CASE STUDY:WIPRO – THE NEW FACE OF GLOBAL

Q1. How did outsourcing work to Wipro improve GE ability to compete in the global economy? Does
such outsourcing harm or benefit the American economy?How did outsourcing work to Wipro
improve GE’s ability to compete in global market?

Firstly, the strategy that GE used to enter Indian market is that it made a joint venture with Wipro to
establish Wipro GE Medical System. It’s a smart step of GE to have entry into new countries in the
developing region and specifically the market which had the second largest population in the world.
Ajoint venture entails establishing a firm that is jointly owned by two or more otherwise independent
firm. It’s also a strategy to enter a new market, excluding acquisition, merger, Greenfield investment…
Why did GE choose this strategy? GE can receive benefits from a local partner’s knowledge of the host
country’s competitive conditions, culture, language, political systems and business systems. While GE
provided technological know-how, the local partner – Wipro provide marketing expertise and the local
knowledge necessary for competing in India. Moreover, GE could share their costs or risks with Wipro.
GE did not need new facilities, bureaucracy fee to establish new firm in India but saving their cost to
continue using land, labor, energy and available customers in India which was property of Wipro. And
GE faced a low-risk of being subject to nationalization of other forms of adverse government
interference.Secondly, GE can utilize maximum human resources in India. India had a cheap source of
talented engineers and programmers. There, it has a technology-oriented education, so India possesses
a solid base of technology-focused universities and colleges that turn out many engineers every year. On
the other hand, Indian workers do not tend to demand too high a wage rather than those in the United
States. In general, software programmers in the United States who has two-to-four-year experience
require $64.000 a year, whereas skilled programmers at Wipro want to earn $10.000 a year, because
that amount of money can already provide them with good living conditions, of course, depending on
GNI/PPP per capita throughout years. So, those factors help GE save their cost to hire foreign labor but
having more or less the same quality. Therefore, it quickly sets aside $5 million a year to hire Wipro
software. This reflects an obvious advantage of globalization of production.Thirdly, it made competition
between its partners in India to save cost. GE was soon contracting out work to other Indian
information technology companies. So Wipro and other firms had to adjust requirements as suitable. So,
GE can reach ever lower cost while playing them off against each other on its drive. Moreover, GE was
ready to transfer its technology and management strategy to Wipro to enhance these aspects. Senior GE
managers began to encourage other units to follow the medical division’s lead and outsource
information technology work to Indian companies. GE also led and instructed Wipro to own the
operating efficiency. By these ways, working and service efficiency of Indian companies, such as Wipro
went up, and cost of services provided for GE came down.But, following the GE’s strategy, does it harm
or benefit to American economy?We can see clearly the advantages American economy has through
GE’s outsourcing work. Americanproducts, such as GE products – GE ultrasounds and IT Scanners - will
have a new market – Indian market. This is a developing market which has above one billion citizens.
And from India, GE can go beyond borders to Asian market where one-third of the world population
lives
Inside the United States economy, there will be a fierce competition among multinational firms.
Thosefirms always want to be the first company to enter a new market. Gross National Product (GNP) is
in an upward trend. Customers will have an opportunity to buy at a cheaper price thanks to cheap labor
and cheap natural resources. Shifting jobs to lower cost countries would benefit the United States in the
long run.But, it also makes some negative drawbacks. One of the challenges for multinational global
supplierswas to take this job creation and wealth creation, and see how it could be leveraged to improve
the quality of life for a much larger set of people. This could lead to unemployment in the US. The US
government also faces challenges from managing this kind of outsourcing work. Money can be lost
through outflow to other nations. It also means regular occurrence of law violation, and this is difficult
to solve because of differences in cultures, laws or political system.

Q2. Did GE help to create Wipro? How?

Not only GE had benefits, but also it help to create Wipro. When Wipro is a jumbled conglomerate
company selling everything, it did not find a suitable product target for commercials. GE appeared
and gave works to Wipro – selling ultrasound scanners under license in India. So they found their
concentration on one kind of business that was their strength, and utilized it. Employees in Wipro now
had a concentrated work with fair salary. Wipro also copied a way that GE had done to enhance the
working efficiency. GE just gave Wipro a window into GE’s relentless push for operated efficiencies.
GE provided a management model – Six Sigma process, for Wipro to improve efficiency made
famous by GE. Nowadays, this model help Wipro executives learn hard but essential lessons. Beside
Wipro, GE still gave work to other Indian companies. It may harm Wipro by putting pressure on
Wipro. But it had a positive sign. Wipro increased the efficiency and quality of productivity.

Q3. If India’s IT companies continue to prosper, overtime what do you think will happen to the income
differential between software programmers in the United States and India? What are the implications
for the American economy?

If Wipro continue, what will happen to the income difference between software programmers inthe
United States and India?As we mentioned, wage of programmers in the United States is around $64.000
but those in India only want $10.000. If this Indian company keeps prospering like today, wage rates
between the US and India will be more or less equalized. The income gap will be as close as possible, but
not mathematically equal because of competition from other high-skilled workers from other countries
preventing them to equalize with US’s level. New American programmers will be paid less than they
formerly received. Vice versa, Indians require more from company because of fairness in human
resources policies. Moreover, demand for Indian engineers grows, so Indians can move to higher-wage
companies, so owners of firms must increase their engineers’ income, and there would be an insufficient
supply of skilled Indian engineers.So, what are the implications for American economy?Clearly,
unemployment in information technology fields in the United States would happen. New programmers
must compete with their colleagues from India, and if they are not content with the income, they lose
their jobs. Standard of living and good consumption in the US would suffer and decline following the
happening of this. It may also lower the attraction of US labor market on global scale because the world
has more options to choose suitable candidates for their company with cheaper price from. But, it is not
the end of the road for workers in US. They can move to other high-paid companies to work, with higher
knowledge level and stronger competition. It’s called global division of labor but it is still controlled by
government. On the other hand, the price of IT products will be cheaper due to declining wages and
decreasing good consumption.

Q4. Since 2000, Wipro has moved abroad, establishing sales offices in 35 nations and design centers in
9. Why is Wipro doing this? What would happen to the company if it did not follow this strategy?Since
2000, Wipro has moved abroad, establishing sales offices in 35 nations and design centers in nine.
Why is Wipro doing this?

Because globalization is a popular trend, so it’s normal if one company wants to extend their sale and
commerce to make profit from other sides of the world. Wipro must not be outside of this tendency.
Inthe 1990s, Wipro expanded by doing larger software projects, taking over whole IT systems and back-
office functions. Its scale got bigger and bigger, so they must find other markets to maximized profits.GE
taught Wipro a hard lesson, but it’s a necessity. GE is a successful global brand, considering the perfect
globalization of production. So GE is an ideal model for Wipro to learn. They don’t want to donormal
work anymore, but they want to do something more profitable. A true global company is one which
appeared to be local wherever it does business. Hiring a local talent and buying a company that gave it
instant industry presence help Wipro come closer to its customers and it constantly seeked
opportunities to arbitrage labor market. In other cases, Wipro can witness their archrivals even in
theirnations and their traditional market.

What would happen to the company if they did not follow this strategy?

If they miss the opportunities on account of not following this strategy, they will forever do normal work
for giants in this field and lose the competitive advantages as well as postpone their growth. Bankruptcy
is also a common obsession. Few companies can survive when doing business in a small area after ten to
fifteen years. Wipro might have been forever dependent on giants like GE, Weyerhaeuser… if it hadn’t
done what it did.

Q5. What does the rise of Wipro teach you about the nature of the global economy in the second
decade of the 21st century?

Bill Clinton has said that: “Globalization is not a policy choice, it is a fact”. Or we usually use the
sentence: “Globalization is not a choice, it’s a reality”. By analyzing the rise of Wipro, we can understand
more clearly the beneficiary and an indispensable trend of Globalization today.When entering a new
market, the most important thing to do is keeping local presence, and customizing to the clients’ tastes
and preferences in local nation. “We invest in people. In three years, we will have a far more global
footprint. Around 10% of our employee population will be based out ofPhilippines, Europe and other
parts of the world” – Sangita Singh, Senior Vice President and Head of Enterprise Application Services,
Wipro Technologies. It has the same meaning that we should focus onexpanding domestic workforce in
target markets.

Lecture 2 case study

What are the Causes of Poverty in Africa?

One in three Africans live below the global poverty line.2 They make up 70 percent of the global
poor, and their numbers are rising.2 Despite the overwhelming number of extremely poor people
in Africa, the causes of poverty on the continent are no different than the causes of poverty
around the world. They can be grouped into two primary categories—external or cultural factors
and internal elements.

• Lack of access to health care

2. What steps can be taken by the nations of sab Saharan Africa to address the causes of poverty!
Can the governments of developed nations help in this process? Should they? How?

In order to effectively stem the tide of extreme poverty in Sub-Saharan African, concerted efforts are
needed at the global, regional, national and local levels aimed at mobilizing crucial resources that target
the poor and their needs. A major reason why many poverty alleviation programmes have failed in Sub-
Saharan Africa is the marginalization of the poor in the conceptualization and management of such
programmes (Arbona, 2006; Robb, 2000). Therefore, sustainable poverty reduction strategies should be
country-driven, encompassing wide consultations with different segments of the population, particularly
the poor, who should be viewed as the focus of the programmes rather than the objects of development
planners. Also, poor people should contribute resources and ideas to poverty reduction strategies to
facilitate participation and ownership by the poor. Sustainable poverty reduction strategies should be
focused on the following critical issues: Creating broad-based economic growth: National governments
in Sub- Saharan Africa should provide the
• enabling environment to facilitate sustainable economic growth. Government efforts should include the
creation of enabling institutions that facilitate a private-sector driven economic framework. In addition,
government should also create incentives to attract foreign direct investments through the provisionof
appropriate incentives and the maintenance of security, law and order critical to economic growth and
prosperity. These efforts should be complemented by fast-tracking on-going economic reforms aimed at
fostering transparency and accountability and the withdrawal of government entities from commercial
activities better undertaken by the private sector. Enhancing Human Capital Development: Governments,
acting in concert with civil societies and

• development partners in the sub-region should embark on capacity building for both public and private
sector operatives to be equipped for higher productivity critical in the increasingly globalised
economicorder. This also includes the provision of more resources to provide education particularly for
the poor in order to stem their marginalization in the society where they live. Promoting Integrated Rural
Development: Since most Africans live in rural areas, there is need to

• transform rural livelihoods in order to stem rural-urban migratory trend, which has undermined rural
areas in the past several decades. Adequate provision should be made to provide social and physical
infrastructure in rural areas to ensure access to potable water, road, networks, transportation, electricity,
communications, as well as schools and medical facilities. Providing Micro-Credit Schemes: A major
obstacle to the poor is lack of assets. A major instrument

• applied to overcome the dearth of capital is the management of micro-finance institutions, as well as the
provision of micro-credit to the poor. Making micro-credit available to the poor has not only transformed
their livelihoods, it has also spurred the ingenuity and entrepreneurial acumen of poor people, particularly
women living under impoverished conditions. Providing Safety Nets: Some of the poorest people in
Africa include the aged, infirmed and the

• handicapped, who are vulnerable to poverty in all its ramifications. Government should earmark
resources to mitigate poverty amongst these groups to maintain the social fabric of African societies,
which is the key to stability in the communities. Fostering Good Governance; The absence of democratic,
accountable governments in many African

• countries has been blamed for the escalation of poverty in affected countries. There is need .to foster
democratic principles and promote good governance anchored on participatory: and democratic
frameworks. This is key to eliminating conflict and the marginalization of ethnic, religious and other
groups from the national agenda.

3. Can international businesses play a role in helping nations in the region to reduce poverty and
ignite economic growth!

In sum, while development progress was impressive, it has been uneven and a large unfinished agenda
remains. Three key challenges stand out: the depth of remaining poverty, the unevenness in shared prosperity,
and the persistent disparities in non-income dimensions of development. First, the policy discourse needs to
focus more directly on the poorest among the poor. While pockets of ultra-poverty exist around the world,
Sub-Saharan Africa is home to most of the deeply poor. To make depth a more central element in policy
formulation, easy-to-communicate measures are needed— and this note attempts a step in this direction with
person-equivalent measures of poverty. Second, the eradication of poverty in all of its forms requires steady
growth of the incomes of the bottom 40 percent. Yet, economic growth — a key driver of shared prosperity—
may not be as buoyant as before the global financial crisis. Third, unequal progress in non-income dimensions
of development requires addressing widespread inequality of opportunity, which transmits poverty across
generations and erodes the pace and sustainability of progress for the bottom 40. To meet these challenges,
three ingredients are core to the policy agenda: sustaining broad-based growth, investing in human
development, and insuring the poor and vulnerable against emerging risks.

4. Currently sub-Saharan Africa receives very little in the way of foreign direct investment from
firms based in developed nations. If nations in the region start to take the actions you identified in
the an swer to question 2, what do you think will happen to the flow of foreign direct investment?
Will this benefit the region's economies? How?

Foreign private investment in Africa has fallen dramatically as a result of COVID-19, with
foreign direct investment (FDI) flows to the continent dropping by some 16% in 2020. And yet,
FDI can be transformative for the region and is crucial for helping Africa get on the path
towards long-term sustainability and growth. What will it take to attract private investors to
the region? What examples can we learn from that can be scaled?

Join The Multilateral Investment Guarantee Agency (MIGA) and an accomplished group of experts,
investors, and thought leaders as we discuss what it will take to drive foreign direct
investment into Africa, especially into sectors that contribute to a green, inclusive, and resilient
recovery, and into countries experiencing fragility, conflict and violence.

Lecture 3 Case study

During the 1990's, Japan economy began to slow. The prolonged economic slump forced may Japanese
companies to abandon their tradition ways of doing businesslike lifetime employment. This caused
younger people just entering the workforce to question whether the loyalty that workers had traditional
given companies, and that had been traditionally reciprocated, made sense. Many younger people
concluded that it no longer made sense to be tied to a single company, that instead it could be
beneficial to take advantage of new opportunities when and where they rose. The difference between
the generation born after in 1964 and their parents is the change in the Japanese culture. In addition,
Japan's companies need many younger staff that has more creative and dynamic than older
employees. Moreover the companies want to abandon lifetime employment. It led to a change in the
traditional values in Japan .These are the following cultural change starting to affect traditional values in
Japan.-Change in perceptions of traditional workplace orientation, lacks of trust.-Younger generation
exposed to necessary business culture compromise.-Shift from collectivist to individualist values.

2. How might Japan’s changing cultural influence the way Japanese businesses operate in
the future? What are the potential implications of such changes for the Japanese economy?

This changing cultural trend would influence the way Japanese business operate in the future as it would
have significant implications particularly for the human resource strategies of firms. Older styles of
recruitment and selection would be minimized. A new employee pool that is focused more on
individualism and self-benefit without the support structures of paternalistic firms would mean different
incentives and pay schemes. Japanese firms would also be more open to International
investors and dealings with businesses and have a more diverse, international workforce allowing
employees options for different type of employment contracts whereby they could choose
greater salary to forego company housing and seniority benefits. This affected Japanese
business performance, improving productivity and individual rewards/incentives.

3. How did traditional Japanese culture benefit Matsushita during the 1950s-1980s? Did traditional
values become more of a liability during the 1990 and early 2000s? How so?

Japan's traditional culture helped Matsushita become a major economic power during the post-war
years and through the 1980's. Matsushita agreed to take care of its employees for life providing
benefits such as subsidized housing andretirement bonuses in exchange for loyalty and
hard work. However, the prolonged economic slump that began in the 1990s made these
commitments difficult to keep. Matsushita was saddled with expenses and no real way to cut them. It
is similar to the more recent challenges of GM to maintain the commitments it had made to
its older workers.

4. What is Matsushita trying to achieve with human resource changes it has announced?What are the
impediments to successfully implementing these changes? What are theimplications of
Matsushita if:(a) The changes are made quickly(b) It takes years or even decades to fully implement the
changes?

he human resource changes it has announced, Matsushita is trying to achieve ayounger workforce that
is encouraged with individuality, initiative taking and risk seeking. It wants its young managers to
become rational and logical, ambitious and aggressive, and at the same time to create an organization
that can carry out their ambitious plans. One of the impediments to successfully implementing these
changes is the lifetime employment commitment, which held Matsushita back from cutting off
unnecessary management staffs. Also the existing managers are performing poorly because of their old
way of doing things. Again, since it cannot lay workers off, it has to cut back on its hiring and this is
triggered by the slow growth rate .a) If changes are made quickly, the company would have dynamic
workforce that would increase the growth rate. But that would lack the loyalty of the employees, is still
a very strong force to keep the company going .b) It Matsushita takes too much time; it might fall back
and become unable to revolutionize its workforce. If old employees do not make way for new
employees, the company will have a slower growth rate with an aging workforce.

5. What does the Matsushita case teach you about the relationship between societal culture
and business success?

Societal culture and business are strongly intertwined. A society culture has a
direct impact in a company’s culture. The values and the tradition that are
important in societal culture will typically be important in corporate culture as
well. As societal culture changes overtime, so should company culture. However,
changes in the business environment can also prompt changes in corporate culture
which can then begin to influence societal culture as well.
 Case study 4
What strategy was Procter and Gamble pursuing when it first entered foreign marketsin the period up
until the 1980s?

In the period up until the 1980s, Procter & Gamble (P&G) pursued a strategy of aggressive international
expansion to enter foreign markets. This strategy was driven by a few key factors:

• Market Diversification: P&G sought to reduce its reliance on the domestic (U.S.) market and
spread its business risks across multiple countries. By entering foreign markets, P&G aimed to
tap into new consumer bases and create additional revenue streams.

• Global Branding: P&G was a company known for its strong brand portfolio, including popular
products such as Tide, Crest, Pampers, and others. By entering foreign markets, P&G aimed to
leverage its global brand recognition and trust, enabling it to gain a competitive advantage over
local competitors.

• Economies of Scale: P&G operated in the consumer goods industry, where economies of scale
played a significant role. By expanding internationally, P&G could increase its production
volumes, achieve cost efficiencies, and enhance its overall profitability.

• Product Standardization: P&G adopted a strategy of standardizing its products across different
markets. This approach allowed the company to benefit from mass production and streamline
its supply chain, resulting in cost savings.

• Adaptation to Local Markets: While standardization was a crucial element, P&G also recognized
the importance of adapting its products to suit local preferences and cultural differences. This
strategy allowed the company to cater to diverse consumer needs in various regions.

• Joint Ventures and Acquisitions: P&G often entered foreign markets through joint ventures or
acquisitions of local companies. This approach helped P&G quickly establish a presence and gain
access to existing distribution networks and market knowledge.
 • Investment in Marketing and R&D: P&G made significant investments in marketing and research
and development to understand local consumers, develop products that suited their needs, and
promote their brands effectively.

• Overall, P&G's strategy in the period up until the 1980s was focused on aggressive international
expansion while balancing the standardization of products with adaptation to local markets. This
approach allowed P&G to become one of the world's leading consumer goods companies, with a
strong global presence.

why do you think this strategy become less viable in the 1990s ?

ChatGPT

The strategy of aggressive international expansion pursued by Procter & Gamble (P&G) became less
viable in the 1990s due to several significant shifts in the global business landscape. Some of the key
factors that contributed to the challenges faced by this strategy in the 1990s include:

1. Saturation in Developed Markets: By the 1990s, P&G had already established a strong presence
in many developed markets. As these markets became increasingly saturated, it became more
challenging for P&G to sustain the same high growth rates experienced in the past.

2. Increasing Competition: P&G faced intensifying competition from both domestic players in
foreign markets and other multinational corporations that also began expanding their
operations globally. This heightened competition led to price wars and eroded profit margins.

3. Localization Challenges: While P&G had adapted its products to some extent in different
markets, the 1990s saw a growing emphasis on the need for deeper localization and
customization of products to meet the diverse preferences and cultural nuances of consumers in
various regions. P&G had to invest more in research and development to create region-specific
products, which increased costs.

4. Market Entry Barriers: As P&G sought to enter emerging markets, it encountered various entry
barriers such as regulatory complexities, government restrictions, and differences in distribution
networks. These barriers made it more difficult to establish a strong foothold in certain regions.

5. Currency and Economic Volatility: The 1990s saw increased currency fluctuations and economic
uncertainties in various parts of the world. These instabilities added risks to P&G's international
operations and made financial planning and forecasting more challenging.

6. Shift in Consumer Preferences: The 1990s witnessed changes in consumer preferences and
demands, including a growing interest in niche and specialty products. P&G's focus on mass-
 market, standardized products limited its ability to cater to these evolving preferences
effectively.

7. Strategic Reevaluation: As P&G faced these challenges, the company needed to reevaluate its
global strategy. In the 1990s, P&G shifted its focus towards a more region-specific approach,
recognizing the need to address local market demands more effectively.

To adapt to the changing landscape, P&G implemented various measures in the 1990s, such as divesting
non-core businesses, streamlining its product portfolio, and adopting more flexible and decentralized
approaches in certain markets. These adjustments allowed P&G to better navigate the evolving global
business environment and remain a significant player in the consumer goods industry.

What strategy does PG appear to be moving toward? What are the benefits of thisstrategy? What are
the potential risks associated with this strategy?

As of my last knowledge update in September 2021, Procter & Gamble (P&G) was moving towards a
strategy focused on brand consolidation and innovation. This strategy aimed to streamline its brand
portfolio and invest in product innovation to meet the evolving needs of consumers. Here are some
aspects of this strategy along with its potential benefits and risks:

Strategy: Brand Consolidation and Innovation

Benefits:

1. Focus and Efficiency: By consolidating its brand portfolio, P&G can focus its resources on a select
group of core brands, eliminating overlapping products and reducing operational complexity.
This increased focus can lead to greater operational efficiency and cost savings.

2. Stronger Brand Identity: With a smaller and more focused brand portfolio, P&G can invest more
in marketing and promotion, building stronger brand identities and increasing consumer
awareness and loyalty.

3. Innovation and New Product Development: P&G's strategy emphasizes investing in research and
development to create innovative products that address emerging consumer trends. This focus
on innovation allows P&G to stay competitive and appeal to new consumer segments.

4. Market Agility: Streamlining its operations can make P&G more agile in responding to market
changes and adapting to shifting consumer preferences, giving the company a competitive
advantage.

5. Enhanced Profitability: By concentrating efforts on high-performing brands and innovative

1. Market Saturation: In highly competitive markets, focusing on a limited number of brands and
products could lead to increased competition and market saturation for those specific offerings.

2. Dependence on Key Brands: Consolidation may result in increased dependence on a few core
brands for revenue generation. If any of these key brands face challenges or decline in
popularity, it could have a significant impact on P&G's overall performance.

3. Missed Opportunities: By narrowing its brand portfolio, P&G might miss out on potential growth
opportunities in certain product categories or regions, limiting its ability to diversify its revenue
streams.

4. Innovation Risk: While innovation is essential for growth, not all new product developments
may succeed in the market. If significant R&D investments do not yield successful products, it
could impact profitability.

5. Consumer Shifts: Consumer preferences and market trends are constantly changing. If P&G's
innovation efforts do not align with emerging trends, the company may struggle to capture new
market segments.

It's important to note that my knowledge is limited to information available up until September 2021,
and P&G's strategy and performance may have evolved since then. For the most up-to-date insights, I
recommend consulting recent reports and news about Procter & Gamble's business strategy.

What strategy does P!G appear to be moving toward? What are the benefits of thisstrategy? What are
the potential risks associated with this strategy?

As of my last knowledge update in September 2021, Procter & Gamble (P&G) was moving towards a
strategy focused on brand consolidation and innovation. This strategy aimed to streamline its brand
portfolio and invest in product innovation to meet the evolving needs of consumers. Here are some
aspects of this strategy along with its potential benefits and risks:

Strategy: Brand Consolidation and Innovation

Benefits:

1. Focus and Efficiency: By consolidating its brand portfolio, P&G can focus its resources on a select
group of core brands, eliminating overlapping products and reducing operational complexity.
This increased focus can lead to greater operational efficiency and cost savings.

2. Stronger Brand Identity: With a smaller and more focused brand portfolio, P&G can invest more
in marketing and promotion, building stronger brand identities and increasing consumer
awareness and loyalty.
 3. Innovation and New Product Development: P&G's strategy emphasizes investing in research and
development to create innovative products that address emerging consumer trends. This focus
on innovation allows P&G to stay competitive and appeal to new consumer segments.

4. Market Agility: Streamlining its operations can make P&G more agile in responding to market
changes and adapting to shifting consumer preferences, giving the company a competitive
advantage.

5. Enhanced Profitability: By concentrating efforts on high-performing brands and innovative

Potential Risks:

1. Market Saturation: In highly competitive markets, focusing on a limited number of brands and
products could lead to increased competition and market saturation for those specific offerings.

2. Dependence on Key Brands: Consolidation may result in increased dependence on a few core
brands for revenue generation. If any of these key brands face challenges or decline in
popularity, it could have a significant impact on P&G's overall performance.

3. Missed Opportunities: By narrowing its brand portfolio, P&G might miss out on potential growth
opportunities in certain product categories or regions, limiting its ability to diversify its revenue
streams.

4. Innovation Risk: While innovation is essential for growth, not all new product developments
may succeed in the market. If significant R&D investments do not yield successful products, it
could impact profitability.

5. Consumer Shifts: Consumer preferences and market trends are constantly changing. If P&G's
innovation efforts do not align with emerging trends, the company may struggle to capture new
market segments.

It's important to note that my knowledge is limited to information available up until September 2021,
and P&G's strategy and performance may have evolved since then. For the most up-to-date insights, I
recommend consulting recent reports and news about Procter & Gamble's business strategy.

Case Study 5

Q1. Before 1997, Diebold manufactured its ATM machines in the United States and sold
theminternationally via distribution agreements, first with Philips Electronics NV and then with
IBM.Why do you think Diebold choose this mode of expanding internationally? What wereadvantages
and disadvantages of this agreement?

Diebold's choice of using distribution agreements with international partners, such as Philips Electronics
NV and IBM, to sell its ATM machines before 1997 was likely driven by several factors that made this
mode of international expansion advantageous:

Advantages of using distribution agreements:

Market Access: Partnering with established international companies like Philips and IBM provided
Diebold with immediate access to foreign markets where these partners already had an existing
customer base and distribution networks. This allowed Diebold to enter international markets without
the need to build its own distribution infrastructure from scratch.

Reduced Risk: Distribution agreements helped reduce the financial and operational risks associated with
entering foreign markets independently. Diebold could leverage the expertise and market knowledge of
its partners to navigate local regulations, cultural nuances, and business practices.

• Cost Savings: Manufacturing its ATMs in the United States and distributing them internationally
through partners allowed Diebold to benefit from economies of scale in production. This setup
likely resulted in cost savings and increased profitability.
• Brand Recognition: Partnering with well-known international companies like Philips and IBM
helped enhance Diebold's brand recognition and credibility in foreign markets. It lent credibility
to Diebold's products and could have facilitated quicker acceptance and adoption by local
customers.
• Speed to Market: Through distribution agreements, Diebold could rapidly enter multiple
international markets simultaneously, accelerating its global expansion timeline compared to
setting up its own operations in each country.

Disadvantages and Challenges of using distribution agreements:

• Control and Coordination: Depending on the terms of the distribution agreements, Diebold
might have had limited control over its distribution partners' activities. Ensuring consistent
product quality, customer service, and branding across various markets could have been
challenging.
• Profits and Margins: While distribution agreements helped Diebold access international
markets, the company may have had to share a portion of its profits with its partners. This could
have impacted the overall profitability compared to selling directly.
• Dependence on Partners: Diebold's success in international markets could have been tied to the
performance and commitment of its distribution partners. If the partners faced financial or
operational issues or decided to focus on other priorities, Diebold's market presence and growth
might have been affected.
 • Limited Market Penetration: Distribution agreements might not have allowed Diebold to have a
deep understanding of local markets and customers, limiting its ability to tailor products and
services to meet specific regional needs effectively.
• Competitive Challenges: While distribution agreements provided market access, Diebold still
faced competition from other ATM manufacturers and local players. The company needed to
differentiate itself and its products to maintain a competitive edge.

Ultimately, the choice of distribution agreements for international expansion before 1997 was a
strategic decision by Diebold to tap into global markets while mitigating some of the risks and
complexities associated with entering foreign markets independently.

• What do you think promoted Diebold to alter its international expansion strategyin 1997 and
start setting up wholly owned subsidiaries in most markets? Why doyou think the company
favoured acquisition as an entry mode?

As of my last knowledge update in September 2021, I don't have access to specific events or decisions
made by Diebold in 1997 or any subsequent changes to its international expansion strategy. However, I
can speculate on some possible reasons that might have prompted Diebold to alter its strategy and start
setting up wholly-owned subsidiaries in most markets, as well as the potential reasons for favoring
acquisition as an entry mode:

Market Control and Integration: Setting up wholly-owned subsidiaries provides Diebold with greater
control over its operations in international markets. With full ownership, the company can align
strategies, streamline decision-making, and ensure consistency in brand image and product quality
across different regions.

Market Penetration: As Diebold expanded its international presence, it might have found that
distribution agreements limited its ability to penetrate markets deeply. By establishing wholly-owned
subsidiaries, the company could directly invest in local marketing, sales, and customer service, enabling
it to better understand and cater to specific market needs.

Branding and Customer Relationships: Wholly-owned subsidiaries allow Diebold to build stronger brand
equity and foster direct relationships with customers. This direct interaction enhances customer trust
and loyalty, ultimately leading to improved customer retention and long-term value.

Integration of Technology and Innovation: For a technology-focused company like Diebold, having
wholly-owned subsidiaries could facilitate the integration of innovative technologies and products
across markets. This integration may be more efficient when Diebold has full control over the
subsidiary's operations.

Acquisition for Market Entry: Acquiring established local companies can provide Diebold with an existing
customer base, distribution networks, and market knowledge. This approach can expedite market entry
and provide a shortcut to overcome regulatory hurdles and cultural differences.
Faster Expansion: Acquisitions can be a faster way to establish a presence in multiple markets
simultaneously. Rather than building operations from scratch, acquiring established companies allows
Diebold to expand rapidly and gain immediate market access.

Risk Mitigation: Acquiring successful local companies with a proven track record can reduce the risk
associated with market entry. Acquiring existing players with a solid customer base and positive
reputation can minimize the uncertainty and challenges of entering unfamiliar markets.

It's essential to note that these are speculative reasons, and the actual decision-making process and
strategic considerations of Diebold may differ. For accurate and up-to-date information on Diebold's
international expansion strategies and decisions, I recommend consulting official company statements,
financial reports, and relevant news sources.

• Diebold entered China via a joint venture, as opposed to a wholly ownedsubsidiary. Why do
you think the company did this?

Entering China via a joint venture rather than a wholly owned subsidiary could have been a strategic
decision made by Diebold for several reasons:

1. Local Expertise: China's market is complex, with unique regulatory, cultural, and business
challenges. By forming a joint venture with a local partner, Diebold could gain access to the
partner's knowledge of the local market, established relationships with key stakeholders, and
understanding of Chinese consumer preferences.

2. Regulatory Compliance: China has historically maintained strict regulations and restrictions on
foreign companies operating in certain industries, including banking and financial services
(which includes ATMs). A joint venture could have been a way to navigate these regulations
more effectively, as partnering with a local entity may provide certain advantages or exemptions
in compliance.

3. Market Access: Forming a joint venture can provide quicker market access than establishing a
wholly owned subsidiary from scratch. The local partner may already have an established
distribution network, customer base, and operational infrastructure, enabling Diebold to
penetrate the Chinese market faster.

4. Risk Sharing: A joint venture allows both partners to share financial and operational risks, which
can be particularly beneficial in a new and challenging market like China. By pooling resources
and expertise, Diebold and its local partner could have mitigated risks and enhanced their
chances of success.

5. Government Relations: In China, having strong government relations can be crucial for smooth
operations and growth. Partnering with a local entity may help Diebold establish a stronger
presence within the Chinese business community and build rapport with government
authorities.
 6. Cultural Adaptation: China has a unique cultural context, and a joint venture can facilitate better
cultural adaptation and understanding of local norms. A local partner can help Diebold navigate
business practices, communication styles, and consumer behaviors that may differ from those in
Western markets.

7. Brand Recognition: Partnering with a well-known local company may have boosted Diebold's
brand recognition and credibility in China, making it easier to gain trust from Chinese customers
and businesses.

It's important to note that the decision to enter a foreign market through a joint venture or a wholly
owned subsidiary depends on various factors, and the strategic considerations for each approach can
vary based on the specific circumstances and objectives of the company

• What are the drawbacks of using a joint venture as an entry method?

Using a joint venture as an entry method into a foreign market can have several drawbacks and
challenges, including:

1. Lack of Full Control: In a joint venture, decision-making is shared between the partners. This can
lead to conflicts and disagreements over strategic direction, investment decisions, and
operational policies. Diebold may not have full control over its business operations, which could
hinder its ability to implement its preferred strategies.

2. Alignment of Objectives: The partners in a joint venture may have different objectives and
priorities. Misalignment of goals can create tensions and hinder effective collaboration,
potentially leading to suboptimal decision-making and compromised outcomes.

3. Technology and Knowledge Transfer: In a joint venture, there may be limitations in the transfer
of critical technology and knowledge from Diebold to its local partner and vice versa. This could
hamper the efficient utilization of Diebold's expertise and hinder the innovation process.

4. Intellectual Property Concerns: Sharing proprietary technology and intellectual property with a
local partner in a joint venture can create potential risks of unauthorized use or leakage,
impacting Diebold's competitive advantage and market position.

5. Cultural Differences: Joint ventures often involve partners from different cultural backgrounds,
which can lead to communication challenges and misunderstandings. These cultural differences
can impact decision-making, team dynamics, and overall cooperation.

6. Limited Market Presence: As Diebold only holds a partial stake in the joint venture, its market
presence and revenue share may be limited compared to having a wholly owned subsidiary. This
could result in a reduced ability to capture a significant portion of the market.
 7. Exit Strategy: Exiting a joint venture can be complex and challenging, especially if there is a lack
of clear exit provisions in the agreement. Disentangling shared assets, intellectual property, and
resources can be time-consuming and potentially lead to disputes.

8. Partner Reliability: The success of a joint venture largely depends on the reliability and
commitment of the local partner. If the local partner fails to fulfill its obligations or performs
poorly, it can negatively impact Diebold's reputation and financial performance.

9. Competitive Risks: Joint ventures can lead to sharing sensitive business information with
competitors, creating potential risks of market intelligence leaks or compromising competitive
advantages.

It is essential for companies like Diebold to carefully assess the specific market conditions, partner
capabilities, and potential risks before deciding to enter a foreign market through a joint venture.
Mitigating these drawbacks requires effective communication, well-defined agreements, and a clear
understanding of the strategic goals of the joint venture for all parties involved.