Deadly Sins of International Business Blog

German carmaker Daimler announced that it will move part of its C-class production to Alabama. Besides Germany, the C-class has already been produced in two other countries for a while – South Africa and China. The facility in Tuscaloosa, Alabama that so far has specialized in Daimler’s M-, GL- and R-class vehicles. When the production first started in Alabama about 10 years ago it received high acclaim for its high efficiency and novel approach to dealing with cultural differences. Not many difficulties to be expected in this case – too bad for this blog. But hey, who knows? It’s still a German company in the United States!

As the New York Times reports, US-based cable TV operator Liberty Global takes over Germany’s Unity Media for $3.7 bn. A case to watch.

General Motors (GM) has confirmed today that it would sell its Hummer brand to a joint venture between Chinese Sichuan Tengzhong Heavy Industrial Machinery and the Chinese Entrepreneur Suolang Duoji. It is clear why the Chinese would want the brand, but the question remains, does the world want a Chinese Hummer? True, under the current agreement, GM will continue to make Hummers for the new owners in the United States for another two years. But who can give such assurances in times like these? And even if the assurances hole, what will happen after two years? Will the Hummers be built in China? And how is the world going to react to a brand that long stood for America’s might and now is manufactured in China?

With the automotive industry in turmoil, it’s natural that the cards are being reshuffled. However, based on the mega-merger of the past decade between Daimler and Chrysler which ended in a mega-break up, what makes Fiat of Italy think that they would be able to integrate better with the American-based culture of Chrysler. They better start thinking about the compatibility of their corporate cultures quickly before I have more bad news to report in this blog….

As the International Herald Tribune reported recently, Sara Lee Corp is considering a sale of its European household and personal care units. It may be a case of simply focusing on what they are on their home turf – a food company; but might it be that it’s just another case of a US multinational not being able to penetrate the European market?

Wal-Mart’s Lee Scott recently stepped down as CEO of Wal-Mart. He will be followed by Mike Duke. Duke, president of Wal-Mart International has been driving Wal-Mart’s global expansion over the past years. Choosing Duke over Castro-Wright, Wal-Mart’s head of US operations, seems to be a strong signal of increased commitment to international markets.

I just found an older, but still good article about some interesting cases of failure of American firms in Japan: Knight, Gary A. (1995), International Marketing Blunders by American firms in Japan – Some Lessons for Management, Journal of International Marketing, Vol. 3, No. 4, 107-129. Knight writes about well known brands’ failures, including the big three US automotive manufacturers, Avon Cosmetics or Betty Crocker. It’s a well written piece which should be appealing to both academics and practicioners. What amazes me most about these companies’ blunders is the fact that we’re dealing with companies here which have all the human and financial resources needed to do things right. And yet, they ignore some of the basics. Many times it’s general knowledge about cultures (including, in the case of Japan, the status orientation or the collectivistic attitudes) which could be easily picked up and integrated into corporate strategies for market entry. So the question is, why don’t they do things properly and continue to fail in international markets?

What is it with US retailers? Did anybody notice how many retail companies headquartered in the US have failed in international markets over the past decades. After about 8 years of trying to get established, Wal-Mart left Germany in 2006, fashion retailer The Gap pulled out of Germany in 2004, and Pizza Hut defected from Austria after having failed to meet consumers’ taste there. Are these companies’ services and products a simple mismatch with local markets or are the companies too proud and too ignorant?