(TIỂU LUẬN) FINAL REPORT SUBJECT GLOBAL STRATEGIC MANAGEMENT critically present your understading about global positioning

UNIVERSITY OF UEH
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


1

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

3

DECLARATION
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


4

1.a)
*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:


5

+ 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.


6

- 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

7

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.


8

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.

9

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


10

- 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 crossborder 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.


11

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 welldefined 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


12

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 grouporiented, 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;


13

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 />18624688
th

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

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

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

from />- Deloitte Consulting LLP, Mergers and Acquisitions Operational Synergies (2013) retrieved

from />- Sandeep Pitrola, Analysing The Complexities Of Pepsico’s Operations in the global environment

(2017) retrieved from
/>
OPERATIONS_IN_THE_GLOBAL_ENVIRONMENT
- Margherita Russo,Strategic Alliances in Global Markets (2017), Retrieved from

/>