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Global Business Management MBA Course International Management Globalization success story: Deutsche Post World Net Globalization failure story: The merger of Daimler-Benz and Chrysler by Ciara Gutiérrez and Karin Reisinger 24.10.2003 Introduction Internationalization has become an important strategy for more and more German companies. Growing world markets offer them a chance to increase their revenues, especially since domestic German markets are often saturated. We have chosen two established, traditional German companies, Deutsche Post and Daimler-Benz, as examples for success and failure in aspects of their globalization strategies. Deutsche Post World Net: the world’s largest logistics company (by Ciara Gutierrez) Deutsche Post’s expansion strategy and its consolidation as a global company: Deutsche Post World Net is made up of Deutsche Post, DHL and Postbank. It is still majority owned by the government, but it will keep that monopoly only until 2007. From 1990 to 2002, the company laid a solid foundation for the further expansion of what today is already an excellent market position. Within the space of twelve years, the loss-making national postal service was transformed into a profitable, global logistics service provider. The revenues were more than quadrupled during this period and Deutsche Post ranks eighth on the German share index DAX. Buoyed by the optimistic forecasts, Deutsche Post shares have climbed more than 50% since the beginning of 2003. The company has a $39 billion turnover, 41% of that is foreign market. Over the past eight years, the Deutsche Post has spent $11 billion buying up logistics and delivery companies around the world, turning this way into the largest express delivery business in Europe and Asia. Until now, the European networks belonging to Deutsche Post Euro Express, Danzas and DHL have been operating independently. Their management will be coordinated in the future, first within individual countries and then throughout Europe. The goal is to develop an integrated European ground- and air-based distribution network, which will significantly improve pick-up and delivery processes. The company enters the U.S. market: Deutsche Post has just completed the acquisition of U.S.-based Airborne Inc., the nation’s No. 3 express service. This acquisition has increased the company’s market share from 2% to 20% in the competitive U.S. market. The rest of the market (80%) is owned by UPS and FedEx, the leading transportation and logistics companies in the U.S.A. Problems derived from internationalization: The term internationalization stands for the process by which a company enters a foreign market, and that’s exactly what Deutsche Post is doing in Europe, Asia and the U.S.A. for the time being. But becoming international isn’t an easy process. Deutsche Post is having now many legal problems in the U.S. Federal law prohibits foreigners from owning over 25% of a U.S. airline or effectively controlling it. The company contracts out flights to Astar Air Cargo, based in Miami, 90% of whose business is generated by Deutsche Post’s DHL unit.
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