A quick example of local adaptation

It’s always fun to find examples of multinationals adapting their products for host markets. Such adaptation (a.k.a. local responsiveness) is one of the key choices such firms face (along with decisions regarding the extent to which resources and activities will be shared/integrated)

The recent 40th birthday of Sesame Street reminded me of their expansion efforts. Actually, Google’s adapted logos showcasing the very familiar characters alerted to me the anniversary.

The list of logos Google used is indicative of the adaptativeness of the Sesame Street creators (once known as the Children’s Television Workshop – now called Sesame Workshop). There were different Muppets featured on Google’s page in Belgium, the Netherlands, Israel, India, South Africa and Mexico.

India’s character’s (above) include Boombah, “a hedonistic, vegetarian lion who believes he is descended from one of India’s historic royal families” and Chamki, “a schoolgirl dressed in the uniform of an Indian government school [who] is the only Sesame Muppet to practice a martial art”. The show is called Galli Galli Sim Sim on the subcontinent, and is predominantly in Hindi.

It isn’t surprising that a company targeting children has made such substantial alterations to meet the needs of overseas markets. Making the show understandable (i.e. in a local language) and relevant (reflecting these kids’ experiences) is the only way the show would achieve its aims (it is worth noting the firm here is a not-for-profit). But I like it because its a fun example.

Oh, and of course, we shouldn’t ignore that Google also adapts its interface for host country audiences…

Any other quirky examples out there?

Advertisement

Why buy? Indian firms seeking partner who…

International business researchers have always been interested in the motivations for foreign direct investments. Pre-eminent IB scholar John Dunning argued that there were four core drivers:
– the quest for more customers (market-seeking)
– gaining access to inputs unavailable, or less palatable, at home (resource-seeking)
– looking to build a more efficient chain of value adding activities (efficiency-seeking)
– building up the knowledge-based resources of the firm and portfolio of brands (strategic-asset-seeking).

This recent Economist article gives a nice catalogue of recent international acquisitions by Indian firms, and offers decent examples of several fronts.

The acquisitions mentioned by Avantha (in engineering), Tata Steel and Tata Motors all can be lumped under the strategic-asset-seeking banner, as the firms sought to tap into technologies and brands unavailable in their home market and which are crucial to further international growth. This is comparable to Lenovo’s purchase of IBM’s PC business a few years back (and pretty typical for emerging market multinationals).

What is less clear in terms of motivation is what is driving Bharti Airtel’s pursuit of South African mobile giant MTN.

Are they chasing MTN’s (admittedly outstanding) competencies in rolling out networks in very poor countries (in terms of household incomes and also physical infrastructure)? These may well mesh in very well with Bharti’s own experiences in India, and set the firm up for a huge play in markets across the developing world (i.e. a strategic-asset-seeking approach).

Or they simply chasing the almost billion possible customers in Africa (to throw on top of a similar top of comparable target market in India)? This would clearly be market-seeking FDI…

Please don’t remember us

The effect of past FDI in a given location is an under-investigated aspect of internationalisation. This story from last week raises some interesting questions about legacy. Talking about Aussie bank ANZ it reports that:

ANZ’s mixed history in India could count against it in a three-way race for the some of Royal Bank of Scotland’s Asian assets.

It goes on to discuss the possibility that Indian banking regulators might not be too pleased to see ANZ back on the scene.

ANZ took over the Indian operations of British overseas bank Grindlays back in 1985 and ran them through to 2000 (along with other subsidiaries in Africa and Asia).

The bank was embroiled in a substantial chequing scandal involving an Indian share-trader that dragged on through much 1990s (for some discussion of this see here – although it is a startlingly complex legal affair). Awkwardly the plaintiff bank in the legal proceedings was owned by the Reserve Bank of India, the same body that will have the major say in approving ANZ’s bid (or not).

It begs the questions:

– Can ANZ distance itself sufficiently from a decade-old scandal?
– Can it make it strong case that it has better appreciation for international environments now?

The latter will be difficult as the Grindlays sale substantially reduced ANZ’s exposure to international markets, particularly in the Asian region. Indeed that was one of the main drivers of the sale, coming as it did in the wake of the Asian currency crisis.

The possibility that the article ignores (surprisingly) is whether the Indian officials (and public) might be just as annoyed by the Grindlays sale itself. ANZ could quite rightly be slammed for abandoning a large and viable bundle of assets in a time of economic crisis, and showing little faith in what would soon become one of the fastest growing and promising economies in the world.

To use a teen-flick analogy, ANZ could be seen as the jock who teased the shy, wallflower, promising much but publicly humiliating her. This shrinking violet has now lost the braces, removed her glasses and shaken out her hair to reveal herself as a real beauty. She can afford to play hard to get, and when choosing suitors the brutish Aussie has got a lot of sweet-talking and sorries to say.

Multinationals can’t afford to forget their past, or expect to be able to walk away from (or more importantly, back into) a country without folks remembering who they are and judging them in that light.

Gaining some Indian insights

One of the biggest challenges for multinationals (and international business scholars) is untangling the enormous institutional and cultural differences from country to country. Perhaps the most complex business environment, and one which multinationals are increasingly engaging with, is the world’s largest democracy – India.

Often Western firms, particularly those from former British colonies (such as Australia) mistakenly assume that India’s similar administrative background will make business easier than in other developing and transitional countries. The existence of a sizable English-speaking population exacerbates this preconception.

Quickly they discover that that life on the ground is dramatically more complex (and frustrating) than they expected. India is a multi-lingual, multi-cultural, pluralistic society steeped in thousands of years of traditions and burdened with layer upon layer of bureaucracy. It is also a nation undergoing incredible rates of change, and these changes are impacting on different layers and generations of society in very different ways.

This can make every element of international business more difficult, whether it be starting a business, choosing a location within the country (and a city), negotiating with public officials, hiring workers, securing supply lines, distributing products, adapting designs, or shaping a marketing message.

It would be tempting to through up one’s hands and say “this is too hard”. But, with the world’s largest middle class, a huge pool of skilled workers, and more than a 6th of the world’s population, India is too big an opportunity to ignore. Firms need to learn and learn fast.

One excellent starting point would be the India Reborn documentary series which has been running recently on Australian television (on SBS). This four-parter has done a fantastic job of surveying a broad range of issues in an even-handed and fascinating fashion, juxtaposing the experiences of a broad cross-section of India’s society. Below are a series of short teaser videos that should give you a feel for its approach and content.

Unfortunately, I can’t find an on-line version of said doco. The more web-savvy of you may be able to find it. Alternatively it is supposed to be coming out on DVD very soon. It has this blog’s seal of approval as a means to (slightly) reduce your cultural distance from this labyrinthine environment. There are also numerous moments where the globalisation process is wonderfully illustrated (but I’ll leave them for you to discover).

The Woolies Indian adventure – a follow-up

The very first post on this Blog was back in July, and discussed reports that Aussie supermarket giant Woolworths was contemplating an entry into the Indian grocery arena. It seems talks continue. Reports out of India earlier this week claimed that Woolies were:

“in talks with Kishore Biyani’s Future Group, which owns Pantaloons Retail, for an equal equity joint venture for food and grocery cash and carry business in India.”

Pantaloon is one of India’s largest retailers and spread across a similar range of retail lines as Woolworths (supermarket, variety, electrical). The firms also has a joint venture with US office supplies retail giant Staples. It will be intriguing to see if and how any partnership with Woolworths will play out.

As I said in the earlier post, India is certainly the next frontier for retailing with a huge population currently under serviced and almost unprecedented scope for consolidation and modernisation. The question is whether Woolworths have transferable advantages and capabilities for this environment, especially if they eventually go head-to-head against the recently finalised Bharti-Wal-Mart combo.

Interestingly, Woolworths already has a relationship with another Indian retail goliath, Tata, in the electronics retailing market. I wonder how they will partition these two arrangements.