Case Studies on

Going Global: The Challenges – Vol. I

Edited by
Syed Abdul Samad
Icfai Business School Case Development Centre

Icfai Books
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 Case Title Page No.

Wal-Mart’s Foray into Japan: Heading Towards Success or Hara-kiri? 1

Asian Paints India Ltd.: The Global Strategies 17

Lindsay Owen-Jones: L’Oréal’s Global Makeover Strategist 31

AstraZeneca’s Crestor: Challenges in the US Market 43

Corona: The Mexican Beer’s Marketing Strategies in USA 55

Tesco: The British Supermarket Chain’s Global Expansion

Strategies and Challenges 71

Metro AG: The German Retailer’s Internationalisation Strategies

through ‘Cash & Carry’ Model 85

CNOOC: Growth Strategies of the Chinese Oil Giant 101

Hyundai in the US: Prospects and Perils 121

Indian Institutes of Management (IIMs): Going Global 135

Corporate China Shopping for Global Brands: Prospects and Perils 173

FEMSA: The Mexican Beverage Giant’s “Continental”

Growth Strategies 183

Nissan in America: The Troubled Strategy 211

Interpublic (USA), the World’s Third-Biggest Marketing

Services Group: The Perils of Reckless Global Expansion 227
 OVERVIEW

Globalisation was there even during seventeenth and eighteenth centuries, in the
form of trading companies circling around the globe. For instance, spices were
imported from East Indies to Northern Europe where they were in deficit. Late
eighteenth century saw trader fleets carrying out offshore manufacturing. The British
took to foreign direct investment (and ruled with power) in various parts of the world
in the nineteenth and early twentieth centuries. Using low labour costs there, they
exported labour-intensive, capital-light manufactured goods like textile and clothing.
This gave them huge economic benefits. In the late twentieth century, globalisation
seemed unstoppable and continued at its inexorable pace. Companies began to
splinter all over the world; Europe, US, China and India were the widely chosen
destinations. In the twenty first century going global no longer remains an abstract
but a stark reality, which the companies, large and small, must confront to exist.
Globalisation has not confined itself to a particular sector, but has become a force
that pervades every aspect of business. It makes firms – both domestic as well as
international – chalk out strategies to sustain any assault from any market.
Companies use a variety of entry strategies for international expansion. Joint
ventures, mergers and acquisitions (M&A), sales, marketing and R&D alliances,
and green field operations are the prominent vehicles of global expansion. Joint
ventures prove to be the best option to grab the markets whereas M&A is the
best for maintaining control over operations in an overseas market and acquiring
local talent. Sales and marketing alliances help tap overseas markets. R&D
alliances reward new sources of innovation. But for the success of all these
strategies – M&A, joint ventures and alliances – companies need to ensure that
they have management leadership and direction, clarity of objectives,
understanding of markets and a clear roadmap for integration. When these are
in place, chances for failure are less.
Global expansion can offer many gains, but numerous obstacles arise nonetheless.
Being responsive to the local markets, integrating and coordinating the global
operations, transfer of learning from one part of the world to another are the prime
functions in gaining global efficiency. However, these only apply to large companies
with some experience of global markets. Small- and medium-sized firms have
different concerns. They are more worried of learning about international markets,
selecting an appropriate arena to compete, difficulties of entering into new markets
and determining how to leverage core competencies. Once entered, they
concentrate on building their position in these markets, establishing a local
presence, developing new products and customising them to local tastes and

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preferences. For further expansion, the company needs to give up its country-
centered strategies and improve integration and coordination across national
markets, leverage its competencies and skills to become a leader. But challenges
in the international markets are bound to pop up at any of these stages. Major
challenges are change, complexity, competition and conscience. These influence
the company’s competitive advantage and determine how readily it can achieve
economies of scale and scope, as well as synergise its worldwide operations.
Change pervades all aspects of business activities – technological changes,
knowledge obsolescence, intensity of competition, changing political and
economic context. Technological change causes product development, process
development, obsolete experience (of earlier technology), escalates investments
and competitive pressure. It shrinks the product lifecycle as well. Till the 1980s
change was predictable, but since then it has swung so much that it has become
complicated and unpredictable. Development of telecommunication networks
in developing countries, for example, could be predicted based on the trends in
developed countries. But cellular technology defies this and makes it possible
for quick adaptation by any country. Even consumers are dizzily changing, as
they are exposed to new ideas through the global media. New products and
innovations are spreading more horizontally across all countries, rather than
trickling down from opinion leaders. Political events like the dissolution of Soviet
Union halted economic growth there. But the same event made its trading
partners look out for new international markets. Change has both positive and
negative impacts. Change-sensitive firms have countless opportunities while those
that are not perish.
Managing international operations often produces complexity. Novel technology
helps manage, direct, control and coordinate operations on a broader scale. But
simultaneously, it adds complexity in the form of problems to adopt and master
the technology. Regional market integration, linkage between corporate
headquarters and local management, linkages with customers and suppliers and
with other organisations become more critical along with the scope of the company’s
expanding operations in global markets. Incompatibility of communication
systems, across the company’s supply chain and the linkages with other companies,
add to the complexity of global operations.
Increasing competition is yet another challenge while going global. Competitive
pressures increase, with the opening up of new markets and changing technology.
As markets open up, competition multiplies posing new threats and dangers to
the existing players. Like that of companies from emerging markets like India,

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China, Malaysia and Brazil from late 1990s. These countries have opened their
markets for foreign companies; in turn, domestic companies – becoming aware of
international opportunities and competition – are incited to go global. On the other
hand, advances in technology and communication are speeding up competitor
response that is no longer giving a lead time for pioneers. However competition is
market-based and only depends on the company’s efficient use of knowledge to
deliver superior value to consumer.
Conscience relates to moral and social responsibility. Companies have to be reactive
to issues such as limiting pollution of atmosphere (gases and toxic wastes), conserve
resources (paper, fuel and plastics), etc. This becomes even more important in the
third world where consumers are less aware of the product safety standards or the
activities of the company that can harm their health and environment. So companies
have the responsibility to produce, design and package environmental friendly
products and also extend the responsibility to educate customers about their merits
and demerits. Rapid change, increased competition and complexity also drive
companies to act responsibly in the global market.
Global dreams should make companies transform and rethink ways of responding
to the competitive landscapes and smartly deploy resources to get to the desired
growth levels. Navigating successfully in these global waters is in itself a challenge
facing today’s firms. So by bracing up for change, complexity, competition and
conscience, companies can prosper.
However, not all companies that go global are successful, a poignant theme of this
book. It speaks of how successful companies overcame challenges in global markets.
Even how strategies of few others proved perilous – outlined in case studies like
Interpublic (USA), The World’s Third-Biggest Marketing Services Group: The Perils
of Reckless Global Expansion. In there, are few cases – namely Asian Paints India
Ltd.: The Global Strategies, CNOOC: Growth Strategiesof the Chinese Oil Giant,
IIMs: Going Global and Corporate China Shopping for Global Brands: Prospects
and Perils – highlighting how establishments, from developing countries like India
and China, are trying to establish their presence outside their home markets; even
their various expansion strategies are discussed. Other case studies – like Wal-Mart’s
Foray into Japan: Heading Towards Success or Hara-kiri?, Tesco: The British
Supermarket Chain’s Global Expansion Strategies and Challenges and Metro AG:
The German Retailer’s Internationalisation Strategies Through ‘Cash & Carry’
Model – discuss their market entry strategies and challenges while expanding into
Asia in search of new potential markets. Lindsay Owen-Jones: L’Oreal’s Global
Makeover Strategies highlights Jones’ strategies to face global competition; while

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Femsa: The Mexican Beverage Giant’s Continental Growth Strategies highlights
its expansion in Latin America through acquisitions, partnerships, agreements and
joint ventures. Nissan in America: the Troubled Strategy narrates Nissan running
into trouble in the US market and how Carlos Ghosn formulated strategies to revive
its position. Hyundai in US: Prospects and Perils, Corona: The Mexican Beer’s
Marketing Strategies in USA and AstraZeneca’s Crestor: Challenges in the US
Market discuss their US market strategies and their challenges like the dilemma of
distribution channels, competitive scenario in the US drug market, etc. This book
burrows into different aspects of global expansion and the resulting challenges and
strategies. In all, this book provokes readers to the practical implications of going
global and rising to the occasion accordingly.

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