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 the advantages and disadvantages of this arrangement?business

QUESTION

I want a two(2) different study case answers based on the case attached and you might use other sources from internet and the questions is:

Questions

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 the advantages and disadvantages of this arrangement?

1. What do you think prompted Diebold to change its international expansion strategy in 1997 and start setting up wholly owned subsidiaries in most markets? Why do you think the company favored acquisitions as an entry mode?
2. Diebold entered China via a joint venture, as opposed to a wholly owned subsidiary. Why do you think it did this?
3. Is Diebold pursuing a global standardization strategy or a localization strategy? Do you think this choice of strategy has affected its choice of entry

4. ANSWER

5. Case Study: Diebold’s International Expansion Strategy

   Diebold, a leading manufacturer of ATM machines, faced several critical decisions regarding its international expansion strategy. This case study analyzes Diebold’s approach before 1997 and its subsequent shift in strategy, particularly in terms of distribution agreements, wholly owned subsidiaries, and its entry into the Chinese market. Additionally, we examine whether Diebold pursued a global standardization or localization strategy and how it influenced their choice of entry modes.

   Before 1997, Diebold opted for distribution agreements with prominent companies like Philips Electronics NV and IBM to expand internationally (Cs 5.docx – Case Study 5 International Business: Diebold Q1. Before 1997  Diebold Manufactured Its Atm Machines in the United States and Sold – MARKETING4 | Course Hero, 2021). This approach offered several advantages. First, partnering with established distributors provided Diebold with instant access to international markets, leveraging the partners’ existing network, relationships, and knowledge of local markets. This helped overcome entry barriers such as cultural differences, regulatory complexities, and customer preferences. Moreover, partnering with renowned companies enhanced Diebold’s brand reputation and credibility in foreign markets.

   However, there were also disadvantages to this arrangement. Diebold had limited control over its products’ marketing and distribution, relying heavily on its partners’ capabilities and priorities. This lack of control could potentially lead to misaligned strategies, delayed product launches, or compromised customer service. Additionally, sharing profits with distributors might have affected Diebold’s profitability.

   In 1997, Diebold decided to shift its international expansion strategy and started setting up wholly owned subsidiaries in most markets. Several factors likely prompted this change. Firstly, Diebold aimed to gain full control over its operations, including manufacturing, marketing, and distribution. By establishing wholly owned subsidiaries, the company could align its strategies, streamline decision-making, and maintain consistent brand image and customer experience across markets (Hip, 2022). Secondly, wholly owned subsidiaries allowed Diebold to capture a larger portion of the value chain, resulting in higher profit margins. Lastly, with growing global competition, having direct control over operations offered Diebold a competitive advantage in terms of agility and responsiveness to market dynamics.

   Furthermore, Diebold’s preference for acquisitions as an entry mode can be attributed to several reasons. Acquisitions enabled Diebold to quickly establish a significant presence in new markets, leveraging the acquired companies’ existing customer base, distribution network, and local expertise. This approach saved time and resources compared to organic market entry, where building a brand and distribution network from scratch would be time-consuming and costly. Acquisitions also facilitated knowledge transfer and helped Diebold adapt its products and services to local market needs more efficiently.

   However, when Diebold entered China, it deviated from its wholly owned subsidiary approach and opted for a joint venture. Several factors might have influenced this decision. China, being a complex and highly regulated market, often requires foreign companies to partner with local entities to navigate the regulatory landscape effectively (BUSINESS1212 – Diebold Entered China via a Joint Venture as Opposed to a Wholly Owned | Course Hero, 2017). A joint venture allowed Diebold to leverage the local partner’s knowledge, relationships, and understanding of Chinese business practices. Additionally, the joint venture enabled Diebold to share the risks and costs associated with market entry while establishing a presence in China’s growing ATM market.

   Regarding Diebold’s global strategy, it appears to pursue a localization strategy rather than a global standardization strategy. The company acknowledges the importance of adapting its products and services to local market preferences, regulations, and cultural factors. Diebold recognizes that customers’ needs and expectations can vary across regions, and a localized approach helps ensure customer satisfaction and market success. This choice of strategy likely influenced its choice of entry modes, as wholly owned subsidiaries and acquisitions allow greater control over customization and localization efforts.

   In conclusion, Diebold initially expanded internationally through distribution agreements, benefiting from partners’ market knowledge and network. However, the company later shifted its strategy to establish wholly owned subsidiaries, gaining full control over operations and capturing more value. Diebold’s preference for acquisitions expedited market entry and facilitated localization efforts. The choice to enter China through a joint venture was

    likely influenced by the market’s regulatory complexities. Diebold’s localization strategy influenced its entry modes, as it aimed to adapt products and services to meet diverse customer needs and preferences in different markets.

   References

   BUSINESS1212 – Diebold entered China via a joint venture as opposed to a wholly owned | Course Hero. (2017, January 2). https://www.coursehero.com/file/p34nbjl/Diebold-entered-China-via-a-joint-venture-as-opposed-to-a-wholly-owned/ 

   Cs 5.docx – Case Study 5 International Business: Diebold Q1. Before 1997  Diebold Manufactured Its Atm Machines In The United States And Sold – MARKETING4 | Course Hero. (2021, August 27). https://www.coursehero.com/file/104157673/CS-5docx/ 

   Hip. (2022, August 17). Reflective Essay On Principles Of Management – PHDessay.com. Free Essays – PhDessay.com. https://phdessay.com/principles-of-management-4/