Business Strategy

Assignment
On
Grand Strategy
0
STABILITY STRATEGY
1. Concentration:
A firm following this strategy focuses its resources on a single product, in a single
market, using one tested technology to ensure profitable growth. Companies
adopt this strategy as it is less risky and does not demand scarce additional
resources.
Example 1: FedEx
Fredrick Smith, an entrepreneur identified the opportunity and established
Federal Express FedEx! in "#$%. Smith operated flights exclusi&ely for cargo
and offered home deli&ery and pick'up ser&ices. (he business model was a big
hit and there was no looking back for the company. )ooking at the success of
FedEx many other companies imitated the model. (hus FedEx concentrated on
the Courier industry in order to gain the competiti&e ad&antage o&er other players
in the market.
FedEx differentiates itself from other player based on its deli&ery process.
Example 2: Swaroo!"i Cr#!tal!
*t pro&ides crystal products to the higher end only.
Example $: Roll! Ro#ce
+olls +oyce follows the strategy of focusing on the single market. *t
manufactures only luxurious car and caters to higher income class.
2. %ar"et &eelopment:
(his process in&ol&es marketing existing products with little modification, to
customers in relates market areas. (he organi,ation employs different channels of
distribution, changes the content of ad&ertising or the medium of promotion.
Example 1: 'LL(! E)tailin* +ent,re
Sangam -irect is a .industan )e&er )imited initiati&e in /umbai to
pro&ide home deli&ery of &arious F/C0, food and grocery products to the
customers directly. (he company boasts of a product range of %100 products
including those of its competitors and unbranded products. (he customer can
order through phone 2 11110000 or through email 2
sangamdirect.hll3unile&er.com and the order are deli&ered in 45 hours. For
a&ailing free home deli&ery the minimum order si,e must be worth +s 500 else
the customer has to pay +s 40 as deli&ery charges.
"
Example 2: -IIT
6**(, *ndia7s leading information technology training institute is a good
example of a company followed the market de&elopment strategy. *t started its
operation in "#84 when computer education was accessible only to engineers and
other science graduates. -uring "#84'"##4, it focused on building awareness
about computer careers. 6**( had to change the mindset of the people to make
them consider computers as a career option. *n "##4, it introduced the
9:ha&ishya ;yoti Scholarship< for students who secured high marks in the
entrance test for its course. 6**( also entered into alliances with foreign
uni&ersities, these enabled students to get admission into foreign uni&ersities fir
degree courses at the end of a minimum 4 years of any 6**( course after "4 years
of schooling.
Example $: Allen Soll# .rand to /omen(! wear.
Allen Solly is a brand of /adura, a leading *ndian apparel company.
/adura employed the *ndian /arket +esearch :ureau */+:! to conduct a
market study on clothing re=uirements of working women. (he study re&ealed
that while *ndian women lo&ed ethnic clothes, they ware not comfortable to work
in. (he study indicated a growing need for >estern wear. (he study also
re&ealed that the western wear a&ailable in the market was unsuitable for *ndian
women. (his information moti&ated /adura to extend its Allen Solly brand to
women7s wear.
$. 0rod,ct &eelopment:
(his process in&ol&es the modification of existing products or the creation of new
items in a related category. (hese products are marketed to current customers
through established channels.
Example 1: -o"ia la,nc1e! -!erie! -23
6okia7s latest addition to its 6series family, the 6okia 680, weighing only
"%5 grams, 6okia 680 is the first =uad band handset designed to work both on %0
and four 0S/ bands. (he con&enient, in'built intuiti&e browsing and fast internet
access makes it possible to send and recei&e e'mails at >)A6 speeds.
(he 6okia 680 demonstrates the cutting'edge technological leadership of
the 6series and offers an unparalleled experience to consumers. (his compact,
internet'optimi,ed and feature'rich de&ice has raised the bar for mobile de&ices.
Comprising the functionality of a highly ad&anced con&erged mobile de&ice, the
6okia 680 empowers people to pursue professional goals and personal passions
with e=ual fer&or.
Example 2: Indica .# TELC4
-e&elopment of *ndica by (E)C? is a good example of successful
product de&elopment. (E)C? had emerged as a leading name in commercial
4
&ehicles, passenger &ehicles, constructions e=uipment, metal cutting and grinding
machines, industrial shutters, high =uality steel, alloy castings and other related
products. (E)C? sought of transform itself from truck manufacturer to an
automobile integrator so in early "##0s, (E)C?7s chairman planned to de&elop a
small car i.e. *ndica.
Example $: -ew Co"e
*n April "#81, Coca'Cola, the largest aerated be&erage manufacturer in the
world launched a sweeter &ersion of soft drink named 96ew Coke<. Coca'Cola7s
decision to change Coke7s formulation was one of the most significant
de&elopments in the soft drink industry during that time. (he taste of 6ew Coke
was similar to that of @epsi. (he main idea of launching 6ew Coke was to
substitute @epsi.
%
GR4/T' STRATEGY
1. Innoation:
*nno&ation in&ol&es the use of a new idea or method. A firm which brings out an
inno&ati&e product usually enAoys the Bfirst mo&er7 ad&antage.
Example 1: 0roce!! Innoation 5 &ell(! Direct Model
(he direct model was strong differentiator for the company as its reduced
unnecessary distribution o&erheads that logged other @C maAor.
(he direct model was based on direct selling, with no retail channel or
reseller. (he telephone operator used to take the order from the customer and his
re=uirements for the systemC sometimes he e&en helped the customer select a
system that would meet his re=uirement. (hen the order was passed on to the
manufacturing people. >hen the system was assembled, the @C was deli&ered to
the customer.
(his enables the people at -E)) to benefit from real'time input from
customers regarding products and ser&ices.
Example 2: 0rod,ct Innoation 5 Gillette
*n recent years, 0illette introduces more than 40 products annually. (he
differentiated products include Sensor Excel and /ach %. @roduct *nno&ation has
become an integral part of 0illette7s strategy. 0illette excelled in creati&ity and
tried to commerciali,e new product designs. *t also tried to market the new
products as fast as possible to get the product design. As a result, 50D of the
0illette7s re&enue comes from products introduced in the past fi&e years.
Example $: Strate*# Innoation 5 /ipro
At >ipro, inno&ation is used to pro&ide added &alue to customers. >ipro
has an inno&ation team and employees who work on de&elopment of inno&ati&e
proAects are rewarded. @roAects are executed in three areasE .ome networking,
collaboration, and knowledge management. (he goal is to shape ideas into
products that are &iable and marketable. Currently, >ipro has o&er 400 people
working on inno&ati&e proAects
2. 'ori6ontal Inte*ration:
*f a firm grows through ac=uiring one or more similar business which is operating
at the same stage of production'marketing chain, then the firm is said to be
following a strategy of hori,ontal integration. >ith these ac=uisitions, the firm
gets access to new markets and eliminates competitors
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Example 1: Glo.al Green Compan# 7GGC8 ac9,ired InterGarden Gro,p
(hapar 0roup7s 00C ac=uired :elgium based *nter0arden 0roup for F 10
million. (he ac=uisition will gi&e 00C a strong foothold in key European
/arket.
00C supplies gherkins, Aalapenos and other preser&ed foods to retail and
other food ser&ice to customer in more than 4% countries and about %0 cities in
*ndia.
*ntergarden has processing factories in :elgium, .ungary, (urkey and
*ndia. (he company produces pickled products such as gherkins, sil&erskin,
cherries, red peppers, etc.
>ith this ac=uisition 00C has extended global footprints, gi&ing
themsel&es better access to customer.
Example 2: GA0 Inc.
(he 0A@ *nc. retail clothing corporation is a good example of a business
that practices hori,ontal integration. 0A@ *nc. controls three distinct companies,
:anana +epublic, ?ld 6a&y, and the 0A@ brand itself. Each company has stores
that market clothes tailored to appeal the needs of a different group. :anana
+epublic sells more expensi&e clothes with a more GupscaleG image, the 0A@
sells GmoderatelyG priced clothes that appeal to middle'aged men and women, and
?ld 6a&y sells Ginexpensi&eG clothes geared towards children and teenagers. :y
using these three different companies, 0A@ *nc. has been &ery successful at
controlling a large segment of the retail clothing industry.
Example $: Ban" o: %ad,ra 5 ICICI Ban"
(he ac=uisition of the :ank of /adura :?/! by *C*C* bank is an
example of the hori,ontal integration. >ith this ac=uisition *C*C* bank has
become one of the largest pri&ate sector banks in *ndia and has consolidated its
presence in South *ndia.
$. +ertical Inte*ration!:
(his type of integration in&ol&es the ac=uisition of suppliers of inputs or the
buyers of the output.
Example 1: Apollo 'ealt1 Street 7A'S8 0t. Ltd. Ac9,ire! Armanti Financial
Serice! 7AFS8
A.S, the healthcare ser&ices company of Apollo group has ac=uired HS
based company AFS, working in hospital billing and recei&ables management
areas.
(he ac=uisition would promise outstanding growth and redefine the
market space. @ost ac=uisition the company expected to achie&e I51 million in "4
months and I"00 million in next "8 months
1
Example 2: C1ira* &in
Chirag -in is one of the leading brands of the country. *t has its own
manufacturing unit and it sells the apparels through its own outlet.
Example $: &i!ne#
-isney owns companies mainly in the exhibition sector with (J channels
such as -isney Channel and A:C. *t is a media institution owns companies in
only one sector of the industry production, distribution or exhibition!.
;. &ier!i:ication:
-i&ersification is the process of entering into different industries either to exploit
untapped potential or to minimi,e the risk of changing business trends.
Example 1: Britannia Ind,!trie! Limited 7BIL8
As part of its strategy to reduce its dependence on biscuits, :*) sought to
di&ersify its product portfolio. :*) saw an opportunity in the dairy segment as it
had only one large player, Amul. *n "##$, :*) entered the dairy segment with
cheese and milk powder or dairy whiteners. :y 4000, :*) captured about %1D of
market share of cheese market and 40D in the dairy whitener segment. *t
launched butter in "##8, tetra packs in "##8 and ghee in 4000. (he company
relaunched its entire dairy business in late April 4000 by bringing it under the
B/ilkman7 name.
Example 2: 0iramal Enterpri!e!
As a part of its strategy, @iramal Enterprises sought to di&ersify its product
portfolio. @iramal Enterprises saw an opportunity in retail sector as it was largely
dri&en by un'organi,ed market. *n September "###, @iramal Enterprises launched
*ndia7s first shopping mall BCrossroads7 in /umbai. Apart from this they also
launched in'house retail store @yramid and (ruemart.
Example $: ITC
*(C has di&ersified into a completely unrelated industry such as food,
apparels.

K
RETRE-C'%E-T
1. T,rnaro,nd:
A turnaround occurs when 9a firm preser&es through an existence 2 threatening
performance declineC and the threat with a combination of strategies, systems,
skills and capabilitiesC and achie&es sustainable performance reco&ery. (he
ob&erse of performance reco&ery is failure and e&entual death.<
Example 1: T,rnin* Aro,nd IB%
*:/7s decline started in the late "#80s. -uring the period "#8K'"##4,
*:/7s o&erall market share in the *( industry in HS fell by %$D, while its global
market share fell by %0D. *n "##%, it reported a record net loss of I8." billion.
*:/7s decline can be attributed more to +'extinction that to L'extinction
factors. (he company had 45 product units functioning independently, e&en
though they were a part of *:/
)ouis 0erstner took o&er as the CE? of the company from ;ohn Akers and
turned the company around. .e brought about a radical change in the work
culture of *:/. *n "##%, he reduced the workforce by %1000 and under took cost
cutting initiati&es. .e also re&ersed the decision of Akers to split *:/ into ""
entities. *:/ also shifted from product'centric to customer'centric in order to
pro&ide complete solution to its client.
*n "##5, 0erstner made effort to impro&e reporting procedures across
different units of the firm. .e started focusing on specific problems related to
indi&idual units.
(he outcome of 0erstner efforts were seen after eight years in 400". *n
that year, the company reported a net income of I$.$ billion. -uring the period
"##%'400", the share price of *:/ shot up by nearly 800D.
Example 2: T,rnin* Aro,nd C1r#!ler
Chrysler Corporation7s decline started in the early "#$0s. (he decline can
be attributed to both internal and external factors. (he top management lacked an
understanding of the strategic direction of the company and the dynamics of the
industry in which the firm was operating.
*acocca Aoined the company in "#$8C it was only "#8% that Chrysler
announced that it would repay the entire I".1 billion go&ernment backed loan by
the end of year "#8%. (hus there was a gap of about 1 years between the time
*acocca Aoined the company and the official announcement of the repayment of
the loan amount.
?&er a period of % years, *acocca fires %% of %1 &ice presidents and in
"#$#'80 fired "1100 workers, sa&ing I100 million in annual cost. *acocca &isited
e&ery single plant, conducted sessions with plant super&isors and spoke directly to
workersC
$
:y "#8%, Chrysler offered 4K million shares, and its stock price rose from
I"K to I%1 within weeks. Chrysler paid off its entire loan se&en years before it
was due. Chrysler7s achie&ement showed that it had accomplished a turnaround.
Example $: T,rnin* Aro,nd -i!!an
6issan7s problem started in early "##0s. 6issan7s decline was caused by
both internal and external factors. (he culture at 6issan was such that e&eryone
was eager to blame someone else for poor performance. *ts organi,ational
structure was also responsible for its decline. (he external factor responsible for
6issan7s decline was low growth in the ;apanese economy in the "##0s. @ost
>orld >ar **, the ;apanese economy grew rapidly and 6issan sei,ed this
opportunity and expanded not only within ;apan but also o&erseas. (his
expansion was funded through debt. :ut once the economy slowed down. As a
result of which there was decline in &ehicle sales, loss of market share, huge debt
and low stock price brought 6issan to near bankruptcy.
Carlos 0hosn, who became C?? of 6issan in "###, turned the company
around. (o bring about changes within 6issan, 0hosn introduced a new
organi,ational structure. Security was eliminated and those who had few
responsibilities were gi&en new assignments. *n addition, compensation packages
were re&amped to reflect performance.
(he outcome of all these measures was that the turnaround was faster than
expected. *n the fiscal year 4000, sales increased by 5DC 40 new models were
launchedC management was streamlinedC purchasing costs reduced by ""D and
the company earned 1.5D operating income on sales.
2. &ie!tit,re:
A di&estiture is the sale of a part or a di&ision of a company to a third party. (he
di&ision may include assets, product lines or subsidiaries.
Example 1: &ie!tit,re! in Gra!im
0rasim *ndustries di&ested its loss'making fabric manufacturing
operations in 0walior to /elodeon Exports )td. and its associates. (he new
management will pro&ide continued employment to the plant7s "410 employees.
After undertaking a techno'commercial e&aluation of its units at 0walior
and :hiwani, the company decided to manufacture both its brands 2 0rasim and
0ra&iera 2at a single location at :hiwani. (his will help impro&e the competiti&e
position of its fabrics business in terms of economies of scale and operations.
(his mo&e is expected to ha&e a positi&e impact on the company7s bottom'
line.
Example 2: &ie!tit,re! in Tata Gro,p
*n 400", (ata chemicals did a maAor restructuring exercise. (he company
decided to di&est the detergent and chemical di&ision, but retain the soda ash, urea
and salt di&ision as a part of (ata Chemicals.
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Example $: &ie!tit,re! in ITC Gro,p
(he di&estiture of *(C Classic Finance by *(C group is one of the best
examples of di&estiture. *(C Classic Finance was a loss'making company of *(C
0roup. *n order to get rid of loss'making company, the *(C group di&ested *(C
Classic Finance which subse=uently got merged with *C*C*.
$. Li9,idation:
)i=uidation in&ol&es selling parts of a firm or the entire firm at auction or to a
pri&ate buyer for its tangible asset &alue. (he intent is not to operate an ongoing
business. Contrast this strategic action with di&estiture.
Example 1: 0etro:il! Ltd.
@etrofils )td. was @SH. -uring late "#80s, @etrofils had tough competition
from +eliance. *n order to o&ercome this competition, @etrofils made in&estments
in Ankleshwar, 0uAarat. As a result of these in&estments, @etrofils incurred huge
loss and was li=uidated.
Example 2: <o1n Steen!on Compan#
;ohn Ste&enson Company was a horse car and carriage builder based in
6ew Mork, 6ew Mork in "8%" and folded in "8K$ due to financial difficulty.
*t re'emerged as the ;ohn Ste&enson Company )imited of )inden, 6ew
;ersey and was building streetcars. (he company was ac=uired by ;. 0. :rill
Company in "#05 and continued to operate under the ;0S name until "#"# when
the plant and corporation was li=uidated.
Example $: S"#line -E0C
6E@C airlines ac=uired -amania airlines. (he new entity was known as Skyline
6E@C Airline. Skyline 6E@C incurred hea&y losses due to high operational
expenditure. -ue to which it was li=uidated in "##K.
;. Ban"r,ptc#:
:ankruptcy in&ol&es legal protection against creditors or others allowing the firm
to restructure its debt obligations or other payments, typically in a way that
temporarily increases cash flow. Such restructuring allows the firm time to
attempt a turnaround strategy
Example 1: T1e Fall o: &aewoo %otor!
*n the late "##0s, the leading South Lorean car manufacturer, -aewoo
/otors was in deep financial trouble. For the financial year ending "###'4000,
-aewoo generated re&enues of I"#$.8 million and a net loss after tax of I"0.5%
billion. (he company7s re&enue had dropped by #5D since "###. (he loss
#
reported was also three times higher than that reported in "###, and was ranked as
South Lorea7s largest e&er corporate loss. *n 6o&ember 4000, the Lorean
0o&ernment officially announced -aewoo7s and its assets were out on sale.
(he reasons for -aewoo7s problem were -aewoo7s borrowings for its
expansion programs into risky and uncertain markets like Jietnam and its
decision to sell products at &ery low prices to gain market share, and
mismanagement and the corrupt go&ernance practices adopted by Lim >oo
Choong, the founder of -aewoo 0roup.
Example 2: Enron Ener*# Serice!
Enron Energy Ser&ices EES! was a business unit of Enron Corporation,
whose purpose was to pro&ide gas, electricity, and energy management directly to
businesses and homes.
EESNs best known area of business was California. @art of their strategy
was to use two'way wireless electric meters, which could be read remotely and
e&entually turn air'conditioning and lighting systems on and off by telephone.
Enron bought thousands of these meters as well as millions of dollars worth of
wireless air time. Enron Energy Ser&ices promised business and home users
a&erage annual sa&ings from 1D to "1D.
EES spent millions of dollars on ad&ertising to attract customers. (his
business strategy depended on a large, deregulated market, and it became clear in
the late "##0s that states were not deregulating fast enough. Enron decided to
change its strategy and target businesses, organi,ations, and corporations with
offices distributed around the Hnited States.
After spending on ads and marketing with little return, the company7s
operations were in a deficit of o&er 100 million dollars. Enron Energy Ser&ices
was one of the many business units that filed for bankruptcy with Enron
Corporation on -ecember 4, 400"
Example $: Ame!
Ames was a chain of discount stores based out of +ocky .ill, Connecticut
in the Hnited States. (he chain went into bankruptcy in 4004.
Ames began in "#18 when two Connecticut brothers, /ilton and *r&ing
0ilman, opened their first store in the Ames >orsted (extile Co. mill in
Southbridge, /assachusetts. '' was once the nationNs sixth'largest discount retailer
with annual net sales of I4.4 billion. :efore going out of business, Ames operated
514 stores in "# states, including the 6ortheast, Southeast, /idwest and the
-istrict of Columbia.
(he firm re=uested bankruptcy protection on August 40, 400", and a year
later, on August "5, 4004, Ames -iscount Stores announced it would close all 514
stores in the chain and wind down business.
Analysts generally belie&e that debt related to the ac=uisition of .ills
-epartment Stores caused the bankruptcy.
"0
C4%BI-ATI4-
1. <oint +ent,re:
;oint Jenture allows companies to own stake and play a role in the management
of the Aoint operation. ;oint Jenture re=uire more direct in&estment and training,
management assistance and technology transfer.
Example 1: %it!,.i!1i 'ea# Ind,!trie!= >awa!a"i= F,?i and Boein*
(hree ;apanese firms ' /itsubishi .ea&y *ndustries, Lawasaki and FuAi
ha&e a complex Aoint &enture with the HS Company, :oeing. (he ;apanese firms
manufacture key portions of aircraft fuselages, aircraft bodies and contribute
important fabrication skills and gain access to :oeing7s global distribution and
marketing network. (hus, while ;apanese firms hope to learn how :oeing
organi,es and manages its global marketing efforts, :oeing seeks to impro&e its
existing highly refined assembly techni=ues with &aluable insights from ;apanese
@artners.
Example 2: 4rc1id C1emical! and Bexel Biotec1nolo*#
*n 4004, Chennai based @harma Company, ?rchid Chemicals
@harmaceuticals )td, entered into a Aoint &enture with :exel :iotechnology )td of
HS. (he purpose was to disco&er new drug for therapeutic diseases. ?rchid
would benefits from the Aoint &enture by learning the methods de&eloped by :exel
for identifying new drugs for diabetes.
Example $: 0e,*eot and 0remier A,tomo.ile! Ltd 70AL8.
*n ?ctober "##5, Europe7s 5
th
largest automobile maAor @eugeot of France
entered the *ndian Automobile market through a Aoint &enture with @A).
After the *ndian economy was opened up to foreign players in the early "##0s,
many multinational auto manufacturers entered the country. )ured by the
prospects of a booming automobile market, @eugeot too decided to enter *ndia
through a Aoint &enture with @A).
2. Strate*ic Alliance:
A strategic alliance is a cooperati&e agreement between potential or actual
competitors.
Example 1: Aero!tar 5 FSA pact :or pilot trainin*.
Aerostar A&iation has Aoined hands with FSA of HS in order to impact
commercial pilots training in *ndia. FSA in one of the world7s largest pilot
training academies in the world with 5% training O learning centers in Europe and
America.
""
(he tie'up will offer *ndian students a ground to fulfill their dreams. (he
alliance will pro&ide an opportunity to o&ercome the existing shortfall of pilots in
the industry.
Example 2: AT@T 5 -EC Corporation
*n "##0, A(P( entered into an alliance with 6EC Corporation of ;apan to
trade technological skills. (his was a trading in core competencies where A(P(
ga&e 6EC some of its computer aided design technology and 6EC ga&e A(P(
access to its technology for ad&anced computer chips.
Example $: 01ilip! -+ 5 %at!,!1ita
@hilips 6J7s alliance with global competitor /atsushita in "##4 to
manufacture and market the digital compact cassette --C! was an effort to
establish the --C system as a new technological standard in the recording and
consumer electronics industry. (his was important because Sony had also
de&eloped 9minicompact disc< technology and hoped to establish it as the new
technological standard. @hilips wanted to win the race by forming an alliance
with /atsushita.
$. Con!ortia:
A consortium is an association of two or more indi&iduals, companies,
organi,ations or go&ernments or any combination of these entities! with the
obAecti&e of participating in a common acti&ity or pooling their resources for
achie&ing a common goal. Each participant retains its separate legal status and the
consortiumNs control o&er each participant is generally limited to acti&ities
in&ol&ing the Aoint endea&or, particularly the di&ision of profits. A consortium is
formed by contract, which delineates the rights and obligations of each member.
Example 1: Six Companie!= Inc.
Six Companies, *nc. was a Aoint &enture of construction companies that
was formed to build .oo&er -am and later went on to build 0rand Coulee -am
and other large proAects. *t was a consortium formed by six smaller general
contractors in order to submit a bid for the .oo&er -am contract. :ecause of the
immense si,e of the dam, no single contractor had the resources to make a
=ualified bid alone. Six Companies started working in about ;une "#%". Six
Companies was composed ofE
". /orrison'Lnudsen of :oise, *daho "0D,
4. Htah Construction Company of ?gden, Htah 40D,
%. @acific :ridge Company of @ortland, ?regon "0D,
5. :echtel Corporation of San Francisco, California, and .enry ;. Laiser of
?akland, California, :echtel'Laiser! %0D, and
1. /ac-onald and Lahn of )os Angeles, California 40D, and
K. ;.F. Shea of @ortland, ?regon "0D
"4
Example 2: 0IC%G
(he @C* *ndustrial Computer /anufacturers 0roup @*C/0! is a
consortium of o&er 510 companies that collaborati&ely de&elop open
specifications for high performance telecommunications and industrial computing
applications. (he members of the consortium ha&e a long history of de&eloping
and using leading edge products for these industries.
*t was founded in "##5 with an original mission to extend the @C*
standard. *ts specifications include Ad&anced(CA, Ad&anced/C, and
Compact@C*.
Example $: Air.,!
Airbus *ndustries GAirbusG!, is one of the worldNs premier manufacturers
of ci&ilian airliners. Airbus is owned by EA-S 80D! and :ritish Aerospace
40D!. EA-S itself is a merger of AQrospatiale'/atra of France, -aimler'
Chrysler Aerospace of 0ermany, and Construcciones AeronRuticas of Spain,
which were originally separate partners in the consortium, owning %$.#D, %$.#D,
and 5.4D, respecti&ely. AirbusN status as a consortium means that profits accrue to
the partner companies7 representati&e to their interests. >ork is allocated on the
same basis as profits.
A. >eiret!,
Leiretsu are ;apanese business combinations that may in&ol&e as many as 10
firms that are related through a large trading company or bank. (he companies are
coordinated through interlocking directors. A keiretsu is an Gintricate web of
relationships that links banks, manufacturers, suppliers, and distributors with the
;apanese go&ernmentG.
Example: 'ori6ontal "eiret!, are headed by maAor ;apanese banks and include
/itsui, /itsubishi, Sumitomo, Fuyo, Sanwa, and -ai'*chi Langyo :ank 0roups.
Example: +ertical "eiret!, are industrial groups connecting manufacturers and
part suppliers or manufacturers, wholesalers and retailers. Jertical keiretsu
include car and electronics producers such as (oyota, 6issan, .onda''/atsushita,
.itachi, (oshiba, and Sony.
2. C1ae.ol!
Chaebol are South LoreaNs business conglomerates. (he English word is a
transliteration of the Lorean word , which is now romani,ed as ;aebeol. (he
Lorean word means business group, trust as in Standard ?il (rust!, or plutocrat,
and is often used the way G:ig :usinessG is used in English.
Chaebol refers to the se&eral do,en large, family'controlled Lorean corporate
groups, assisted by go&ernment financing, which ha&e played a maAor role in the
South Lorean economy since the "#K0s.
"%
Example!: Some ha&e become well'known international brand names, such as
Samsung, .yundai, and )0. .yundai e&en played a role in the slight thawing of
relations between 6orth and South Lorea since 4000.
(he top "0 largest chaebol in Lorea in 4005 by total re&enues were Samsung
I8#." billion!, .yundai /otor Company I1$.4 billion!, )0 I10.5 billion!, SL
I5K.5 billion!, .anAin I"K.4 billion!, .yundai .ea&y *ndustries I"0.1 billion!,
)otte IK.% billion!, -oosan I5.1 billion!, .anhwa I5.5 billion!, and Lumho
Asiana or Lumho I4.8 billion!.
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