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Outline of Internationalization Process2
Outline of Internationalization Process
Carlsberg’s internationalization strategy is focusing on three main areas; Northern & Western Europe, Eastern Europe and Asia. Carlsberg have merged and acquired several companies since 2002 to become a stronger player on the global beer market by changing their internalization strategy in 2000. From 2000, Carlsberg concentrated on its core business being; brewing, sale and distribution of beer. This meant that a series of non-strategic companies and assets had been sold. Markets outside their three main areas were serviced through export and production under licence. Carlsberg has been looking at ways to expand their businesses, since the global beer industry is being challenged significantly. Fewer and stronger players are dominating the global market and Carlsberg accommodated these challenges by merging with the Norwegian brewery Orkla. In 2001 Carlsberg entered a joint-venture with Orkla as a part of their internationalization process. Orkla was holding 60% ownership of Carlsberg, and as payment for the remaining 40% shareholding, Orkla contributed with all its beer and softdrink activities in Sweden, Norway and Russia. This gave Carlsberg a better opportunity to get a stronger foothold in the Baltic states and in the very large and valuable Russian beer market. The joint venture made Carlsberg the market leader in the four very competitive Nordic countries. Furthermore, Carlsberg continued to expand their businesses by obtaining full control of its brewery business by acquiring Orkla’s 40% shareholding in Carlsberg in 2004. In 2008 Carlsberg and Heineken acquired the English brewery Scottish & Newcastle as a part of their internationalization process. This acquisition was by far, the largest transaction in the Carlsberg history. All Scottish & Newcastle activities was split between Carlsberg and Heineken, giving Carlsberg larger market shares in Russia and the Baltic countries, larger market shares in France by acquiring the French market leader Kronenbourg. In addition, Carlsberg acquired breweries in Greece, China and Vietnam. The mergers and acquisitions of the new activities have given Carlsberg stronger foothold in their focus areas and important new beer brands to the portfolio. Carlsberg is now a much larger player in the global brewing industry, and the new platform has positioned Carlsberg firmly among the world’s largest breweries. Furthermore in 2002 Carlsberg refocused their energy in a few formulated key win battles (Malnight T. Keys T. (2007). With this Carlsberg wanted to increase ownership shares of its subsidiaries in all its markets. Furthermore a heavy focus was put upon communication across markets. This effort marked the success Carlsberg enjoyed the following years. Analysis
One can argue that the reason Carlsberg has build their internationalization strategy upon joint ventures, mergers and acquisitions is to circumvent the liability of foreignness. But this strategy also addresses the internationalization problems pivoted around bounded rationality and liability of outsidership.
The beer markets around the world are often protected by the governments through entry barriers. Being an international brewing company, entrance to new markets can therefore be a challenge. Since 1968 Carlsberg has been engaged in an internationalization process pivoted around a strategy of joint ventures, mergers and acquisitions. The reason for this strategy could be found in the difficulties entering new markets because of entry barriers, hence the liability of foreignness. The local beer industries is dominated by local breweries that grasp a large fraction of the demand. It can be argued that beer drinking is path dependent and it is hard for Carlsberg to change consumers drinking habits in a new market towards using...