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Carlsberg in Emerging Markets
1. Describe and discuss different strategies of multinational enterprises when expanding into emerging markets. Comment on the pros and cons of Carlsberg’s acquisition strategy in China.
An emerging market is one that has high growth or growth potential with an infrastructure that is under-developed. The focus of internationalization is shifting from developed countries to emerging countries as developed markets are becoming saturated. As multinational enterprises are turning to emerging markets for resource, future growth, and outsourcing, appropriate market strategies and execution in these markets have become crucial to global success. Therefore, when a multinational enterprise considers entering an emerging market, it should be clear about which strategy it should perform.
When a corporation decides to expand its market into the emerging market, it has to choose between exporting or licensing, fully owned or shared ownership. Our team focused on the strategies in terms of ownership.
There are two strategies of expanding into emerging markets in terms of ownership, which are joint ventures and wholly owned subsidiaries.
Joint ventures
Joint venture is an attractive method of sharing risks and saving money through capital and resource sharing that companies with high uncertainty avoidance would prefer. Joint venture in emerging markets is a crucial strategy as some countries, such as China, will not allow outside companies to own the majority of a domestic business unless they establish a joint venture with them.
Forming a joint venture with a company from the emerging economy has its benefits as the locally-based domestic corporation has access to a wide network of local contacts at company management level as well as local market intelligence, making it easier for them to spot good investment opportunities.
For the emerging economy domestic companies’ view, joint venture provides them the chance to work with larger companies
1. Describe and discuss different strategies of multinational enterprises when expanding into emerging markets. Comment on the pros and cons of Carlsberg’s acquisition strategy in China.
An emerging market is one that has high growth or growth potential with an infrastructure that is under-developed. The focus of internationalization is shifting from developed countries to emerging countries as developed markets are becoming saturated. As multinational enterprises are turning to emerging markets for resource, future growth, and outsourcing, appropriate market strategies and execution in these markets have become crucial to global success. Therefore, when a multinational enterprise considers entering an emerging market, it should be clear about which strategy it should perform.
When a corporation decides to expand its market into the emerging market, it has to choose between exporting or licensing, fully owned or shared ownership. Our team focused on the strategies in terms of ownership.
There are two strategies of expanding into emerging markets in terms of ownership, which are joint ventures and wholly owned subsidiaries.
Joint ventures
Joint venture is an attractive method of sharing risks and saving money through capital and resource sharing that companies with high uncertainty avoidance would prefer. Joint venture in emerging markets is a crucial strategy as some countries, such as China, will not allow outside companies to own the majority of a domestic business unless they establish a joint venture with them.
Forming a joint venture with a company from the emerging economy has its benefits as the locally-based domestic corporation has access to a wide network of local contacts at company management level as well as local market intelligence, making it easier for them to spot good investment opportunities.
For the emerging economy domestic companies’ view, joint venture provides them the chance to work with larger companies