...Entry Strategies for MNEs in China: The Case of Danone and DHL International Business Winter 2014/2015 Table of contents 1. Introduction 3 1.1. FDIs and Entry in China 3 1.2. Research Contribution 3 1.3. Research Method 3 2. Literature review 4 2.1. FDIs 4 2.2. Macro Environment 5 2.3. Timing of entry 6 3. Discussion 6 3.1. Introduction of Cases 6 3.2. Motives of Entering China 7 3.3. Joint Venture in China 8 4. Conclusion 9 4.1. Implications 9 4.2. Limitations 9 4.3. Research Outlook 9 5. References 9 1. Introduction 2.1. FDIs and Entry in China How should MNEs enter China? MNEs are usually presented with multiple entry choices, namely export, licensing agreements, franchising and FDIs. While each mode presents advantages and disadvantages, FDIs cause MNEs to make direct investments and be directly present in foreign countries, as opposed to indirect investments and presence through other modes of entry, hence the name “foreign direct investment”. But with direct presence in a foreign country MNEs are subject to both formal and informal institutions, and those institutions will directly influence a company’s decisions and it’s mode of entry (Ingram, Silverman 2002). MNEs have to decide whether to go as a first or late mover and due to what kind of motivation they decide to do FDIs in China. In countries with a weak institutional framework, Meyer et al. (2009) find that MNEs should choose the Joint Venture...
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...Niehues Edward Tse Justin Zubrod Express Opportunities In China Packaging a Strategy For the International And Domestic Express Delivery Market Booz & Company is a leading global management consulting firm, helping the world’s top businesses, governments, and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914. Today, with more than 3,300 people in 58 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. For our management magazine strategy+business, visit www.strategy-business.com. Visit www.booz.com/cn to learn more about Booz & Company in Greater China. CONTACT INFORMATION Hong Kong/Shanghai Edward Tse Partner edward.tse@booz.com McLean Justin Zubrod Stuttgart Partner justin.zubrod@booz.com Alexander Niehues Partner alexander.niehues@booz.com Originally published as: Express Opportunities in China: Packaging a Strategy for the International and Domestic Express Delivery Market, by Ed Tse, Justin Zubrod, Alexander Niehues, Simon Gillies, and Paolo Pigorini, Booz Allen Hamilton, 2007. 1 Express Opportunities in China Packaging a Strategy for the International and Domestic Express Delivery Market Introduction China is on its way to becoming a global trade powerhouse—with an economy...
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...Introduction Business SegmentsFedEx ExpressFedEx GroundFedEx FreightFedEx ServicesCorporate Strategy“Compete Collectively, Manage Collaboratively” • 3. Brand Planning AssessmentThe FedEx PositionWho is the target market?“anyone who needs to send something anywhere in the world. Whether it’s the one and only package you'll ever ship in your life or you have 1000 packages to ship every day.” • 4. Brand Planning AssessmentThe FedEx PositionWho are the main competitors?UPS • 5. Brand Planning AssessmentThe FedEx PositionWhat are the points of parity?-Both companies ship packagesBoth online services allow you to track packages, order supplies and pay bills.What are the points of difference?-FedEx has 3 times as many planes-Print and ship from anywhere services-FedEx has been known to update technology more frequently than UPS • 6. Brand Planning AssessmentThe FedEx PositionFast Forward MovingPrecise • 7. Brand Planning AssessmentKey Marketing ActivitiesAlliances with NFL, NBA, FedEx cup, FedEx racing, the FedEx orange bowl, and the FedEx field Senior Vice President of International Marketing, Rajesh Subramaniam, said, “FedEx sponsors and associates with several sports that share its attributes of speed, reliability, precision, teamwork and flawless execution.” • 8. Brand Valuation Assessment Building EquityFavorability & Awareness Through Six ElementsMEMORABLEMEANINGFULLIKEABLETRANSFERABLEADAPTABLEPROTECTABLE • 9. Brand Valuation...
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...UESTION FOR DISCUSSION 1. FedEx entered in to China in 1984 through a joint venture, while UPS entered China in 1988 through an agent partnership relationship. Critically examine the contrasting strategies adopted by both the companies, while entering and expanding their service network in China. The case discusses in detail about the entry and expansion strategies of the two US-based logistics companies - FedEx and UPS in the Chinese market .The case examines the contrasting strategies adopted by FedEx and UPS in their efforts to establish presence in China. FedEx followed an aggressive, high risk, more investments approach to expand its services network in China which enabled the company to capture higher market share .On the contrary, till the late 1990s, UPS followed a conservative, low risk, low investment approach to establish its presence in China. The case brings out the contrasting elements of the strategies adopted by both companies including establishing the services network, advertising and promotion, targeting customers and the investments made. Finally, the case examines how the expansion strategies of both companies have changed with the improving business prospects in China, following its entry into WTO. The case discusses in detail the entry and expansion strategies of the two US-based logistics companies - FedEx and United Parcel Services (UPS) - in the Chinese market. The case examines the contrasting strategies adopted by FedEx and UPS in their efforts to establish...
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...Kenmore, Brastemp, and Bauknecht. In 2006, Whirlpool acquired competitor Maytag (horizontal integration) and its brands (Amana, Jenn Air, Magic Chef, and Maytag). Whirlpool generated over $19 billion in 2006 annual sales: 60 percent from North America, 25 percent from Europe, 15 percent from Latin America, and 2 percent from Asia. Operate with 60 manufacturing and technology centers worldwide and 80,000 employees. International Expansion Domestically: (1) The U.S. appliance market matured in the 1990s, and Whirlpool faced low profit margins, intense competition, and more demanding buyers, pressuring management to consider international markets. Internationally: (1) Trade barriers fell, consumer affluence grew, and capitalism flourished. (2) A “global” approach would yield economies of scale in manufacturing, assembly, appliance technology and distribution. (3) Whirlpool sought cost reductions in R&D, manufacturing, and services by locating plants in lower cost locations such as China, Mexico and Poland. Strategy Global expansion Whirlpool: Acquired the appliance giant Philips in Europe Bought 65 percent of Italian cooling compressor manufacturer Aspera Acquired control of Kelvinator of India Purchased Poland's second largest...
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...Business Strategy United Parcel Service (UPS) Overview United Parcel Service, Inc. was founded in 1907 as a private messenger and delivery service in Seattle, Washington. Today, UPS is the world’s largest package delivery company, a leader in the U.S. less-than-truckload industry and the premier provider of global supply chain management solutions. It deliver packages each business day for 1.6 million shipping customers to 8.2 million receivers ("consignees") in over 220 countries and territories. In 2014, it delivered an average of 18.0 million pieces per day worldwide, or a total of 4.6 billion packages. Total revenue in 2014 was $58.2 billion. It are a global leader in logistics, and it create value for its customers through solutions that lower costs, improve service and provide highly customizable supply chain control and visibility. Customers are attracted to its broad set of services that are delivered as promised through its integrated ground, air and ocean global network. Its services and integrated network allow shippers to simplify their supply chains by using fewer carriers, and to adapt their transportation requirements and expenditures as their businesses evolve. Across its service portfolio, it also provide control and visibility of customers’ inventories and supply chains via its UPS technology platform. The information flow from UPS technology drives improvements for its customers, as well as for UPS, in reliability, flexibility...
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...The contrasting strategies Analyst felt that FedEx and UPS established themselves in China till the late 1990s following different corporate styles. While FedEx believed tackling foreign competition head-on, UPS believed in partnering with them. UPS, was happy to enter into lease agreements with other companies already having its presence in China. While FedEx’s main thrust was on capturing the accounts of its multinational customers operating in China, UPS tried to build an image of a local company. Advertising and promotion However, during the late 1990’s, as the competition in the logistics business in china intensified, both FedEx and UPS started emphasizing on promotion to attract Chinese customers. Till the late 1990s there was a marked distinction in the approach of FedEx and UPS towards advertising and promotion in China. FedEx followed an approach which emphasized on heavily publicizing its services offering in China. It launched intimidating ad campaigns to attract customers. One of the ad’s showed the tail of a FedEx plane parked in front of a forbidden city saying, “ Call FedEx , it’s almost forbidden not to.” FedEx stressed on promoting its service offerings and enhancing brand awareness among the customers in China. For this purpose, it hired a popular media partner, OMD based in Hong Kong. On the other hand UPS emphasized less on advertising because it preferred to project itself as a local company, but still it held up a six-week T.V campaign...
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...FedEx Custom Critical and Caribbean Transportation Services. As for FedEx Services Segment comprise of FedEx Services, FedEx Office, FedEx Customer Information Services as well as FedEx Global Supply Chain Services. FedEx has experience tremendous success domestically and internationally since it began operations, however FedEx is still does not has the main market share in both markets as UPS dominates the ground delivery and DHL dominates the international express delivery. So in this paper, we will be answering three questions regarding FedEx’s methods of expansion, reasons for its global operations problems, SWOT considerations, competitive landscape and recommendations to encroach upon the two competitors. 2.0 QUESTION 1 Evaluate the methods used by FedEx to grow domestically and internationally. Why do you think that the company initially had problems in its global operations? 2.1 Evaluate the methods used by FedEx to grow domestically and internationally Before FedEx has its tremendous successes, they have adopted various alternatives to grow in the domestic market and expand into international market. FedEx had used few methods to grow domestically and internationally which categorized in few attributes as stated...
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...billion packages * $22.5 Billion with 37% margins * UPS History * Started in 1907 by 19 year-old Jim Casey then called American Messenger Company. * Became Unite Parcel Service of America in 1929 and began shipping packages on commercial airliners. * By 2003 * 88,000 Ground Trucks * 583 Planes * 360,000 Employees * $2.9 Billion in profits on $33.4 Billion * The Competition * Price competition * Operational Reengineering * Information Technology * Service Expansion * Logistic Services * The European Market * In 1992, FedEx sold operations to DHL after sustaining an estimated $1 Billion in losses since 1984. * FedEx continues to deliver throughout Europe, however, leveraging local partners. * UPS enters the European...
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...What this case is about FedEx vs. UPS China & US agreement for the establishment of air-cargo hubs in China and landing rights for commercial airlines at any available airport China is battleground for the two package delivery giants Assumption: success in China was widely seen as the litmus test for corporate survival in the new millennium No guarantee for how new cargo routes would be allocated between UPS and Fed Ex Which company was better positioned to attract the capital necessary to win this competitive battle? Current facts FedEx had largest foreign presence in China invented customer logistical management innovative, entrepreneurial, operational leader 2003 assets: $15.4 B Net Income: $830 M Revenue: $22.5 B Performance assessment: superior financial returns No unions – flexible with costs Model asset attentive UPS world’s largest package-delivery company historically bureaucratic and industry follower overhaul of image repositioning as leading provider of logistics and supply-chain management services small-package market - $60 B vs. worldwide supply-chain market is $3.2 T everything from the moment something gets made until it gets delivered for final delivery, and then after market, it’s parts replacement 2003 assets: $28.9 B Net Income: $2.9 B Revenue: $33.4 B Performance assessment: long-term competitive return History of FedEx 1971 Fred Smith Yale Purchase planes instead of using cargo space on passenger airlines like competitors Largest venture-capital start-up...
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...clients. The company is divided into eight major divisions: [pic] The mission of FedEx is to provide superior financial returns for shareowners by providing high value-added supply chain, transportation, business and related information services through focused operating companies. Customer needs will be met in the highest quality manner appropriate to each market segment served. FedEx strives to develop gratifying relationships with its employees, partners and suppliers. Safety will be the first consideration in all operations and all activities will be conducted to the highest ethical and professional standards (FedEx Corporation – Financial and Strategic Analysis Review, 2011). FedEx’s vision is a world where goods and information move quickly and seamlessly. The company’s goal is to connect the world in such a way that consumers will view them as a provider of convenient, reliable, trustworthy and fast service. The FedEx corporation strategy focuses on three levels: • Compete collectively – standing as one brand with one voice • Operate independently – focusing on different market segment networks to meet distinct customer needs • Manage collaboratively – identifying ways to sustain loyal relationships with employees, customers and...
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...efficiency of Federal Express’s current business model, and recommend one new business-level strategy that gives the company a competitive advantage over its rivals. We are also asked to examine the manner in which overall global competition may impact the new business strategy. And, finally, we are asked to suggest one significant way that Federal Express may confront its global competition. Senior management at FedEx must appreciate the need for adding new value to their organization if they intend for FedEx to remain viable. Senior management needs to be committed to the creation of new internal capabilities for FedEx growth. And management must be ready for strategy innovation and the exploration of FedEx’s strategic frontier. Innovative new business opportunities found on the strategic frontier can provide forward-thinking leadership with the entrepreneurial growth ideas FedEx needs. FedEx does not need decades of R&D expenditures to develop new business ideas and opportunities. All FedEx really needs is an understanding of its customer’s needs. If FedEx is really in touch with the needs of the customer, then the organization will be closer to deciding where on the strategic frontier meaningful value is to be found. Once FedEx reaches that point then senior management will need the conviction and motivation to create a new business model to address those needs. Strategy innovation can take the form of new products and...
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...Dell’s Supply Chain Management Strategy Build-to-order model, Dell, Direct model, PC Manufacturing, SCM, Supply Chain Case Study Abstract The focus of this case study is the supply chain management practices of Dell. Dell has been following its unique ‘direct build-to-order’ sales model for more than 20 years. Customers can plan their own configuration and place orders directly with the company via the phone or its Web site. Over the years, Dell’s supply chain efficiencies and direct sales gave it a competitive advantage. Can Dell regain its market leader position from HP? In 2006 however, Dell faced several problems. Many customers complained about long delays in supplies. Recall of Sony battery cells in its laptops brought undesirable media hype to the company. Increasing discontent of customers led to a slowdown in sales. Consequently, Dell lost its market leadership to Hewlett-Packard Co. (HP). Industry analysts felt that, with Dell’s competitors also improving their supply chains and matching Dell’s direct model, the company had been losing its competitive edge. Dell will have to bear additional costs with its foray into retail distribution thereby minimizing its cost advantage. Besides, profit margins of Dell will drop further since it will have to offer incentives to compete with HP in retail stores. Though Dell spruced up its product design and range but Apple is clearly far ahead of it. Many experts feel that such new initiatives will only distract Dell from its...
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...SUMMARY Kulicke and Soffa is a global leader in the design and manufacture of semiconductor assembly equipment and have plans to expand its capillary production facilities. In order to maintain its world leading market share of wire bonding tools, the company must decide whether to increase its capacity at its existing Israeli site or establish a new location in the growing Asia-Pacific region to keep pace with the competition. The company is headquartered in Willow Grove, Pennsylvania and has manufacturing facilities in California and Alabama. It also has facilities in such highly diverse and far away locations as Israel, Taiwan, Singapore, and Switzerland. Approximately 80 percent of the company's total sales volume is generated overseas. Recognizing the need for a growth strategy to remain competitive and K&S’s position in the tool bonding market, K&S needs to expand its capacity. It would be advantageous for K&S to add an additional facility. Since the customer base was moving to Asia; China, Jordan and Singapore were considered and evaluated for the most optimal location in addition to expanding the existing capacity in Israel. Weighing the advantages and disadvantages of each location, K&S should build a new facility in Suzhou, China. ANALYSIS Kulicke & Soffa needs to base their decision regarding an expansion effort by deciding what criterion are most important to their supply chain. In order for K&S to make a sound decision regarding...
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...THE BODY SHOP Strategic Implementation Plan Table of Content Introduction 3 Section I Strategic Management Practices 4 1.1 The Body Shop’s Strategic Management Practices 4 1.2 Limitations and Alternative Approaches 6 1.3 Strategy proposed 7 Section II Corporate Governance 8 2.1 Evaluation of Governance structure 8 2.2 What is the stakeholder’s role? 9 2.2.1 Keep satisfied 10 2.2.2 Keep Informed 11 2.2.3 Key players 11 Section III Hard Changes in the Body Shop 13 3.1 Existing Value Chain 13 3.2 Adjustment 14 3.3 What strategy method should Body Shop undertake? 15 Section IV Culture and Leadership Changes 17 4.1 Strategic Change through Culture 17 4.1.1 Control Systems 19 4.1.2 Organisation and Power Structures 19 4.2 Strategic Change through Leadership 20 Section V Implementation Plan 21 5.1 Preliminary Activities to enter China 22 5.2 Procedure of starting a Business in China 23 5.3 Setting up the First Store 23 Conclusion 24 References 25 Introduction L’Oreal Group is the world’s largest cosmetic and beauty company, headquartered in France. It offers a vast amount of products and services across the cosmetic field, concentrating on make-up, hair care, skin care, perfumes and sun protection. L’Oreal divides its brand portfolio into five divisions, Professional products, L’Oreal Luxe, Consumer Products, Active cosmetics and The Body Shop, which covers different the lines to...
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