13 Major restructurings by large US food manufacturers,
2000–05 135
5.14 US market share of top food manufacturers
by category 137
5.15 Profiles of P&G and Gillette, 2004 140
5.16 Concentration in select US consumer product
categories 141
5.17 Top vendor share in US department store apparel
sales, 2002 142
6.1 The world’s top 700 firms by research and development
expenditure, 2003 146
6.2 Dominance of the global business revolution by
firms based in high-income countries 151
6.3 Large companies from low-income countries 152
6.4 Distribution of the world’s top 320 companies in
R&D spending 153
6.5 Distribution of the world’s top 100 brands, 2003 154
6.6 China’s top ten importers in 2003 160
List of Tables and Figures ix
Figures
2.1 Cascade effect 33
3.1 Commercial aircraft bookings by Boeing and
Airbus since 1990 40
