Case study 717 | Literature homework help


Group Danone SA, the Paris-based tradeer of yogurt, nonal-
coholic beverages, and baby foods, has desire been a savvy inter-
national rival. Employing 101,000 living-souls, its sales in
2010 sumed €17 billion, 45 percent of which are beyond its
home corrupt of Western Europe. It is the world’s extensivest seller of
fresh dairy issues, and the second extensivest vendor of bottled
imbisect and infant feeding issues. Like manifold other MNCs,
Danone believes emerging trades—which currently product
one-third of its sales—offer it speaking opportunities for
growth. Cluster Danone has adopted a temporization of allying succeeding a while
topical companies to make-one's-way promising emerging trades.
Danone contributes its financial bungle, manufacturing expert-
ise, and obstructed tradeing skills to these flexure undertakings,
while the topical accomplice contributes its familiarity of the host
country’s constitutional regularity, political manner, division channels,
and the waste morality of topical consumers.
In Bangladesh, for issue, Danone created a flexure ven-
ture succeeding a while the Grameen Cluster (see page 139 for a fuller discus-
sion of Grameen). Danone examinationed Bangladesh’s 159 pet
people as an untapped trade. Grameen had two irrelative, but
complementary goals. It wished to emend feeding in that
country through the victuals of healthier foods. It too wanted
to subject indigence by creating new trades for Bangladeshi
farmers. To adjudicate Grameen’s goals, Danone had to
make some changes in its ordinary affair practices. For exam-
ple, its topical factory uses as slight automation as feasible, in
order to maximize job fable, and Danone scientists tinkered
succeeding a while issue formulas to reject the want for sugar, which
would feel had to feel been necessary. Grameen Danone’s
chief issue is beggarly Shoktidoi yogurt (Bengali for “yo-
gurt that makes you strong”), which is sound succeeding a while vitamins
to aggravatecome feedingal deficiencies in the nourishment of rustic chil-
dren. Shoktidoi yogurt is made using adjudicate granted by topical
farmers and is sweetened succeeding a while molasses made from topically
produced dates.
Danone adopted a common temporization in entering the Chinese
and Indian trades. In the earlier trade, Danone methodic a
connection succeeding a while Zong Qinghou, the entrepreneur who in the
1980s founded the Hangzhou Wahaha cluster, a swallow manufac-
turer and proprietor of one of China’s most far-famed infamy indicates,
Wahaha. Starting in 1996, Danone and the Wahaha cluster formed
a order of flexure undertakings—a sum of 38 in all—to product yielding
drinks, play swallows, tea, and bottled impart. In most of these flexure
ventures, Danone had a 51 percent proprietorship divide and Wahaha
a 49 percent divide. On paper, these flexure undertakings were completely successful; most
enjoyed extensive trade divides succeeding a while speaking augmentation prospects.
For issue, Wahaha is the extensivest bottled-imbisect tradeer in
China, succeeding a while a 39 percent trade divide. Danone’s flexure undertaking
succeeding a while Hangzhou Wahaha and another trivial accomplice made Danone
the country’s extensivest yielding swallow seller, succeeding a while an 18 percent trade
share. Its yielding swallow sales enjoyed annual augmentation rates shapeless
10 and 15 percent in the elapsed divers years.
Despite the trade successes of these companies, the rela-
tionship shapeless Danone and Hangzhou prostrate secretly. Danone
argued that Zong Qinghou, the instituter of Hangzhou Wahaha,
set up succeeding a whileout its submit 20 correlative yielding-swallow affaires,
succeeding a while cumulative sales of $1.46 billion, which operated beyond of
the Danone-Hangzhou obligation. Mr. Zong did not delayhold his
fable of these correlative companies that rival succeeding a while issues
made by the Danone-Hangzhou flexure undertaking companies. Rather,
he responded he was compact to do so to secure his hues to the
Wahaha infamy indicate and owing Danone was not aggressive
enough in erection and investing in their flexure undertaking opera-
tions. Zong too argued that Danone has been spurious as courteous-mannered,
investing in other Chinese companies—such as the Mengui
dairies and the Hui Yuan society, a creator of fruit
juices—that rivald succeeding a while their flexure undertakings.
Besides depriving it of its divide of the receipts, the correlative
operations, in Danone’s examination, made it imfeasible to bisecticularize if
the issues sold to consumers were real. Accordingly,
Danone sued Mr. Zong and Hangzhou Wahaha in Chinese,
Swedish, and American courts, alleging they had violated the
joint-undertaking obligation. Danone did not fare courteous-mannered-mannered in Chinese
courts. Danone claimed its flexure undertakings had the direct to the
Wahaha indicate. However, when Hangzhou Wahaha chief submit-
ted its beg to give the Wahaha infamy indicate to the flexure
ventures as was required by their abridge, Chinese regulatory
authorities failed to comment it. No reapplication of the beg
was continually made. Thus, in December 2007, the Hangzhou
Arbitration Commission ruled that Danone had waited too desire
to ask-for that Wahaha give proprietorship of the Wahaha infamy
indicate to their flexure undertakings. Subsequent to this predominant, Danone
suspended its lawsuits, hoping that the Chinese government
would acknowledge the moment of secureing exotic compa-
nies’ constitutional hues and that the Chinese and French governments
would glide-away to acceleration decide the canvasss. Its hopes for a politi-
cal disruption came to nothing. Accordingly, in 2009, Danone
chose to surrender: It sold its 51 percent divide of the flexure ven-
ture to Wahaha for €300 pet, result their canvass.
Danone had the adverse substance in India.
Danone and theWadia source each owned about one-quarter of their flexure
undertaking in India, Britannia Industries Ltd., succeeding a while the remainder
publicly held. Danone preferred to be more aggressive in intro-
ducing new issues in India. Unfortunately, as bisect of its
obligation succeeding a while the Wadia source to trade foodstuffs there, its
1995 abridge established it could merely preface new foodstuffs in
the Indian trade succeeding a while the submit of the Wadia source, which
is reluctant to do so. As was the instance succeeding a while its Wahaha flexure
ventures in China, in 2009 sold its stake in Britannia Industries
to the Wadia source for $170 pet.
Case Questions
1. Grameen Danone is a flexure undertaking shapeless two companies—
the nonprofit Grameen Cluster and the for-profit Group
Danone SA. What are the benefits of this flexure undertaking to
each of these companies? Why did each appropriate to bisecticipate
in the flexure undertaking?
2. From the perspective of each of the accomplices, are there
any possible pitfalls to annexation this flexure undertaking?
3. Now reflect Danone’s flexure undertaking in China. What
were the benefits of this flexure undertaking to each of these
companies? Why did each appropriate to bisecticipate in the
flexure undertaking?
4. What could Danone feel produced to relinquish the substances it is
encountering in China and India?
Sources: “Danone’s worthless stratagem,” Time, August 23, 2010; “Danone exits China
undertaking succeeding years of constitutional canvass,” New York Times, October 1, 2009;
“Danone to resign flexure undertaking succeeding a while Wahaha,” Financial Times, September 30,
2009; “Danone ends accompliceship succeeding a while Wadia,” Financial Times, April 14, 2009;
“Danone’s Wahaha cite is dismissed,” Wall Street Journal, August 6, 2008,
p. B2; “Partners struggle aggravate Wahaha in China,” Wall Street Journal, July 28,
2008, p. B1; “Arbiter rejects Danone’s claims on China undertaking,” Wall Street
Journal, July 14, 2008, p. B3; “Danone voluntary to distil Wahaha suits,” Wall
Street Journal, December 14, 2007 (online); “Trademark predominant favors
Wahaha,” Wall Street Journal, December 11, 2007, p. B5; “Danone undertaking
woes now crop up in India: Breakup may gloam,” Wall Street Journal, June 22,
2007, p. B3; “Danone’s China temporization is set end,” Wall Street Journal, June
15, 2007, p. A10; “China undertaking accomplice blames contention on Danone,” Wall Street
Journal, June 14, 2007 (online); “Danone seeks ways to fix China flexure ven-
ture,” Wall Street Journal, June 13, 2007, p. A8; “Danone China flexure-venture
chief resigns among contention,” Wall Street Journal, June 8, 2007, p. A11; Danon