Page 152 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

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exchange, and the share price generally moves with little relation to
the overall share price of the global bank.
“High-engagement” strategies involve direct ownership by
the multinational firm, in both the literal and figurative senses of
ownership. One form of a high-engagement strategy is to enter a
market directly, by purchasing or leasing a store, putting up your
shingle, and beginning to sell your goods; this form is commonly
referred to as organic entry. Much of globalization has occurred this
way, and the phenomenon is much more common in highly
deregulated markets. Globally owned Starbucks and Gap outlets in
Europe, for example, represent direct market entry. In the GCC
context, an example would be Microsoft’s establishment of an office
in Dubai Media City. Strategy is first set at the global level and then
transferred to the in-market organization. Authorization to invest
start-up funding comes from the global headquarters, and the
initial staff is typically brought in from other markets. The local
team is expected to perform at global standards. The foreign outlet
may be based in a different country, but it is very much part of the
“family” of the global firm.
A second form of high-engagement market entry is through
the acquisition of a local business that is then (partially or fully)
integrated into the global parent company. Ford’s 1999 acquisition
of Volvo is an example: Ford’s purchase of Volvo gave it a strong
presence in the Swedish and European markets, as well as a strong
product to distribute in the United States and elsewhere. In recent
years, companies founded in emerging markets have increasingly
reversed the typical acquisition flow and have begun acquiring
companies in the OECD. Mittal Steel’s (India) acquisitions in
Europe (including Arcelor) and the United States, Lenovo’s (China)
purchase of IBM’s personal computer business, and indeed Dubai
Ports World’s (UAE) acquisition of P&O are recent high-profile
examples of this kind of high-engagement market entries. While
integrating the acquired entity into the structure and systems of the
global parent is usually helpful from an efficiency and savings
perspective, the brand and local feel of the acquired firm are often
preserved to help retain customers and fuel in-market growth.
While regulations in the GCC have hitherto made acquisitions
impossible, changes in the regulatory environment may make Gulf
acquisitions a real possibility for multinational firms.