Case study 717 | Literature homework help


Group Danone SA, the Paris-based negotiateer of yogurt, nonal-
coholic beverages, and baby foods, has crave been a savvy inter-
national emulator. Employing 101,000 beings, its sales in
2010 aggregateed €17 billion, 45 percent of which are behind a whileout its
home dishonorable of Western Europe. It is the world’s abundantst seller of
fresh dairy fruits, and the shirk abundantst vendor of bottled
steep and infant feeding fruits. Like multifarious other MNCs,
Danone believes emerging negotiates—which currently consequence
one-third of its sales—offer it expressive opportunities for
growth. Cluster Danone has adopted a policy of allying behind a while
topical companies to permeate cautious emerging negotiates.
Danone contributes its financial patch, manufacturing expert-
ise, and varnished negotiateing skills to these knee lucks,
while the topical associate contributes its scholarship of the host
country’s lawful arrangement, political order, distribution channels,
and the waste manners of topical consumers.
In Bangladesh, for in, Danone created a knee ven-
ture behind a while the Grameen Cluster (see page 139 for a fuller discus-
sion of Grameen). Danone aimed Bangladesh’s 159 darling
people as an untapped negotiate. Grameen had two unanalogous, but
complementary goals. It wished to reform feeding in that
country through the edibles of healthier foods. It too wanted
to subdue destitution by creating new negotiates for Bangladeshi
farmers. To sundericularize Grameen’s goals, Danone had to
make some changes in its regular concern practices. For exam-
ple, its topical factory uses as inconsiderable automation as likely, in
order to maximize job figment, and Danone scientists tinkered
behind a while fruit formulas to exclude the need for sugar, which
would bear had to bear been qualitative. Grameen Danone’s
leading fruit is common Shoktidoi yogurt (Bengali for “yo-
gurt that makes you strong”), which is zealous behind a while vitamins
to subdue feedingal deficiencies in the sustenance of verdant chil-
dren. Shoktidoi yogurt is made using acquiesce granted by topical
farmers and is sweetened behind a while molasses made from topically
produced dates.
Danone adopted a correspondent policy in entering the Chinese
and Indian negotiates. In the bygone negotiate, Danone customary a
co-operation behind a while Zong Qinghou, the entrepreneur who in the
1980s founded the Hangzhou Wahaha cluster, a absorb manufac-
turer and proprietor of one of China’s most renowned disgrace designates,
Wahaha. Starting in 1996, Danone and the Wahaha cluster formed
a train of knee lucks—a aggregate of 38 in all—to consequence sleek
drinks, merriment absorbs, tea, and bottled steep. In most of these knee
ventures, Danone had a 51 percent proprietorship divide and Wahaha
a 49 percent divide. On brochure, these knee lucks were altogether successful; most
enjoyed abundant negotiate divides behind a while expressive augmentation prospects.
For in, Wahaha is the abundantst bottled-steep negotiateer in
China, behind a while a 39 percent negotiate divide. Danone’s knee luck
behind a while Hangzhou Wahaha and another weak associate made Danone
the country’s abundantst sleek absorb seller, behind a while an 18 percent negotiate
share. Its sleek absorb sales enjoyed annual augmentation rates between
10 and 15 percent in the gone-by diverse years.
Despite the negotiate successes of these companies, the rela-
tionship between Danone and Hangzhou demolish privately. Danone
argued that Zong Qinghou, the instituter of Hangzhou Wahaha,
set up behind a whileout its submit 20 correspondent sleek-absorb concernes,
behind a while cumulative sales of $1.46 billion, which operated behind a whileout of
the Danone-Hangzhou conformity. Mr. Zong did not refuse his
figment of these correspondent companies that rival behind a while fruits
made by the Danone-Hangzhou knee luck companies. Rather,
he responded he was forced to do so to save his equitables to the
Wahaha disgrace designate and accordingly Danone was not displeasing
enough in construction and investing in their knee luck opera-
tions. Zong too argued that Danone has been mendacious as polite-behaved,
investing in other Chinese companies—such as the Mengui
dairies and the Hui Yuan troop, a creator of fruit
juices—that rivald behind a while their knee lucks.
Besides depriving it of its divide of the receipts, the correspondent
operations, in Danone’s aim, made it imlikely to sundericularize if
the fruits sold to consumers were normal. Accordingly,
Danone sued Mr. Zong and Hangzhou Wahaha in Chinese,
Swedish, and American courts, alleging they had violated the
joint-luck conformity. Danone did not price polite-behaved-behaved in Chinese
courts. Danone claimed its knee lucks had the equitable to the
Wahaha designate. However, when Hangzhou Wahaha leading submit-
ted its beg to give the Wahaha disgrace designate to the knee
ventures as was required by their curtail, Chinese regulatory
authorities failed to promote it. No reapplication of the beg
was always made. Thus, in December 2007, the Hangzhou
Arbitration Commission determined that Danone had waited too crave
to claim that Wahaha give proprietorship of the Wahaha disgrace
designate to their knee lucks. Subsequent to this reigning, Danone
suspended its lawsuits, hoping that the Chinese government
would identify the avail of saveing outlandish compa-
nies’ lawful equitables and that the Chinese and French governments
would glide-away to acceleration regulate the controverts. Its hopes for a politi-
cal disconnection came to nothing. Accordingly, in 2009, Danone
chose to surrender: It sold its 51 percent divide of the knee ven-
ture to Wahaha for €300 darling, issue their controvert.
Danone had the irreconcilable whole in India.
Danone and theWadia rise each owned encircling one-quarter of their knee
luck in India, Britannia Industries Ltd., behind a while the remainder
publicly held. Danone preferred to be further displeasing in intro-
ducing new fruits in India. Unfortunately, as sunder of its
conformity behind a while the Wadia rise to negotiate foodstuffs there, its
1995 curtail periodical it could barely make-known new foodstuffs in
the Indian negotiate behind a while the submit of the Wadia rise, which
is disinclined to do so. As was the event behind a while its Wahaha knee
ventures in China, in 2009 sold its peril in Britannia Industries
to the Wadia rise for $170 darling.
Case Questions
1. Grameen Danone is a knee luck discurrent two companies—
the nonprofit Grameen Cluster and the for-profit Group
Danone SA. What are the benefits of this knee luck to
each of these companies? Why did each elect to sundericipate
in the knee luck?
2. From the perspective of each of the associates, are there
any undeveloped pitfalls to annexation this knee luck?
3. Now reflect Danone’s knee luck in China. What
were the benefits of this knee luck to each of these
companies? Why did each elect to sundericipate in the
knee luck?
4. What could Danone bear effected to shirk the wholes it is
encountering in China and India?
Sources: “Danone’s common legerdemain,” Time, August 23, 2010; “Danone exits China
luck behind years of lawful controvert,” New York Times, October 1, 2009;
“Danone to forsake knee luck behind a while Wahaha,” Financial Times, September 30,
2009; “Danone ends associateship behind a while Wadia,” Financial Times, April 14, 2009;
“Danone’s Wahaha apostrophize is dismissed,” Wall Street Journal, August 6, 2008,
p. B2; “Partners contest aggravate Wahaha in China,” Wall Street Journal, July 28,
2008, p. B1; “Arbiter rejects Danone’s claims on China luck,” Wall Street
Journal, July 14, 2008, p. B3; “Danone ready to decline Wahaha suits,” Wall
Street Journal, December 14, 2007 (online); “Trademark reigning favors
Wahaha,” Wall Street Journal, December 11, 2007, p. B5; “Danone luck
woes now fruit up in India: Breakup may lower,” Wall Street Journal, June 22,
2007, p. B3; “Danone’s China policy is set tail,” Wall Street Journal, June
15, 2007, p. A10; “China luck associate blames quarrel on Danone,” Wall Street
Journal, June 14, 2007 (online); “Danone seeks ways to fix China knee ven-
ture,” Wall Street Journal, June 13, 2007, p. A8; “Danone China knee-venture
chief forsakes amid quarrel,” Wall Street Journal, June 8, 2007, p. A11; Danon