DIEBOLD

Case Discussion Questions: 1. Before 1997, Diebold manufactured its ATM machines in the United States, and sold them internationally via distribution agreements, first with Philips NV and then with IBM. Why do you think Diebold chose this mode of expanding internationally? arrangement? ANS: Before 1997, Diebold manufactured its ATM machines in the United States, and sold them internationally via distribution agreements, first with Philips NV and then with IBM. Dieboldshifted from Philips to IBM because it had more worldwide recognition compare to IBM. Furthermore Diebold was driven by by a believe that IBM would pursue ATM sales more aggressively. : Advantages; Sell the product more aggressively in the market Worldwide recognition. To attract large number of customers. What were the advantages and disadvantages of this

Disadvantages; Difficult to control the attention its products received from Philips and IBM.

2. What do you think promoted Diebold to alter its international expansion strategy in 1997 and start setting up wholly owned subsidiaries in most markets? Why do you think the company favoured acquisition as an entry mode? ANS: The sales in the United States started decreasing due to a saturated domestic market and Diebold was seeking rapid growth in demand for ATMs in a wide range of developed and developing markets such as China, India, and Brazil where banking system in large numbers were starting. So, it alter its international expansion strategy in 1997 and started setting up wholly owned subsidiaries in most markets since the foreign demand was in increasing trend. The company favoured acquisition as an entry mode because it could get a running start in these developing markets.

3. Diebold entered China via joint venture, as opposed to a wholly owned subsidiary. Why do you think the company did this? ANS: Diebold entered china via joint venture in which it took a majority ownership position because in china there were no possible acquisitions and substantial indigenous competitors from other foreign companies. Also Diebold wanted to access the local knowledge in order to expand its business in the foreign market and gain competitive advantage over its competitors. 4. Is Diebold pursuing a global standardization strategy or a localization strategy? Do you think this choice of strategy has affected its choice of entry mode? How? ANS: Diebold is pursuing a localization strategy as it is focusing more on the local markets in different developing countries such as China, India and many others. The use of ATMs varies considerably by location. Therefore, it is adopting localization strategy as the competitors are very few in the local market. Yes, this choice of strategy has affected its choice of entry mode as the need for local knowledge was met by their acquisitions of partners.

Submitted by; Metzu Shresta MBA Term 5