Submitted by: Submitted by dave6913
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Category: Business and Industry
Date Submitted: 10/21/2013 01:04 PM
David Tisserand
11/6/12
International Business
Professor Carrino
Case 1: Diebold
1) Before 1997, Diebold manufactured its ATM machines in the United States and sold them internationally via distribution agreements, first with Philips Electronics NV and then with IBM. Why do you think Diebold choose this mode of expanding internationally? What were advantages and disadvantages of this agreement?
Before the 1980s, Diebold had no need to expand its business across boarders since there was a massive demand inside the United States. When they decided to export their ATM machines internationally they used a key international business alliance: distribution alliances. Distribution alliances, such as joint ventures, allow a company to acquire new capacity and expertise, to enter related businesses or new geographic markets, to access greater resource or to share risks. In Diebold case, the company was first wary of going to foreign market alone because it lacked the resources to establish an international presence, then, the alliances with Philips first and then IBM permitted to use their global marketing, sales and service functions. Indeed, those alliances made Diebold able to use Philips and IBM distributions systems and knowledge about international markets, and reputation. Moreover, Diebold could also use the Brand awareness among consumers; customers are more willing to consume products and services about brands they know, than brands they never heard about.
However, distribution alliances involve also disadvantages such as time needed to build right relationship and partnering with other businesses, awareness by both parties of the clear objective and strategy, imbalance in levels of expertise, investment or assets, difference in cultures and management styles, sharing profits and loss of control by one party or another. In Diebold case, the biggest disadvantages were the dissatisfaction of Philips and IBM’s sales efforts, since Diebold’s ATMs were...