Carlsberg Diversification

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Table of contents
Question 1
Pressures for National Responsiveness…………………………………….………2 Strategic Role in Relation to Structural Context…………………………………...4 Managerial Recommendations……………………………………………………..5 Question 2
The Speed of a Rival’s Attack……………………………………………………..6 Managerial Recommendations…………………………………………………….9 Appendices…………………………………………………………………...….10 References……………………………………………………………………….17

Question 1
Pressures for National Responsiveness (incl. measures and data) For the sake of clarity, I have defined local responsiveness as ‘the extent to which parent managers understand, respond and adapt to host country conditions, so that their decisions and policies pertaining to foreign subsidiaries are geared to the unique parameters of the local environment’ (Luo, 2003). My area of focus is Carlsberg’s subsidiary (SUB) in China. I have chosen to view the Chinese SUBs as one in order to collect the best data, because Carlsberg denotes them as one in their Annual Report and because Carlsberg has a one CEO of ‘Carlsberg China’ (carlsberggroup.com). This case is interesting as it was vital for Carlsberg to enter through FDI to attain a sustainable competitive advantage through the creation and transfer of dynamic capabilities (Teece, 1997) and to create a shared context - a differentiated network - to share knowledge and relationships (Moran and Ghoshal, 1996). Carlsberg did succeed in getting access to the in-imitable resource (Barney, 1991) of the SUBs informal networks and also in sharing and appropriating knowledge (Carlsen et al, 2010). Using the framework of Dunning (2008) and Lassere (2007), other drivers for Carlsberg’s FDI were ‘Consolidation’ and Global Reach’ (Carlsen et al, 2010; Wong, 2006). Carlsberg entered China gradually but made the first acquisition of Huizhou Brewery in Guandong in 1995 (Meyer & Tran 2006). I will divide the pressures for local responsiveness in external and internal pressures. External: Firstly, I would like to measure national culture on the basis of Hofstede’s 5 dimensions as ‘cultural differences play an important role in the development of IB activities’ (Cultural and Institutional factors, compendium). Please see appendix 1 for graphs. The differences might seem large but to make sure and get a relative number, I have compared DK-China to DK-Sweden. This showed that the cultural differences are vast in all dimensions. Limitations of Hofstede’s survey is that it was conducted within IBM and one must remember that ‘cross-cultural problems emerge not only due to differences in national culture between home and host country but also from clashed of corporate culture (Cultural and Institutional factors). My second quantitative measure will be the institutions of DK and China respectively. Before investigating, my hypothesis is that these will differ substantially because what North coined the informal institutions’ (norms and behavior) interplay with Hofstede’s dimensions directly, which affect the formal institutions (regulation and laws). (North, 1990; Macdonald 2010). On the Global Competitive Index, China is ranked on a modest 50th place when it comes to institutions whereas Dk occupies the 5th place and Sweden is ranked 2nd (Global Competitiveness Report, 2010-2011). This rightly shows large discrepancy between DK and China in terms of institutions and shows that there is high pressure for national responsiveness. Further more, relationships, Guanxi, are of utmost importance in China (Li et. al, 2007) also in the beverage industry (Just-drinks, 1999). Plus, a deeper set of government regulations have been applied in recent years as e.g. stricter environment standards (Wong, 2010). Carlsberg had to comply with these initiatives in China (Wong, 2010) and other countries in general (Brooks et. Al, 2004). I would argue that Carlsberg does this to attain legitimacy. This is especially important as the legitimacy of the MNE as a whole is affected by the...
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