Strategy in Asian companies

Asian companies are often altered differently by governments than companies from other regions. In Korea, for example, historically seen, the government influenced production and sales of companies. Conglomerates, so-called ‘chaebols,’ are the results. These chaebols focus simultaneously on many different businesses.

Industries are technologically unrelated (Lippold, 1996).

After the 1970s and entering the World Trade Organization, China was forced to more integrate into the world economy. Based on analyses of historic changes in

(2002) further clarified that China should improve the indigenous companies’

position. Open market would force the Chinese companies to become more efficient to compete globally, as the authors explained.

Global competition leads to an increase of efficiencies. This could be seen e.g. in the US car industry of the 1980s, when Japanese companies started competing. In fact, due to drastic changes in the dollar - yen exchange rates, an increase of direct investment by Japanese firms could be experienced from the 1990s on. In the Japanese economy, many companies increasingly set on internationalization and globalization strategies. Consequently, academic research focuses on Japanese tactics. The management of Japanese companies was analyzed as being relatively flexible but also aggressive in the 1990s. These changes led to an increasing adaptation of systems and strategies across borders. This adaptation was forced by environmental problems, international pressure, and social changes (Demes, 1992;

Kumazawa, 1992; Nomura, 1992; Tokunaga, 1992; Nolan, 2002).

Concluding the remarks on the three Asian countries one can say that besides differing economic and cultural roots, intense developments took place. This fact leads to the question whether Asian companies are equally competitive as Western companies and if so, whether it is possible to map the strategies of all global actors in one concept. To answer these questions, in this part of the thesis, it is differentiated between Asian, European, and Northern American companies. The basis for the analyses is the Fortune Global 500 list published 07/25/2011 that uses company data of 2010 (Fortune Global 500, 2011). To show the developments, the lists of 2009 and 2008 are also used. In 21 different industries, each region’s largest company completes the analyses. This leads to in general three analyzed companies per industry. Together with the analyzed factors, the industries will be explained in the upcoming part.

North America, or Asia, and categorized them in the following 21 industries : (1) Services in general, (2) Insurances, (3) Banking, (4) Transport and Travel, (5) Post and Delivery, (6) Media and Entertainment, (7) Telecommunication, (8) Aircraft, (9) IT and Electronics, (10) Electrics, (11) Energy, (12) Oil and Gas, (13) Food and Nutrition, (14) Supermarkets and Retailers, (15) Consumer goods, (16) Chemical products, (17) Pharmaceutics, (18) Tobacco, (19) Industrial companies, (20) Mining, and (21) Automobile.¹⁷A list of the companies is contained in Table 3.1 on page 115.

We assign each company to only one industry that it names its core competency even though the majority of enterprises are active across several industries and explicitly underline the diversity of their businesses. Nevertheless, we find a unique assignment of enterprises to industries helpful for structuring and comparing the strategy configurations within and across industries. BASF SE, for example, sees itself as a chemical company, but also focuses on other businesses. We included the company in the industry that was provided as the core competency by the company information itself (Chemical products, part 3.2.16). Although differences in the industries are to be highlighted, the main focus of this part lies on the concluding remarks on all industries. Since the aim of the PNC is to cope with all industries, a stringent differentiation between the companies, if not possible, does not influence the quality of the analyses. However, some companies did not explicitly categorize themselves. Neither the different businesses they act in, nor their own understanding of the whole company, nor a tendency was explicitly stated. These companies were thus not integrated into the analyses.

To make it clear, this data collection will focus on two parts. On the one hand, industry-by-industry analyses provide context-specific and accurate measures. On the other hand, focusing on several industries will make the hypotheses possible to

16Please note that we developed an own categorization for diversified, international enterprises, that

and the sources can be found in the Appendix B.

The analyses took place between January and May 2012. Following Lane (1998), this study implements company strategy statements, annual reports, as well as additional information provided by the analyzed companies. Annual reports of the fiscal year 2011 are not included into the work as they were partly not available in Spring 2012. Annual reports of the years 2010, 2009 and 2008, if available, and additional corporate website information are the basis of this work. Pages are not explicitly named in the footnotes, as most annual reports do not have a continuing number of pages. The tables in the Appendices show the corporate statements on the respective websites and available data. Summarizing the data in the tables was scientifically challenging, as so far no systematic method of translating corporate statements to strategy aspects exists¹⁹. In order not to have a bias in our information, we therefore conducted the data analysis in the next step which we present in chapter 3.4 of this work.

3.1.2 Neglected and included industries

In the following part, we analyze service as well as producing enterprises in 21 markets, namely (1) Services in general, (2) Insurances, (3) Banking, (4) Transport and Travel, (5) Post and Delivery, (6) Media and Entertainment, (7) Telecommunication, (8) Aircraft, (9) IT and Electronics, (10) Electrics, (11) Energy, (12) Gas and Oil, (13) Food and Nutrition, (14) Supermarkets and Retailers, (15) Consumer goods, (16) Chemical products, (17) Pharmaceutics, (18) Tobacco, (19) Industrial companies, (20) Mining, and (21) Automobile. Table 3.1 gives an overview on all analyzed enterprises, organized in alphabetical order of the industry.

18Please note that all information and company statements are summarized in the respective tables in the Appendix. Hints to literature are thus not included in the strategy analyses. Corporate website sources are presented in footnotes.

Aircraft: Aviation Industry Corp. of China (China) The Boeing Company (USA)

EADS Group (Netherlands)

AVIC BA EADS Automobile: General Motors Company (USA)

Toyota Motor Corporation (Japan) Volkswagen AG (Germany)

GM TM VW

Banks: Bank of America Corp. (USA)

Industrial and Commercial Bank of China Limited (China)

ING Group (Netherlands)

BAC ICBC ING

Chemical products: BASF SE (Germany)

Dow Chemical Company (USA)

Sinochem International (Holding) Co., Ltd. (China)

BFFAF DOW SCM Consumer goods: Johnson & Johnson (USA)

The Procter & Gamble Company (USA) Unilever (Netherlands/Great Britain)

JNJ PG UL Electrics: Robert Bosch GmbH (Germany)

General Electric (USA)

Samsung Electronics (South Korea)

BOS GE SSU

Energy: E.ON AG (Germany)

Petrobras (Brazil)

Suncor Energy Inc. (Canada)

EON PBR SU Food and Nutrition: COFCO (China)

Kraft Foods Inc. (USA) Nestlé S.A. (Switzerland)

CFO KFT NSRGY Gas and Oil: ExxonMobil Corporation (USA)

Royal Dutch Shell Group (Netherlands) Sinopec Group (China)

XOM RDSA SHI

Industrial companies: Caterpillar Inc. (USA)

Hyundai Heavy Industries Co., Ltd. (South Korea) Compagnie de Saint-Gobain (France)

CAT HHI SGO Insurances: American International Group, Inc. (USA)

AXA Group (France)

China Life Insurance Company Limited (China)

AIG AXA LFC IT and Electronics: Hewlett-Packard Company (USA)

Panasonic Corporation (Japan) Siemens AG (Germany)

HPQ PC SI

Media: SoftBank Corp. (Japan)

Vivendi SA (France)

The Walt Disney Company (USA)

SFTB VIVEF DIS Mining: Rio Tinto Group (Great Britain/Australia)

Vale S.A. (Brazil)

RIO VALE Pharmaceutics: Cardinal Health, Inc. (USA)

Novartis AG (Switzerland) Suzuken Co., Ltd. (Japan)

CAH NVS SZUKF

Post: Deutsche Post DHL (Germany)

Japan Post Group (Japan)

United States Postal Service (USA)

DPD JPP USP Services in general: Google Inc. (USA)

Ingram Micro Inc. (USA)

Maruhan Corporation (Japan) [MHN]

Sodexo (France)

Veolia Environnement (France)

GOOG IM MHN SDXAY VE Supermarkets and Retailers: Carrefour S.A. (France)

Wal-Mart Stores Inc. (USA) 7 & i Holdings Co., Ltd. (Japan)

CA WMT SVNDY Telecommunication: AT&T Inc. (USA)

Deutsche Telekom AG (Germany)

Nippon Telegraph and Telephone Corporation

T DT

Tobacco: British American Tobacco PLC (Great Britain/USA)

Imperial Tobacco Group PLC (Great Britain) Japan Tobacco Inc. (Japan)

BTI ITYBF JAPAF Transport and Travel: American Airlines, Inc. (USA)

China Railway Group Limited (China) Deutsche Bahn AG (Germany) Deutsche Lufthansa AG (Germany)

AMR CRR DB DLAKY

In most markets, three companies are analyzed. In the field of Services in general, five different companies are examined. Services are broadly defined and five companies provide a more detailed picture of the service industry. The part on Transport and Travel comprises two railway companies and two airlines. As there is no consumer goods producer in Asia besides the ones that are already included in other parts (e.g. COFCO), there are two US-American companies and one European taken for analyses. Mining comprises two companies. It was though analyzed as an example of heavy industry. In the field of steel production, the European company ArcelorMittal as well as the South Korean company POSCO are included in the Fortune Global 500 (2011) list. In contrast to mining, steel companies will not be analyzed in this work, as a North American counterpart is not on the list.

Other sectors, as e.g. investment holding companies (for example EXOR Group, total score 83) or food production companies (for example Archer Daniels Midland, total score 122) are not included in research. This is due to missing available information. Some other companies do not provide information in English, French, or German and are thus not included and not further named here. Some industries have only one representative in the Fortune Global 500 list and are thus excluded.

Becoming global actors was partly motivated by delocation of productions. This could especially be experienced in the clothing industry, but also in other manufacturing industries (see e.g. Jungnickel, 1995). Eryuruk et al. (2010) analyzed

clothing in general, the luxury brand Christian Dior can be found in the list (Fortune Global 500, 2011), but will not be further elucidated in this work.

3.1.3 Analyzed factors

In the following analyses, in a first step, the companies chosen are shortly presented in order of their score in the Fortune Global 500 list. In a second step, trends in financial data and number of employees are focused on. This is followed by an analysis of five factors.

Shareholder and investor relationship

All companies provided extra information for shareholders and potential investors and helped us to shortly analyze financial data and number of employees²⁰. The tables summarizing the number of employees and financial data can also be found in the Appendix B. In the analyses, percent changes are included.

The Japanese fiscal year ends in March 2011. The growth rates are calculated in that currency which is named in the available information (US Dollar [Dollar], Euro, Yen, RMB, Pound, Canadian Dollar, or Korean Won). Those figures not stated in US Dollar are additionally calculated in the then-actual exchange rate. Where an exchange rate was explicitly stated in the available data of a company, that exchange rate was used. The elsewhere used rates are summarized in the following table, Table 3.2.

20Please note that information of the numbers of employee is partly presented as averages of years

31/12/2010 (03/31/2011)

31/12/2009 (03/31/2010)

31/12/2008 (03/31/2009)

Euro/Dollar 1.339 1.433 1.399

Yen/Dollar 0.012 0.011 0.010

RMB/Dollar 0.146 0.146 0.143

Pound/Dollar 1.562 1.616 1.434

Canadian Dollar/Dollar 1,003 0.955 0.821

Korean Won 0.001 0.001 0.001

Source: See Währungsrechner (2012).

The five factors

After the short company presentations and financial data summaries, in a third step, the tables of Appendix B provide information for analyses on the following five factors: (1) Mission and philosophy, (2) Strategy statement, (3) Corporate culture, values, code of conduct, (4) Cooperations, and (5) Responsibility, depending on the availability of the data.

(1) Mission and philosophy: Though not always explicitly noted, most of the companies have a mission statement and/or a vision and philosophy which we included in the tables. However, some visions can more be seen as a strategy statement and are then included into (2) Strategy statement. These statements are sometimes presented in listings. Kaplan and Norton (2008) pointed to the information function of these documents, as they summarized the most important strategy facts.

(3) Corporate culture, values, code of conduct: In codes of conduct the companies try to define their position as a corporate citizen. This framework is formulated as an

(4) Cooperations: Laanti, Gabrielsson, and Gabrielsson (2007) came to the conclusion that the more international a company becomes, the more important cooperations are. One can say that cooperations are made to improve a company’s abilities (Vornhusen, 1994). Hanke (1993) warned against the difficulties in defining cooperations. According to the author, cooperations are subject to changes. Thus, new forms are steadily developed. Hanke (1993) suggested differentiating between horizontal, vertical, and conglomerate cooperations. Overlapping of this tripartite is possible. Companies being present on the same market are horizontal cooperators.

Vertical cooperations define companies forming one supply chain, e.g. a producer and a retailer. These cooperations became increasingly well-accepted in the 1990s.

Working on different markets but cooperating, companies have a conglomerate, or diagonal cooperation (Hanke, 1993; Han, Wilson, & Dant, 1993).

Vornhusen (1994) summarized some hundred cooperations to be started yearly.

These cooperations can last for some days, years or even decades. Dillerup (1998) defined cooperations as networks. These networks are set together by different companies that each do what they can best. Thus, cooperation is a best-of-everything organization. Magnus (2007) explained cooperations to be made by nearly all retailers. The question of whether and how the chosen Fortune Global 500 companies cooperate will thus be elucidated in the analyses.

(5) Responsibility: At the beginning of the 1990s, environmental problems became of increasing interest (Tokunaga, 1992). Curbach (2009) explained that companies somehow reacted to the environmental problems, but also to social needs etc.

Different ambitions, as e.g. reputation, recruiting, marketing strategy, or competitive advantages made the companies more and more integrating responsibility into their business structures. Today, corporate social responsibility is expected from the globalized companies, as Curbach (2009) summarized. Spence (2011) meant that nearly all Fortune Global 500 firms invest in some kind of CSR. In fact, companies are responsible in the following four ways: philanthropic, ethical, legal, and economic responsibility (Carroll, 1991). Palazzo and Richter (2005) explained three

transactional level. Consistent and transparent actions are fulfilled; promises kept, moral, and legal rules are complied. Third, self-interest is transcended; the common good is of highest importance. The benevolence centers the societies’ well-being at this transformational level (Carroll, 1991; Palazzo, & Richter, 2005).

Today, a number of companies provide a Corporate Responsibility report. It should be noted here, that different expressions for responsibility exist. Some companies call it corporate responsibility, some underline the social aspect (corporate social responsibility). Others use the expressions corporate citizenship or sustainability. As the analyses of available information shoed that all companies somehow mean the same, in the following, no differentiation is made and all expressions summed up by the term responsibility (Curbach, 2009).

3.1.4 Not explicitly noted aspects

During the research, it became increasingly obvious, that some aspects are included in all companies’ statements. Thus the explicit notice of these aspects was neglected.

Only some exceptions are made if the factors are especially highlighted by all analyzed companies of an industry. The aspects of interest are shortly explained to make clear their importance for the global actors.

Environmental influences

The analyzed companies all directly or indirectly pointed to political and cultural influences they face doing business. These influences include for example cooperating with governments etc. These aspects are not further highlighted in the analyses.

Research and Development (R&D) spending

The majority of the companies included their R&D spending into their publications.

Though some spent more than others, one can conclude that R&D is of importance

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