FINAL REPORT SUBJECT GLOBAL STRATEGIC MANAGEMENT critically present your understading about global positioning

*Global positioning talks about choice of countries and value proposition.. Malaysia for rubber, or Saudi Arabia for petroleum - Second, the defining of the numerous value propositions f

BUSINESS SCHOOL FACULTY OF INTERNATIONAL BUSINESS

-MARKETING

FINAL REPORT SUBJECT: GLOBAL STRATEGIC MANAGEMENT

Instructor: MSc Do Ngoc Bich Class Code: 22D1BUS50310901 Student: Nguyen Phuong Uyen Grade - Class: K46 - FTC01 MSSV: 31201024693

Ho Chi Minh City, June 5th, 2022

TABLE OF CONTENT

1 Question 1……… 4

a Critically present your understading about global positioning ………4

Choices of countries………4

Value proposition………4

b Analyse global positioning of a global firm ………5

Choices of countries………5

Value attribute,,,,………5

Customer segment ………6

Degree of worldwide standardization ……….6

2 Question 2……….…7

a Discuss 6 reasons leading to joint venture failure (support with relevant evidences and numbers, explanation) …… ……….7

1 Valuation mistakes………,,………7

2 Integration Time,………7 3.Culture Management ………8

4.Synergies … ……….9

5.Straying too far… ……… 10

6 Lacking of project governance……… 11

b Analyse one failure of global brands and present all lessons that you can taken from (causes and results analysis – link with 2a) ………11

1 Culture aspect……….12

2 Synergies problems……….12

3 Appendix……….13

TABLE OF ACRONYM

M&A Merge and Acquisition PMI Post merge integration

I confirm that this is my own work and the use of all materials from other sources has

been properly and fully acknowledged

Signature: Uyen Phuong Nguyen

Date: 5th June 2022

*Global positioning talks about choice of countries and value proposition It consists of two

types of choice:

- First, the choice of countries in which the company wants to compete and the role that those countries play in the global portfolio In particular, there are five types of country where global positioning occurs:

• Key countries are critical for the long-term competitiveness of the company because of their size, growth or available resources.(Germany, the UK and France are important nations in Europe)

• Emerging countries exhibit a high growth rate for a particular industry (China, India would fit that description)

• Platform countries can serve as ‘hubs’ for setting up regional centers – global factories that are

‘platforms’ for further development ( Carrefour, the French hypermarket conglomerate, has exploited Taiwan as a

strategic expansion platform in Asia)

• Marketing countries have attractive markets without being as strategically critical as the key countries ( Vietnam in Asia, Tunisia in North Africa )

• Sourcing countries have a strong resource base but limited market prospects ( Malaysia for rubber, or Saudi Arabia for petroleum)

- Second, the defining of the numerous value propositions for the company's products or services, as they relate

to the categories and regions in which the company wishes to compete

 Value proposition consists of the selection of value qualities, client segmentation, and the degree of standardization:

• Value characteristics are product/service elements that customers value when making a

purchasing choice

• Customer segments are specific groupings of customers that want comparable

value attributes (shared value curve)

• Degree of world standardization of products/services:

+ A standardized value proposal provides the same sort of consumer segment with a similar or standard value attribute everywhere over the world

+ An adaptive value proposition tailors the value proposition to different regions

- The choice of global positioning depends on the company’s decisions on the:

• Scope of targeted client groups (broad/focused player)

• Approach of making a value proposition in several nations (standardized/adaptive)

• Adoption of generic strategies adopted (differentiation or cost leadership)

1.b/

*Pepsi Company

- Choices of countries: Pepsi International is a world renowned brand that produce one of the largest

carbodinated drinks in the world and is the second largest food and beverage company Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time Although its head office is in New York City, the company operates almost all over the world

- Value attributes: Pepsi’s generic competitive advantage approach is product positioning and

differentiation It emphasizes quality and values in consumer goods and continued to refine its beverage and snack portfolio to meet changing consumer demands For example, in 2016, the corporation introduced Pepsi Zero Sugar - a beverage with reduced sugars and saturated fat to produce a healthier and more nutritious beverage Moreover, differentiation marketing strategies help highlight the distinctiveness of the product like the “Pepsi Challenge,” where consumers blindly taste both Pepsi and Coke and choose which one they prefer

The cost leadership generic approach is used on Pepsi's goods to gain a competitive edge through

cost or pricing Pepsi beverage products are priced lower than competitors such as Coca Cola’s

The company ensures that its many products are readily available and affordable, which is

appealing to different income segments

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- Customer segment: PepsiCo is known for its broad and multi-segment customer base where it targets

more than one customer with its diverse products to better capture the market and satisfy their customers There are three ways for Pepsi to classify customers : through age, behavior and psychology

+ Age segmentation

Demographically, PepsiCo is known to classify its market based on age where the company's major segment is those within the age of 15-45 These are individuals who are still strong and have no worries about carbonated drinks and will always buy the original PepsiCo product Pepsi has over 22 brands that reach diverse consumers based on age, gender, income levels, and such like demographics.and the association of pepsi image with youth as well as the vitality favorable helped position the image of Pepsi so high

+ Behavioral segmentation

Behavioral segmentation is another way through which PepsiCo has classified its market

The group being targeted here includes benefits sought such as those seeking enjoyment and taste of those refreshing beverages or spending time Personality as well includes those users who are easy-going, ambitious, and determined in their activities

+ Psychopathic segmentation The company has products that fit in all the classes from the working class, middle class, to the upper class This is because the products are packaged in diverse sizes and prices start from lowest to highest which makes the product affordable for nearly all classes and income levels

- Degree of worldwide standardization: PepsiCo applied the adaptive value proposition The company

has created a diverse product line of complementary goods and beverages globally to address the requirements and changing behaviors of customers Since nutritionists continually say that soft drinks are bad for people’s health due to their high sugar content, Pepsi tries to provide several nutritious and healthier alternatives for the expanding

nutritions market The company introduced Aqua Minerale water and juice, a healthy drink with more flavors for its Kevita Master Brew Kambocha brand and Tropicana Probiotics Moreover, they also develop

several flavors of drinks with customer tastes and preferences in mind - For example, to capture

the market share of Latin community, Pepsi launched a whole grain oats-based food item called

Three Minutos

2 a/

1 Valuation Mistakes:

To complete an M&A transaction, a significant amount of information needs to be exchanged If

the original information was inaccurate or could not be supported by market-based data, it would

likely change the original offer The investment in the assets may look good on paper, but

practically they may not be the revenue-generating areas after the closure of the deal When the

original terms are not properly valuated, the company can pay an inaccurate bidding price for the

target, making it less controllable

2/ Intergration time

Several deal makers were unable to lessen the time of uncertainty for their workers, customers,

and suppliers throughout the M&A processcompare to sucessful ones Since acquiring a firm

normally necessitates big investments, the company's owners and management want to see a

speedy return on investment The prolong integration could inflate the expense of the integration

process and make it impossible for the organization to expedite the return on

investment.However, too quick an integration is not good either - as the company may take

incorrect or uninformed decisions and overlooked important aspect

3/ Culture Management

Cultural differences are one of the reasons why almost two-thirds of M&A failed Part of the

problem is when integrating companies are in the same or similar businesses, their top

executives tend to assume they are “similar” and dismiss the need for deep cultural analysis

Businesses tends to neglect culture-related issues or address them late and inadequately, or

worse, unaware of the problem since everyone pays lip services to the agreed-upon new

methods This research graphic below shows how pervasive the problem is from the

perspective of executives involved in mergers

4/ Synergies

There is a significant difference in the degrees of synergy attainment between successful and

failed deal-makers: although 83 percent of successful deal makers can meet their synergy goals,

fewer than half of failed deal makers can

- Companies struggle to obtain M&A synergies for three main reasons.

First, corporations prioritize capturing short-term financial synergies over taking a holistic

approach By narrowing the scope, they frequently miss many "hidden" synergies and fail to

build high-performing supply chains with strong long-term potential that give sustained value to

consumers and stakeholders

Second, during M&A due diligence, corporations may miss the two companies' overall

business and operational "compatibility," resulting in operational synergies that are out of sync

with market needs

Finally, businesses vastly underestimate the complexity, resources, and managerial

focus required to carry out a successful integration and realize anticipated benefits

5/ Straying too far

M&A that takes the acquirer beyond its core line of business is more likely to fail, and

cross-border M&A had a higher likelihood of failure than those within the same country

There are 75% of deals failed when expanding into a new industry through acquisition This

is due to some company models are just not as relevant in various regions of the world, or the

acquirer's competitive capabilities may not be applicable to the new industry

6/ Lacking of project governance

Almost all sucessful acquisation applied this method, while it’s muchh less common among

failed businesses As the PMI requires a lot of time, resources and effort, companies need

well-defined project governance to assign accountability, define functional authority and focus

resource and capital better and more efficiently However, failed deal makers tend to neglect the

comlexity of this process and lack the necessary skills to deal with the transformation issues,

which leads to failed acquisition

2.b/

Volvo is a Swedish multinational manufacturing conglomerate with its headquarters in Gothenburg

While Renault is a French car manufacturer founded in 1898 by Louis Renault and his brothers The

two companies developed a good partnership over time and eventually becoming alliance partners in

1990 The Volvo-Renault strategic partnership was "one of the largest and most notable agreements

in Europe, creating a formidable world-class rival" Despite

its enormous success, the collaboration only lasted three years, dissolving in 1993 The merger

between Renault and Volvo was unsuccessful due to both cultural and synergies aspects

1 Cultural aspects:

The most significant issue was a clash of cultures, as each firm has its own culture and way

of doing things The French and Swedes, in particular, had opposing views on their respective

government roles, power distance, working style, and language

To begin with, the government's weight and role are different in France and Sweden; in France,

government control over industry was quite strong, while in Sweden it was very weak Second,

there are variances in power distances because Volvo's structure was decentralized and there was

a balance between the different powers, whereas Renault's distance power is quite high and so

the structure was very centralized Furthermore, the Swedish work culture is more

group-oriented, whereas the French are more individualistic Finally, there is a lack of cooperation

among white-collar workers They have distinct beliefs about job handling and product

development, which caused communication issues In fact, some newspapers stated that

Renault's personnel spoke in French during some confrontations, and Swedish saw this as a

manner of excluding them It is critical for organizations working together to be able to

communicate and understand each other's intentions Poor communication makes it difficult for

these businesses to resolve misunderstandings and problems caused by diverse cultures The

failure of Renault and Volvo is a clear example of how culture plays a vital part in the

development of alliance relationships; it is necessary to achieve integration, balance, and a

compromise between the cultures of different enterprises involved in a strategic alliance

2/ Synergies problem:

- Power conflict: Although the alliance was first promised to be an equal partnership, it quickly turned into more of a takeover due to the French Golden Share regulation The merge would have left Volve shareholder with a 35% stake in the combine company while the French government control the remaining This had led to an unfair balance of power between the two firms, advantage for Renault and no gains for Volvo’s shareholders

- Management problem: Renault and Volvo have different organizational structure While Volvo is a decentralized management structure which is able to respond faster and share information;

Renault has a centralized structure which is greatest control by top management This difference in

management styles will cause delay the decision making in the strategic alliance Moreover, there is

a lack of trust in the management team, as both companies worry about losing strategic control over

the alliance rather than working towards the partnership's common goals

* Appendix

- Lasserre, Philippe, Global Strategic Management the fourth edition (2018)

- Ellen Shi, Failed Collaboration : Volvo and Renault: The Attempted Merge (2021),

retrieved August 10, 2021 from

https://www.studocu.com/en-ca/document/university-of-manitoba/introduction-to-organizational-behaviour/failed-collaboration-gmgt-2070-project/

18624688

- Shelly Lu, 6 Reasons M&A Deals Fail (2018), retrieved 13th February, 2018 from

https://www.securedocs.com/blog/6-reasons-m-a-deals-fail

- PwC’s M&A Integration Survey Report, Success factors in post-merger integration (2017) retrieved from

https://www.pwc.de/de/deals/success-factors-in-post-merger-integration.pdf

- Bernadine Racoma, How Pepsi adapts around the world (2019) retrieved 18th July 2019 from

https://www.daytranslations.com/blog/how-pepsi-expands/

- Deloitte Consulting LLP, Mergers and Acquisitions Operational Synergies (2013) retrieved from https:// www2.deloitte.com/content/dam/Deloitte/us/Documents/manufacturing/us-man- auto-maoperationalsynergiespov-part1-110713.pdf

- Sandeep Pitrola, Analysing The Complexities Of Pepsico’s Operations in the global environment (2017) retrieved from https://www.academia.edu/36359790/ANALYSING_THE_COMPLEXITIES_OF_PEPSICOS_

OPERATIONS_IN_THE_GLOBAL_ENVIRONMENT

- Margherita Russo,Strategic Alliances in Global Markets (2017), Retrieved from https://boa.unimib.it/retrieve/ handle/10281/153661/218692/phd_unimib_759771.pdf