Nastle in America

FINA 70012- SPRING SESSION

Instructor: Stefanie Ricchio-Forlingieri, CPA;CGA

Assginment #2-10% (Dropbox, Email or Hand in by July 8th/2015)

Follow the link below or read the story attached and answer the questions listed below for 5 or the 10 companies in the article.

Link:

https://globalconnections.hsbc.com/brazil/en/articles/10-biggest-overseas-blunders-en

Answer the following as either short answer or essay style:

• What did the company set out to do, was it different than what they were doing in their current home market?
• What were the contributing factors to the failure of the company? (ie. Political, Cultural, Financial)
• What information should or could they have acquired in better form prior to entering into the foreign market?

10 biggest overseas blunders

Paul Gallant, Global Report

When a company fails internationally, the thud is heard round the world. A spectacular failure might take the shape of a genuine disaster, in the case of BP's oil spill, or a cultural disaster, like marketing frivolous toys to serious Chinese girls and boys. Either way, the fallout can leave a company red-faced for years.

The irony of many international misfires is that companies that have proven domestic success are as likely — perhaps more likely — to slip up. They overlook how their established business model needs to adapt. They'd do better treating each effort overseas as a new startup.

"Companies can become complacent and arrogant and then they make mistakes when they expand overseas," says Peter Cohan, co-author of Export Now: Five Keys to Entering New Markets and founder of Peter S. Cohan & Associates, a management consulting and venture capital firm.

Whether it's bad marketing, sloppy operations, ill-advised corporate behaviour or mere obliviousness to local culture, screw-ups happen. We asked Cohan, his Export Now co-author Frank Lavin and Robert E. Mittelstaedt Jr., dean of the W. P. Carey School of Business at Arizona State University and author ofWill Your Next Mistake Be Fatal? what can be learned from some of the most embarrassing international venture flameouts.

Here’s the top 10 international flameouts,  in no particular order:

1. Nestlé in Africa

Accused of aggressively marketing its baby formula in impoverished markets where clean water was not readily available, which caused children to be sick, Nestlé was hit with a boycott that started in 1977 and continues to this day in various regions around the world. "They went in and tried to convince people that this was the modern thing to do," says Mittelstaedt. "They assumed there would be clean water, when there wasn't any, and the natural method would have been perfectly fine." While Mittelstaedt says it was the wrong product in the wrong market at the wrong time — Nestlé may have done better selling nutrients to mothers — Lavin says that niche marketing, perhaps focusing on affluent women who needed an alternative to breast feeding, would have given Nestlé a foothold in Africa without causing so much ire.