It seems that Spyker and GM have finally reached a deal. After initial rumors that the deal is off, Reuters reports of signs that GM has agreed to sell the Saab brand to automaker Spyker of The Netherlands for a total of US$ 400 million.
Archive for January, 2010
The times when Western hotel chains where the ones expanding in Asia seem to be over. As the International Herald Tribune reports, the latest trend is Asian hotel chains opening hotels in European locations. Raffles will open the Royal Monceau in Paris, where both Peninsula and Shangri-La Hotels will also be opening new properties soon. In addition, Shangri-La is looking into further projects in London, Moscow and Vienna. Banyan Tree will open hotels on Korfu and Santorini islands in Greece, while Six Sense is looking into the island of Milos. Given the growth prospects in Asia, the stagnating market in Europe and the increasing pressure hotel chains find themselves under, their moves seem counterintuitive at first sight. Considering, however, that an ever more affluent group of Asian tourists is and will be visiting Europe, their plans make perfect sense. Ultimately, these hotels will eat into the market share of European and American hotel chains. Will there be difficulties connected to the entry of these hotels into Europe? I am sorry to say, but I doubt it.
Last year Maerklin, German manufacturer of high quality toy trains slipped into bankruptcy. As the Financial Times Germany reports, former US rival and market leader in the United States, Lionel has shown keen interest in acquiring the ailing German company. While there seemed to be tangible urgency to find a new owner originally, 2009 has been a surprisingly good year that renders smaller Lionel’s (sales 2009 about US$ 80 mio) offer just not good enough. With about EUR 110 mio in sales last year, Maerklin made it back into the profit zone and is flush with cash. It may have become more attractive for other investors which supposedly include Sun Capital. Ironically, Lionel has been through a bankruptcy itself in 2007 when it was snatched up by investment bank Guggenheim Partners.
As has been reported, the Kraft-Cadbury takeover battle is almost over. After Kraft has upped its offer, the board of British chocolatier Cadbury has approved the takeover. Only very few voices remain opposed to the deal now, including its founder’s, George Cadbury’s great-granddaughter, Felicity Loudon. In an interview she said that Kraft had no idea what Cadbury really is about and doesn’t want it to become the latest in a row of British companies being taken over by foreign owners (including Rolls Royce being owned by BMW of Germany, Manchester United owned by US investor Malcolm Glazer or Rowntree (maker of After Eight) being owned by Nestle of Switzerland).
As readers of this blog know, I enjoy reporting the blunders companies make in international markets. But I have to admit that it’s almost as much fun to find examples of multinationals adapting their products for host markets. Such adaptation (a.k.a. local responsiveness) is one of the key choices such firms face (along with decisions regarding the extent to which resources and activities will be shared/integrated). The recent 40th birthday of Sesame Street reminded me of their expansion efforts. If you’d like to read more about this, visit the International BS Blog by Andre Sammartino.
I just realized something. With all the discussion around Google’s threat to leave China, many people seem to have forgotten (including myself, I admit), that this may indeed be China’s century. With an abundance of qualified labor, smart (albeit not always fair) economic policies, unlimited foreign reserves and much more, China is on the way to change the global economic landscape. As Dani Rodrick of Harvard University recently mused, tremendous change may be ahead of us. We’ll not only see more powerful Chinese companies of all sectors in the global marketplace, we’ll also see a change in the global political and legal framework shaped by a more Chinese view of the world. If it’s true that wealthy families in Manhattan are increasingly hiring Chinese speaking nannies so that their children learn the language of the future, I can only ask why are they smarter than many corporations who still see China as a potential market instead of a competitor that needs to be taken very seriously.
Cultural awareness is key in any international business activity. Cultural divides should be accounted for in marketing, negotiations, product design, and other important decisions. One must analytically consider the best way to promote a product given the target audience. It is argued that differences among cultures can be explained according to four dimensions of culture:
1. Individualism – “I” consciousness vs. “we” consciousness
2. Power Distance – levels of equality in society
3. Uncertainty Avoidance – need for formal rules and regulations
4. Masculinity – attitude toward achievement, roles of men and women
This figure shows the cultural dimension scores of 12 countries. Japan, for instance, shows the highest Uncertainty Avoidance score and thus might be receptive to such risk-reducing marketing programs as return privileges and extended warranties. Since individualism is highly regarded in the US, promotional appeals the promise empowerment might be enticing. In Arab countries where Power Distance scores are high, consumers may respond well to promotions that imply social status.
Doing business in other countries requires cognizance of the cultural divide. An international manager must think analytically to eliminate any self-reference criterion, which is the unconscious reference to one’s own cultural values. This is the root of most international business problems.
Understanding culture requires constant monitoring of changes caused by outside events and by the business entity itself. Resisting ethnocentrism – thinking one’s own cultural is superior – is also important. One must be careful not to measure other cultures with one’s own cultural barometer.
Some times a Long-Term vs. Short Term Outlook dimension also has been considered. Asian countries score highly on this dimension, while most Western countries do not. This may help explain why the Japanese tend to evaluate marketing decisions based on long-term market share rather than on short-term profit motivations.
Re-post by permission of Prof. Michael R. Czinkota. Originally posted at: http://michaelczinkota.blogspot.com/
Following Google’s threat to leave China, the International Herald Tribune reports that many foreign companies confirm growing hurdles to doing business in China. Complaints range from intellectual property theft to pressures to source locally to blunt breeches of contracts by joint venture partners. There are allegationns that many of these practices are not just due to opportunistic behavior by individual companies, but tolerated and promoted by the government. After initial improvements in the business environment shortly before and after China joined the WTO in 2001, China seems to be back on a protectionist route. Foreign investment is still restricted in some sectors, patent and trademark infringements continue, and the Chinese government is even imposing export controls on certain minerals which will ultimately create shortages on global markets. Is China simply weary of foreign companies? What is more likely is that China is continuing on its path to create an environment in which Chinese companies can grow and ultimately will be ready to compete in global markets.
Amsterdam-based brewer Heineken announced that it will acquire the beer operations of Mexican Femsa through an all-share transaction. The hope is not only to strengthen some of Femsa’s brands in Central and Latin American markets, but also to build out the premium market for Heineken’s own brand. And yes, as usual, there’s talk of cost-saving synergies.
German toymaker Steiff, famous for its teddybears and other stuffed animals, announced that it will pull out of the Chinese market soon. Like many other companies, Steiff entered China (in 2004) in an effort to reduce costs and remain competitive with its range of high-quality toys that are often more collectors items rather than toys. From the outset Steiff was battling with low quality manufacturing. Workers didn’t seem to be capable or willing to adhere to Steiff’s strict strict quality standards. Even intensive (and expensive) training has not shown much effect because of high turnover among workers which is quite common in China. When, in addition, wages began to rise, the venture simply didn’t seem to hold its initial promise and Steiff decided to leave China.