Notes

Introduction

1. Portions of this introduction have been adapted from Tarun Khanna, Krishna Palepu, and Kjell Carlsson, “Why Study Emerging Markets,” Note 5-706-422 (Boston: Harvard Business School, 2007).

2. David Oakley, “Emerging Market Equities Outperform West,” Financial Times (FT.com), June 7, 2009.

3. “Emerging-Market Indicators,” The Economist, January 8, 1994, 102.

4. “Economic and Financial Indicators,” The Economist, January 6, 2007, 81.

5. “The World This Week,” The Economist, January 8, 1994, 5.

6. “The New World Order: Back to the Future,” The Economist, January 8, 1994, 21.

7. The Economist, January 8, 1994, 52.

8. Standard & Poor’s Global Industry Surveys, “Computers: Hardware: Asia,” October 2006, 20.

9. Antoine van Agtmael coined the term. See Antoine van Agtmael, The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World (New York: Free Press, 2007), 1–6. Mark Mobius of Franklin Templeton Investments pioneered equity investing in emerging markets.

10. International outsourcing, or offshoring, has not and may not result in widespread unemployment in the United States and other developed markets compared with the normal churn of jobs in the hurly-burly of competitive, technologically dynamic market economies. It may nonetheless have a transformative impact on the labor markets of developed economies, as Alan Blinder has argued. The accessibility of labor in emerging markets is likely to reshape different service industries in different ways in developed economies, because some highly skilled workers will be vulnerable to emerging market competition while some low-skilled workers in personal services will be less vulnerable. Offshoring to emerging markets could have a profound impact on the educational systems and social safety nets of developed economies as these countries come to terms with preparing their youth to compete in this new landscape and support those who lose out to labor competition based overseas. See Alan S. Blinder, “Offshoring: The Next Industrial Revolution?” Foreign Affairs, March/April 2006, http://www.foreignaffairs.org/20060301faessay85209/alan-s-blinder/offshoring-the-next-industrial-revolution.html.

11. Dominic Wilson and Roopa Purushothaman, Dreaming with BRICs: The Path to 2050, Goldman Sachs Economics Paper No. 99, October 1, 2003.

12. Fareed Zakaria, The Post-American World (New York: W.W. Norton & Company, 2008).

13. As of April 2009, 168 listings on the New York Stock Exchange were based in countries included in the Morgan Stanley Capital International (MSCI) Emerging Markets Index; New York Stock Exchange, http://www.nyse.com/about/listed/lc_ny_region.html. The MSCI Emerging Markets Index included 24 countries as of January 2009: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. In 2008, 300 of the 1,125 billionaires identified by Forbes on its annual list resided in countries included in this index. Forbes identified only 83 billionaires from those countries in 2001 (out of 538) and only 13 in 1987 (out of 141); Luisa Kroll, ed., “The World’s Billionaires,” Forbes, March 5, 2008, http://www.forbes.com/2008/03/05/richest-people-billionaires-billionaires08-cx_lk_0305billie_land.html. See also “The World’s Richest People,” Forbes, July 9, 2001, 110–124; and Harold Seneker, “The World’s Billionaires,” Forbes, October 5, 1987, 82.

14. Adapted from Tarun Khanna and Krishna Palepu, “Why Focused Strategies May Be Wrong for Emerging Markets,” Harvard Business Review, July–August 1997, 41–51.

15. We use the terms emerging and developing interchangeably throughout this book to refer to economies having a variety of transactional challenges or institutional voids.

Chapter 1

1. Portions of this chapter have been adapted from Tarun Khanna and Krishna Palepu, “Spotting Institutional Voids in Emerging Markets,” Note 106-014 (Boston: Harvard Business School Publishing, 2005); and Tarun Khanna, Krishna Palepu, and Kjell Carlsson, “Why Study Emerging Markets,” Note 706-422 (Boston: Harvard Business School Publishing, 2007).

2. Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Strauss & Giroux, 2005).

3. Amarchand & Mangaldas & Suresh A. Shroff & Co., quoted in Kian Ganz, “India Special Report: Hard Court Battle,” The Lawyer, June 8, 2009, http://www.thelawyer.com/india-special-report-hard-court-battle/1000999.article.

4. Ibid.

5. Tarun Khanna and Krishna Palepu, “Why Focused Strategies May Be Wrong for Emerging Markets,” Harvard Business Review, July–August 1997, 41–51.

6. Eric Bellman, “The Infomercial Comes to Life in India’s Remotest Villages: Traveling Salesman Mr. Sharma Sings, Jokes to Spread Gospel of Global Consumerism,” Wall Street Journal, June 10, 2009, A1.

7. “Company profile,” Ctrip.com, http://pages.english.ctrip.com/webhome/purehtml/en/footer/CompanyProfile.html.

8. Capital IQ, https://www.capitaliq.com/main.asp.

9. Ibid.

10. George A. Akerlof, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics 84, no. 3 (August 1970): 488–500.

11. Economists call this an adverse selection problem.

12. Khanna and Palepu, “Why Focused Strategies May Be Wrong for Emerging Markets.”

Chapter 2

1. Portions of this chapter have been adapted from Tarun Khanna and Krishna G. Palepu, “Spotting Institutional Voids in Emerging Markets,” Note 106-014 (Boston: Harvard Business School Publishing, 2005).

2. Paragraph adapted from Tarun Khanna, “Local Institutions and Global Strategy,” Note 702-475 (Boston: Harvard Business School Publishing, 2002).

3. The four-context framework, the application of the “spotting institutional voids” questions, and the full list of questions in the toolkit are drawn from Tarun Khanna, Krishna G. Palepu, and Jayant Sinha, “Strategies That Fit Emerging Markets,” Harvard Business Review, June 2005, 63–76.

4. See C. K. Prahalad and Allen Hammond, “Serving the World’s Poor, Profitably,” Harvard Business Review, September 2002, 48–57.

5. This section has been adapted from Tarun Khanna, Krishna G. Palepu, and Kjell Carlsson, “Why Study Emerging Markets,” Note 706-422 (Boston: Harvard Business School Publishing, 2007).

Chapter 3

1. Portions of this chapter have been adapted from Tarun Khanna and Krishna G. Palepu, “Spotting Institutional Voids in Emerging Markets,” Note 9-106-014 (Boston: Harvard Business School Publishing, 2005).

2. Informed by Tarun Khanna, “Local Institutions and Global Strategy,” Note 9-702-475 (Boston: Harvard Business School Publishing, 2002).

3. John Joseph Wallis and Douglass C. North, “Measuring the Transaction Sector in the American Economy, 1870–1970,” in Long-Term Factors in American Economic Growth, ed. Stanley L. Engerman and Robert E. Gallman (Chicago: The University of Chicago Press, 1986), 121.

4. Tarun Khanna, Rakesh Khurana, and Krishna G. Palepu, “Russell Reynolds Associates, 1999,” Case 9-100-039 (Boston: Harvard Business School, 2001); and Tarun Khanna, “Russell Reynolds Associates, 1999: Teaching Note,” Note 5-701-115 (Boston: Harvard Business School Publishing, 2001).

5. Steve Scroggins, managing director (head of Asia-Pacific operations), “Russell Reynolds Associates,” Video 9-701-804 (Boston: Harvard Business School Publishing, 2001).

6. Heidrick & Struggles International, Inc., “Heidrick & Struggles Opens Office in Chongqing, China,” press release, PRNewswire-FirstCall, November 28, 2006, http://phx.corporate-ir.net/phoenix.zhtml?c=91196&p=irol-newsArticle&ID=936669& highlight=.

7. Heidrick & Struggles International, Inc., “Heidrick & Struggles and Jobkoo Form Strategic Partnership to Reinvent Career Management Platform,” press release, GlobeNewswire, February 24, 2009, http://finance.yahoo.com/news/Heidrick-amp-Struggles-and-pz-14458625.html.

8. Kevin Kelly, CEO, Heidrick & Struggles, quoted in Robert G. Eccles and David Lane, “Heidrick & Struggles International, Inc.,” Case 9-408-066 (Boston: Harvard Business School Publishing, 2008), 14.

9. Blue River Capital example derived from Krishna G. Palepu, Tarun Khanna, and Richard J. Bullock, “Blue River Capital,” Case 9-708-448 (Boston: Harvard Business School Publishing, 2007); and Shujaat Khan, managing director, Blue River Capital, presentation by teleconference at Harvard Business School, October 12, 2007.

10. Khan, presentation by teleconference at Harvard Business School.

11. Ibid.

12. Khan, quoted in Palepu, Khanna, and Bullock, “Blue River Capital,” 8.

13. Khan, presentation by teleconference at Harvard Business School.

14. Khan, quoted in Palepu, Khanna, and Bullock, “Blue River Capital,” 8.

15. Ibid.

16. Ibid.

17. M. Chandrasekaran, quoted in Palepu, Khanna, and Bullock, “Blue River Capital,” 9.

18. Khan, quoted in ibid., 7.

19. Portions of Deremate example informed by Michael G. Rukstad and David Collis, “Deremate.com: Building a Latin American Internet Auction Site,” Case 9-702-454 (Boston: Harvard Business School Publishing, 2002).

20. Ibid., 3, 5–6.

21. Ibid., 7.

22. Ibid., 11.

23. Alec Oxenford, CEO, Deremate.com, presentation at Harvard Business School, April 23, 2003.

24. Ibid.

25. Ibid.

26. Roger Kenney, CFO, Deremate.com, quoted in Rukstad and Collis, “Deremate.com: Building a Latin American Internet Auction Site,” 12.

27. Oxenford, presentation at Harvard Business School.

28. Ibid.

29. Ibid.

30. F. Asis Martinez-Jerez, “MercadoLibre.com,” Case 9-106-057 (Boston: Harvard Business School Publishing, 2007), 3; Shane Romig, Dow Jones Newswires, “Mercadolibre Tightens Grip on Lat Am Mkt Amid Online Boom,” September 10, 2008.

31. Romig, “Mercadolibre Tightens Grip On Lat Am Mkt Amid Online Boom”; “Argentina: La Nacion launches demotores.com.ar,” La Nacion, August 16, 2006.

32. Oxenford, presentation at Harvard Business School.

33. Example informed by Joan Magretta, “Fast, Global, and Entrepreneurial: Supply Chain Management, Hong Kong Style,” Harvard Business Review OnPoint, product number 2020 (Boston: Harvard Business School Publishing, 2002); Joan Magretta, “Fast, Global, and Entrepreneurial: Supply Chain Management, Hong Kong Style: An Interview with Victor Fung,” Harvard Business Review, September–October 1998, 102–114; Antony St. George, Carin-Isabel Knoop, and Michael Y. Yoshino, “Li & Fung: Beyond ‘Filling in the Mosaic’: 1995–1998,” Case 9-398-092 (Boston: Harvard Business School Publishing, 1998); F. Warren McFarlan, William C. Kirby, and Tracy Yuen Manty, “Li & Fung 2006,” Case 9-307-077 (Boston: Harvard Business School Publishing, 2007); Bang-yan Feng, 100 Years of Li & Fung: Rise from Family Business to Multinational (Singapore: Thomson Learning, 2007); and Tarun Khanna and Krishna G. Palepu, “Emerging Giants: Building World-Class Companies in Emerging Markets,” Note 9-703-431 (Boston: Harvard Business School Publishing, 2005).

34. Victor Fung, quoted in Joan Magretta, “Fast, Global, and Entrepreneurial: Supply Chain Management, Hong Kong Style: An Interview with Victor Fung,” 104.

35. Ibid., 105, 106.

36. Ibid., 104.

37. Ibid., 108.

38. Ibid., 109.

39. Ibid., 110.

40. Ibid.

41. Danny Lau, Li & Fung executive director of sales, quoted in Jason Booth, “Value Creators: Outsell, Outlast, Outclass—Going the Last Mile—Li & Fung Takes Its Middleman Role to Extremes,” Asian Wall Street Journal, December 14, 2001, W5.

42. Bruce Einhorn, with Aili McConnon, “How Not to Sweat the Retail Details: Hong Kong’s Li & Fung Takes On All the Manufacturing Headaches for Big Brands,” BusinessWeek, May 25, 2009, 52.

43. William L. McComb, CEO, Liz Claiborne, quoted in ibid., 52.

44. Ibid., 52; Frank Longid and Wing-Gar Cheng, “Li & Fung Seeks ‘Major’ Deal to Meet 3-Year Targets (Update 1),” Bloomberg, May 13, 2009, http://www.bloomberg.com/apps/news?pid=email_en&sid=aO8EqIqt9h0E.

45. Metro example adapted from Tarun Khanna, Krishna G. Palepu, Carin-Isabel Knoop, and David Lane, “Metro Cash & Carry,” Case 9-707-505 (Boston: Harvard Business School, 2007); and “Metro Cash & Carry,” Note 5-707-464 (Boston: Harvard Business School, 2007); and Thomas Hübner, James Scott, and Michael Wiedman, “Metro Cash & Carry,” Video 9-707-812 (Boston: Harvard Business School Publishing, 2007).

46. James Scott, regional operating officer, Metro Cash & Carry Asia, “Metro Cash & Carry,” video.

47. Michael Wiedman, general manager, Metro Cash & Carry International, ibid.

48. Thomas Hübner, CEO, Metro Cash & Carry, ibid.

49. James Scott, regional operating officer, Metro Cash & Carry Asia, ibid.

50. Ibid.

Chapter 4

1. Portions of this chapter have been adapted from Tarun Khanna, Krishna G. Palepu, and Jayant Sinha, “Strategies That Fit Emerging Markets,” Harvard Business Review, June 2005, 63–76.

2. Procter & Gamble, 2004 Annual Report, 33; Procter & Gamble, 2008 Annual Report, 43, www.pg.com.

3. Martin Fackler, “In India, a New Detroit,” New York Times, June 26, 2008, 1.

4. Ericsson Annual Report 2008, 15.

5. “Nokia Unveils Four New Devices and Local Email Solution Aimed at ‘Replacement Buyers’ in Emerging Markets,” Nokia, press release, April 2, 2008, http:// www.nokia.com/A4971206; Jack Ewing, “Nokia Brings the Web to Emerging Markets,” BusinessWeek, November 4, 2008, http://www.businessweek.com/globalbiz/content/nov2008/gb2008114_268373.htm.

6. Nokia in 2008: Review by the Board of Directors and Nokia Annual Accounts 2008, 2.

7. Tarun Khanna and Krishna G. Palepu, “Multinationals as Global Intermediaries,” Note 9-703-428 (Boston: Harvard Business School Publishing, 2002), 15.

8. Calculated by authors from data as of December 1997 from Ministry of Communications, January 12, 1998, via CEIC Data, China Premium Database.

9. “Investing in China: Testing GM’s Shock Absorbers,” The Economist, May 1, 1999, 64.

10. Peter Wonacott, “China’s Buick Infatuation: The Stodgy American Auto Is a Pre-revolutionary Icon for Booming Middle Class,” Wall Street Journal, July 22, 2004, B1.

11. Rick Wagoner, “Carmakers Are Vying to Meet China’s Needs,” Financial Times, November 4, 2003, 19.

12. Rahul Jacob, “Inside Track: Racing Start for Buicks in China,” Financial Times, April 25, 2000, 18.

13. “Investing in China: Testing GM’s Shock Absorbers,” 64.

14. Raymond Bierzynski, quoted in Gordon Fairclough, “Chinese Cadillac Offers a Glimpse of GM’s Future,” Wall Street Journal, November 17, 2006, B1.

15. Fairclough, ibid., B1.

16. Ibid.

17. “Investing in China: Testing GM’s Shock Absorbers,” 64.

18. http://www.gmchina.com/english/corporate_info2/company_operations_sgm.jsp.

19. http://www.gmchina.com/english/corporate_info2/company_operations_patac.jsp.

20. http://www.gmchina.com/english/corporate_info2/company_operations_gmw.jsp.

21. http://www.gmchina.com/english/corporate_info2/company_operations_ gmacsaic.jsp.

22. http://www.gmchina.com/english/corporate_info2/company_gmchina.jsp.

23. William C. Durant, quoted in Alfred P. Sloan, Jr., edited by John McDonald with Catharine Stevens, My Years with General Motors (New York: Doubleday, 1963), 303.

24. Gordon Fairclough, “Passing Lane: GM’s Chinese Partner Looms as a New Rival—Learning from Detroit, Shanghai Automotive Pushes Its Own Cars,” Wall Street Journal, April 20, 2007, A1.

25. Calculated from data in General Motors Corporation 2007 Annual Report, 16, 47.

26. Heather Timmons, “In Overhaul, G.M. May Look to Its Far-Flung Arms,” New York Times, June 3, 2009, http://www.nytimes.com/2009/06/04/business/global/04overseas .html?emc=eta1.

27. Nick Reilly, president, GM Asia-Pacific, quoted in Bill Powell, “The Other GM,” Time, May 18, 2009, http://www.time.com/time/magazine/article/0,9171,1896626,00.html. Model introduction figure from same article.

28. Timmons, “In Overhaul, G.M. May Look to Its Far-Flung Arms.”

29. L’Oréal discussion derived from Christina Passariello, “Beauty Fix: Behind L’Oréal’s Makeover in India: Going Upscale—When Cheap Shampoo Didn’t Sell, Company Tapped Rising Class,” Wall Street Journal, July 13, 2007, A1.

30. Alain Evrard, quoted in Passariello, “Beauty Fix: Behind L’Oréal’s Makeover in India: Going Upscale—When Cheap Shampoo Didn’t Sell, Company Tapped Rising Class.”

31. Tarun Khanna, Billions of Entrepreneurs: How China and India Are Reshaping Their Futures—and Yours (Boston: Harvard Business Press, 2008), 22–23.

32. Tarun Khanna and Prithwiraj Choudhury, “Microsoft in China and India, 1993–2007,” Case 9-708-444 (Boston: Harvard Business School Publishing, 2007).

33. Amy Yee, “Cisco Invests in Lavish Campus to Lure the Local Talent,” Financial Times, January 25, 2008, 4.

34. Peter Löscher, CEO, Siemens, quoted in Richard Milne, “Siemens Too White, German and Male, Says Chief,” Financial Times, June 25, 2008, 18.

35. Ravi Venkatesan, chairman, Microsoft India, “Ravi Venkatesan, Chairman, Microsoft India,” Video 9-708-804 (Boston: Harvard Business School Publishing, 2007).

36. Thomas Hübner, CEO, Metro Cash & Carry, “Metro Cash & Carry,” Video 9-707-812 (Boston: Harvard Business School Publishing, 2007).

37. Microsoft example informed by Tarun Khanna and Prithwiraj Choudhury, “Microsoft in China and India, 1993–2007,” Case 9-708-444 (Boston: Harvard Business School Publishing, 2007); Tarun Khanna, “Microsoft in the People’s Republic of China— 1993” Case 9-795-115 (Boston: Harvard Business School Publishing, 1995); Khanna, “Microsoft in the People’s Republic of China—1993 & 2005 Update,” Note 5-796-072 (Boston: Harvard Business School Publishing, 2005); Khanna, “Microsoft in the People’s Republic of China: 2005 Update,” Case Supplement 706-429 (Boston: Harvard Business School Publishing, 2005); and Khanna, “Microsoft in the People’s Republic of China: 1998 Update,” Case Supplement 797-107 (Boston: Harvard Business School Publishing, 2001).

38. Sarah Schafer, “Microsoft’s Cultural Revolution: How the Software Giant Is Rethinking the Way It Does Business in the World’s Largest Market,” Newsweek, June 28, 2004, 36.

39. Ravi Venkatesan, “Ravi Venkatesan, Chairman, Microsoft India.”

40. Ibid.

41. Ibid.

42. Tarun Khanna and Elizabeth Raabe, “General Electric Healthcare, 2006,” Case 9-706-478 (Boston: Harvard Business School Publishing, 2006); and Tarun Khanna and James Weber, “General Electric Medical Systems 2002,” Case 9-702-428 (Boston: Harvard Business School Publishing, 2002).

43. Marc Onetto, who served as vice president of GEMS’s global supply chain, quoted in Tarun Khanna and James Weber, “General Electric Medical Systems 2002,” Case 9-702-428 (Boston: Harvard Business School Publishing, 2002), 8.

44. Ibid.

45. Reinaldo Garcia, head of GEMS Europe, quoted in ibid., 11.

46. Chih Chen, head of GEMS China, quoted in ibid., 14–15.

47. Joe Hogan, “Joe Hogan, President & CEO, GE Healthcare,” Video 9-708-801 (Boston: Harvard Business School Publishing, 2007).

48. Mike Jones, who served as GEMS’s global business and market development manager, quoted in Khanna and Weber, “General Electric Medical Systems 2002,” 11.

49. Jena McGregor, “GE Plans a Big Health-Care Push: To Spark Growth, the Conglomerate Will Spend $6 Billion on Lower-Cost Equipment for Underserved Markets,” BusinessWeek.com, May 7, 2009.

50. McDonald’s example from Tarun Khanna, Krishna G. Palepu, and Jayant Sinha, “Strategies That Fit Emerging Markets,” 73–74; Niraj Kaji and Max Yacoub provided research assistance for the example. See also George Cohon with David Macfarlane, To Russia with Fries (Toronto: McClelland & Stewart, 1997).

51. Ferit Sahenk, chairman, Dou Group, “Dou Group: Weighing Partners for Garanti Bank,” Video 9-709-807 (Boston: Harvard Business School Publishing, 2008).

52. Monsanto example informed by David E. Bell and Mary Shelman, “Monsanto: Realizing Biotech Value in Brazil,” Case 9-507-018 (Boston: Harvard Business School Publishing, 2006).

53. Rick Greubel, president, Monsanto Brazil, quoted in ibid., 8.

54. Greg Lucier, CEO, GEMS-IT, “General Electric Medical Systems” Video 9-703-904 (Boston: Harvard Business School Publishing, 2003).

55. Ravi Venkatesan, “Ravi Venkatesan, Chairman, Microsoft India.”

56. Chuck Elias, head of The Home Depot China, quoted in Frederik Balfour with Brian Grow, “Home Depot: One Foot in China,” BusinessWeek, May 1, 2006, 44–45, http://www.businessweek.com/print/magazine/content/06_18/b3982066.htm?chan=gl.

57. Balfour with Grow, ibid.

58. Vivian Wai-yin Kwok, “Home Depot Buys China Clone,” Forbes.com, December 13, 2006, http://www.forbes.com/2006/12/13/home-depot-china-markets-emerge-cx_vk_ 1213markets01.html?partner=email; and Balfour with Grow, “Home Depot: One Foot in China.”

59. Derived from Tarun Khanna, Krishna G. Palepu, and Gustavo Herrero, “Tetra Pak Argentina,” Case 9-708-402 (Boston: Harvard Business School Publishing, 2007); and Alex Anavi, Tetra Pak senior vice president for business development and previously head of Tetra Pak Argentina, presentation at Harvard Business School, September 12, 2007.

60. Alex Anavi, presentation at Harvard Business School.

61. Ibid.

62. Ibid.

63. Ibid.

Chapter 5

1. This chapter is adapted in part from Tarun Khanna and Krishna G. Palepu, “Emerging Giants: Building World-Class Companies in Emerging Markets,” Note 9-703-431 (Boston: Harvard Business School Publishing, 2005); and Tarun Khanna and Krishna G. Palepu, “Emerging Giants: Building World-Class Companies in Developing Countries,” Harvard Business Review, October 2006, 60–69.

2. See Tarun Khanna, “At Home, It’s Not Just Profits That Matter: The Case for National Ownership,” International Herald Tribune, February 22, 2006, 8.

3. Krishna G. Palepu and Vishnu Srinivasan, “Tata Motors: The Tata Ace,” Case N2-108-011 (Boston: Harvard Business School Publishing, 2008).

4. Ravi Kant, managing director, Tata Motors, presentation via teleconference to Harvard Business School, September 26, 2007.

5. Jonathan Wheatley, “Brazil Prepares to Grow the Next World Fuel—Moves to Increase the Proportion of Ethanol in Petrol Would Generate a Surge in Sugar Demand, Writes Jonathan Wheatley,” Financial Times, March 9, 2006, 7.

6. Cosan, “Strategy and Competitive Advantages,” http://www.cosan.com.br/en/ir.

7. Ibid.

8. Ibid.

9. “Cosan’s Strategy for Future Growth,” Ethanol Statistics, www.ethanolstatistics.com, December 10, 2007.

10. Antonio Regalado, “Deals and Dealmakers: Cosan Raises $1.05 Billion in Trading Debut on NYSE,” Wall Street Journal, August 17, 2007, C5.

11. Antonio Regalado, “Cosan to List Stock in Bid for Growth,” Wall Street Journal, June 26, 2007, C12.

12. Marcos Paulo, stock analyst with Banco Fator, quoted in ibid.

13. Antonio Regalado and Grace Fan, “Sugar Rush: Ethanol Giants Struggle to Crack Brazil Market: Family Owners Hesitate to Sell Out to Big Players; Visit from Google Guys,” Wall Street Journal, September 10, 2007, A1.

14. Marc McCarthy, Bear Stearns, quoted in ibid.

15. Marcos Lutz, chief commercial officer, Cosan, quoted in “Cosan’s Strategy for Future Growth.”

16. Ibid.

17. Cosan, “Strategy and Competitive Advantages.”

18. Ibid.

19. Kenneth Rapoza, “Brazil Sugar Cos Taking Steps to Improve Labor Conditions,” Dow Jones International News, April 11, 2007.

20. “Cosan’s Strategy for Future Growth,” Ethanol Statistics.

21. Cosan, “Strategy and Competitive Advantages.”

22. Antonio Regalado, “Corporate News: Ethanol Maker Buys Exxon’s Brazil Outlets,” Wall Street Journal, April 25, 2008, B4.

23. Cosan, “Strategy and Competitive Advantages.”

24. Jonathan Wheatley, “Cosan Buys Filling Station Chain for $826m,” Financial Times (FT.Com), April 24, 2008.

25. Paulo Diniz, chief financial officer, Cosan, quoted in Regalado, “Corporate News: Ethanol Maker Buys Exxon’s Brazil Outlets.”

26. Regalado, ibid.

27. Marcos Lutz, quoted in “Cosan’s Strategy for Future Growth.”

28. Bharti Airtel example derived from Tarun Khanna, Krishna G. Palepu, and Ingrid Vargas, “Bharti Tele-Ventures,” Case 9-704-426 (Boston: Harvard Business School Publishing, 2004); and Tarun Khanna and Krishna G. Palepu, “Teaching Note: Bharti Tele-Ventures,” Teaching Note 5-707-467 (Boston: Harvard Business School Publishing, 2007). Data converted from data at the Bharti Airtel Web site, http://www.airtel.in/wps/wcm/connect/About%20Bharti%20Airtel/bharti+airtel/investor+relations/overview/.

29. Sunil Mittal, quoted in Indranil Ghosh, “Casting a Wide Net,” Business India, April 3, 2000, 54.

30. “Another First for the Leader,” Business India, June 1, 1998; Amy Louise Kazmin, “Why Phones Are Ringing for Sunil Mittal,” BusinessWeek, December 27, 1999.

31. Sunil Mittal, quoted in Indranil Ghosh, “Casting a Wide Net.”

32. Pulak Prasad, managing director, Warburg Pincus, quoted in Khanna, Palepu, and Vargas, “Bharti Tele-Ventures,” Case 9-704-426.

33. Sunil Mittal, quoted in Henry Sender, “Bharti’s Stock Price May Not Show Potential,” Wall Street Journal Europe, April 30, 2002.

34. Dalip Pathak, quoted in Manjeet Kripalani, “Private Equity Pours into India,” BusinessWeek, June 20, 2005, http://www.businessweek.com/print/magazine/content/05_25/b3938158_mz035.htm?chan=gl.

35. Example informed by Tarun Khanna, Krishna G. Palepu, and Richard J. Bullock, “Dou Group: Weighing Partners for Garanti Bank,” Case N9-709-401 (Boston: Harvard Business School Publishing, 2008); Rakesh Khurana, Simon Johnson, and Gina Carioggia, “Taking Charge at Dou Holding (A),” Case 9-402-009 (Boston: Harvard Business School Publishing, 2002); and “Dou Group: Weighing Partners for Garanti Bank,” Video 9-709-807 (Boston: Harvard Business School Publishing, 2008).

36. Garanti Consolidated Financial Statements, 2005H1, June 30, 2005, http://www.garantibank.com/download/investor_relations/investor/pre_ifrs_h1_05.pdf; BRSA Earnings Presentation, July 22, 2005, www.garantibank.com/download/investor_relations/presentations/brsa_pres_05_q2.pdf.

37. ING Sector Review Turkish Banks, December 3, 2004.

38. Piraye Kuranei, “Foreign Banks Poised to Invest in Turkish Banking Sector,” Mondaq Business Briefing, March 2, 2005; “Fortis to Acquire Turkey’s Disbank,” Reuters News, April 12, 2005.

39. Ferit ¸Sahenk, chairman, Dou Group, interview with author, April 10, 2008.

40. Ibid.

41. Ibid.

42. Ferit ¸Sahenk, “Dou Group: Weighing Partners for Garanti Bank,” video.

43. Ibid.

44. Ibid.

45. Ferit ¸Sahenk, interview with author.

46. Ferit ¸Sahenk, presentation at Harvard Business School.

47. Ferit ¸Sahenk, interview with author.

48. Ibid.

49. Ferit ¸Sahenk, “Dou Group: Weighing Partners for Garanti Bank,” video.

50. Haier example derived from Tarun Khanna, Krishna G. Palepu, and Ingrid Vargas, “Haier: Taking a Chinese Company Global,” Case N2-706-401 (Boston: Harvard Business School Publishing, 2005); and Tarun Khanna and Krishna G. Palepu, “Haier: Taking a Chinese Company Global, Teaching Note,” Note No. 707-459 (Boston: Harvard Business School Publishing, 2006).

51. Penetration figure from Graham Ormerod, G. K. Goh Research, “Guangdong Kelon: A White Good Comeback Play,” August 29, 2003, available from The Investext Group, http://www.investext.com.

52. Andrew Browne, “Haier Group Never Says ‘No,’” Reuters News, December 9, 1997.

53. Pamela Yatsko, “To Serve and Profit: A Chinese Fridge-Maker Wows Customers with Service,” Far Eastern Economic Review, October 17, 1996.

54. http://www.gome.com.hk/businessoverview.php.

55. Russell Flannery, “Watch Your Back: China’s Haier Got So Good at Selling Appliances Abroad That It Underestimated the Threat at Home,” Forbes, April 23, 2007, 104.

56. This section has been adapted from Tarun Khanna and Krishna G. Palepu, “Globalization and Convergence in Corporate Governance: Evidence from Infosys and the Indian Software Industry,” Journal of International Business Studies 35, no. 6 (November 2004): 484–507.

57. This section has been adapted from Tarun Khanna and Krishna G. Palepu, “Why Focused Strategies May Be Wrong for Emerging Markets,” Harvard Business Review, July–August 1997, 41–51; Tarun Khanna and Krishna G. Palepu, “The Right Way to Restructure Conglomerates in Emerging Markets,” Harvard Business Review, July–August 1999, 125–134; and Tarun Khanna, “Local Institutions and Global Strategy,” Note 702-475 (Boston: Harvard Business School Publishing, 2002).

58. Ramón Opulencia, quoted in Belen Villalonga and Raphael Amit, “Ayala Corporation,” Case 9-207-041 (Boston: Harvard Business School Publishing, 2007), 6.

59. Villalonga and Amit, ibid.

60. Tarun Khanna, Krishna G. Palepu, and Ingrid Vargas, “Globe Telecom,” Case 9-704-505 (Boston: Harvard Business School Publishing, 2004).

61. John A. Quelch and Anna Harrington, “Samsung Electronics Co.: Global Marketing Operations,” Case 9-504-051 (Boston: Harvard Business School Publishing, 2008).

62. Raymond J. Fisman and Tarun Khanna, “Facilitating Development: The Role of Business Groups,” World Development 32, no. 4 (April 2004): 609–628.

63. Tarun Khanna, Robert Pekannen, and Michael Yoshino, “Sime Darby Berhad (A)—1995,” Case 9-797-017 (Boston: Harvard Business School Publishing, 2001).

64. Ibid.

65. Tarun Khanna and Yishay Yafeh, “Business Groups in Emerging Markets: Paragons or Parasites?” Journal of Economic Literature 45, no. 2 (June 2007): 331–372.

66. See Tarun Khanna, “At Home, It’s Not Just Profits That Matter: The Case for National Ownership,” 8.

Chapter 6

1. This chapter is adapted in part from Tarun Khanna and Krishna G. Palepu, “Emerging Giants: Building World-Class Companies in Emerging Markets,” Note 9-703-431 (Boston: Harvard Business School Publishing, 2005); and Tarun Khanna and Krishna G. Palepu, “Emerging Giants: Building World-Class Companies in Developing Countries,” Harvard Business Review, October 2006, 60–69.

2. Tarun Khanna, Krishna G. Palepu, and Richard J. Bullock, “House of Tata: Acquiring a Global Footprint,” Case 9-708-446 (Boston: Harvard Business School Publishing, 2008), 3–4.

3. Ibid., 5.

4. Ishaat Hussain, finance director, Tata Sons, interview with author, April 2007.

5. The raw correlation between size and degree of globalization in the United Nations Conference on Trade and Development (UNCTAD) list of top fifty (by market valuation of assets) companies based in these markets was only 0.4 in 2006. Khanna and Palepu, “Emerging Giants: Building World-Class Companies in Developing Countries.”

6. Tarun Khanna and Ayesha Khan, “Crossing Borders: Notes on a Middle Eastern Journey Through Africa,” Case 1-708-477 (Boston: Harvard Business School Publishing, 2008); Saad Al-Barrak, “Zain (MTC) Pre-Class,” Video 9-709-803 (Boston: Harvard Business School Publishing, 2008); Saad Al-Barrak, “Zain (MTC) Post-Class,” Video 9-709-805 (Boston: Harvard Business School Publishing, 2008).

7. Haitham Al Khaled, COO, Zain (MTC) Middle East quoted in Khanna and Khan, “Crossing Borders: Notes on a Middle Eastern Journey Through Africa.”

8. Saad Al-Barrak, “Zain (MTC) Pre-Class.”

9. AMEinfo.com, “African Leaders Keen to Attract More Middle East Investment,” press release, November 25, 2007, http://www.ameinfo.com/139706.html.

10. “Africa—Telecoms, Mobile and Broadband Overview and Analysis,” Paul Budde Communication Pty Ltd., 2007.

11. Saad Al-Barrak, CEO, Zain Group, presentation at Harvard Business School, May 1, 2008.

12. Saad Al-Barrak, “Zain (MTC) Post-Class.”

13. Saad Al-Barrak, presentation at Harvard Business School.

14. “Out of Africa—Mobile Telecoms,” The Economist, December 9, 2006, 67–68.

15. Saad Al-Barrak, “Zain (MTC) Post-Class.”

16. Ibid.

17. Ibid.

18. Ibid.

19. Saad Al-Barrak, presentation at Harvard Business School; and Saad Al-Barrak, “Zain (MTC) Pre-Class.”

20. Saad Al-Barrak, “Zain (MTC) Pre-Class.”

21. Saad Al-Barrak, presentation at Harvard Business School.

22. Saad Al-Barrak, “Zain (MTC) Post-Class.”

23. Ibid.

24. Ibid.

25. Michael Chu and Gustavo Herrero, “Tata Consultancy Services Iberoamerica,” Case 9-705-020 (Boston: Harvard Business School Publishing, 2005), 5.

26. Gabriel Rozman, CEO, Tata Consultancy Services Iberoamerica, presentation at Harvard Business School, September 25, 2006.

27. Ibid.

28. Ibid.

29. Ibid.

30. Chu and Herrero, “Tata Consultancy Services Iberoamerica,” 8.

31. Ibid., 9.

32. Gabriel Rozman, presentation at Harvard Business School.

33. Ibid.

34. Tata Consultancy Services, http://www.tcs.com/worldwide/s_america/locations/5x5/Pages/default.aspx.

35. Gabriel Rozman, presentation at Harvard Business School.

36. Gabriel Rozman, quoted in Thomas L. Friedman, “Latin America’s Choice,” New York Times, June 21, 2006.

37. Gabriel Rozman, presentation at Harvard Business School; and Tata Consultancy Services, http://www.tcs.com/worldwide/s_america/locations/5x5/Pages/default.aspx.

38. Gabriel Rozman, presentation at Harvard Business School.

39. Tata Consultancy Services, http://www.tcs.com/worldwide/s_america/locations/5x5/Pages/default.aspx.

40. Theresa Bradley, “Offshoring Booms in Latin America as Crisis Pushes Companies to Cut Costs—Closer to Home,” Associated Press Newswires, April 12, 2009.

41. Tarun Khanna, Krishna G. Palepu, and Ingrid Vargas, “Haier: Taking a Chinese Company Global,” Case N2-706-401 (Boston: Harvard Business School Publishing, 2005); and Tarun Khanna and Krishna G. Palepu, “Haier: Taking a Chinese Company Global, Teaching Note,” Note 5-707-459 (Boston: Harvard Business School Publishing, 2006).

42. Mei Fong, “Chinese Refrigerator Maker Finds U.S. Chilly,” Wall Street Journal, March 18, 2008.

43. Michael Jemal, “Michael Jemal, CEO, Haier America,” Video 9-707-801 (Boston: Harvard Business School Publishing, 2006).

44. Jeannie J. Yi and Shawn X. Ye, The Haier Way: The Making of a Chinese Business Leader and a Global Brand (Dumont, New Jersey: Homa & Sekey Books, 2003), 205–225; and Michael Jemal, “Michael Jemal, CEO, Haier America.”

45. Michael Jemal, “Michael Jemal, CEO, Haier America.”

46. Ibid.

47. Ibid.

48. Ibid.

49. Nicholas P. Heymann, appliance industry analyst, Prudential Securities, quoted in Michael Arndt, “Can Haier Freeze Out Whirlpool and GE?” BusinessWeek Online, April 11, 2002.

50. Fong, “Chinese Refrigerator Maker Finds U.S. Chilly.”

51. Ibid.

52. Li Pan, quoted in Tarun Khanna, Krishna G. Palepu, and Ingrid Vargas, “Haier: Taking a Chinese Company Global,” Case N2-706-401.

53. Derived from Tarun Khanna, Krishna G. Palepu, and Claudine Madras, “Teva Pharmaceutical Industries, Ltd.,” Case 9-707-441 (Boston: Harvard Business School Publishing, 2006); and Tarun Khanna and Krishna G. Palepu, “Teva Pharmaceutical Industries, Ltd., Teaching Note,” Note 5-708-419 (Boston: Harvard Business School Publishing, 2007.)

54. Eli Hurvitz, chairman, Teva Pharmaceutical Industries, “Teva Pharmaceutical Industries, Ltd.,” Video 9-708-806 (Boston: Harvard Business School Publishing, 2007).

55. Eli Hurvitz, presentation at Harvard Business School, September 26, 2006.

56. Elon Kohlberg, quoted in Tarun Khanna, Krishna G. Palepu, and Claudine Madras, “Teva Pharmaceutical Industries, Ltd.,” Case 9-707-441, 8.

57. Eli Hurvitz, “Teva Pharmaceutical Industries, Ltd.,” video.

58. Ibid.

59. Ibid.

60. Eli Hurvitz, quoted in Tarun Khanna, Krishna G. Palepu, and Claudine Madras, “Teva Pharmaceutical Industries, Ltd.,” Case 9-707-441, 13.

61. “Generic Drugmakers Teva and Barr Show Earnings Resilience amid Economic Downturn,” Associated Press Newswires, November 6, 2008.

62. This example derived from Tarun Khanna and Ramana Nanda, “ICICI’s Global Expansion,” Case 9-706-426 (Boston: Harvard Business School Publishing, 2005); Tarun Khanna, “ICICI’s Global Expansion, Teaching Note,” Note 5-707-483 (Boston: Harvard Business School Publishing, 2007); and Lalita Gupte and Bhargav Dasgupta, presentation at Harvard Business School, September 26, 2005.

63. This section based on Bhargav Dasgupta, who spearheaded ICICI’s international business, presentation at Harvard Business School, September 26, 2005.

64. ICICI Bank, presentation at Harvard Business School, September 26, 2005.

65. Nandini Lakshman, “Credit Chatter Snares India’s ICICI Bank: Despite Nasty Rumors, the Bank’s Health Is Good, But Anxieties About the World Economy and Future Loans Cast a Dark Shadow,” BusinessWeek.com, October 1, 2008.

66. Tarun Khanna and Krishna G. Palepu, “Globalization and Convergence in Corporate Governance: Evidence from Infosys and the Indian Software Industry,” Journal of International Business Studies 35 (2004), online publication date October 21, 2004.

67. See Pankaj Ghemawat and Jamie L. Matthews, “The Globalization of CEMEX,” Case 9-701-017 (Boston: Harvard Business School Publishing, 2004).

68. This is exactly the logic of Michael Spence’s famous signaling model for which he was awarded the Nobel Memorial Prize in Economic Sciences in 2001. See Michael Spence, “Job Market Signaling,” Quarterly Journal of Economics 87 (1973): 355–374. See also Asher Blass and Yishay Yafeh, “Vagabond Shoes Longing to Stray: Why Foreign Firms List in the United States,” Journal of Banking and Finance 25, no. 3 (2001): 555–572.

69. Tarun Khanna and Krishna G. Palepu, “Globalization and Convergence in Corporate Governance,” 491–492.

70. Jayanth Verma, quoted in Tarun Khanna and Krishna G. Palepu, “Globalization and Convergence in Corporate Governance,” 492.

71. Discussion of Chilean capital market development and Empresas CAP is derived from Tarun Khanna and Danielle Melito Wu, “Empresas CAP,” Case 9-798-053 (Boston: Harvard Business School Publishing, 1998); and Tarun Khanna, “Empresas CAP—1994, Teaching Note,” Note 5-701-038 (Boston: Harvard Business School Publishing, 2001).

72. Jaime Charles, quoted in Tarun Khanna and Danielle Melito Wu, “Empresas CAP,” Case 9-798-053, 6.

73. Ibid.

74. Example adapted from Tarun Khanna, Krishna G. Palepu, and Richard J. Bullock, “House of Tata: Acquiring a Global Footprint,” Case 9-708-446 (Boston: Harvard Business School Publishing, 2008), 10–14.

75. Ravi Kant, managing director, Tata Motors, quoted in ibid., 11.

76. “MG Rover Mulls Tata Indica Diesel Sourcing Too,” Business Standard, September 17, 2003, http://www.tata.com/tata_motors/media/20030917_indica.htm; and “Tata’s Grand Vision,” Autocar Professional, January 15, 2006, http://www.tata.com/tata_sons/-media/20060115.htm.

77. Ravi Kant, managing director, Tata Motors, quoted in Khanna, Palepu, and Bullock, “House of Tata: Acquiring a Global Footprint,” 11.

78. Ibid., 12.

79. Ibid.

80. “The New People’s Car,” The Economist, March 28, 2009, 73–74.

81. Joe Leahy and John Reed, “UK Carmakers Prove Heavy Burden,” Financial Times, May 22, 2009, 14.

82. Ibid.; and “The New People’s Car,” The Economist.

83. Example informed by Michel Anteby and Nitin Nohria, “Michael Fernandes at Nicholas Piramal,” Case 9-408-001 (Boston: Harvard Business School, 2008).

84. Ian Grundy, former head of business development in Europe, Japan, and India for Avecia and then NPIL head of European business development, quoted in ibid., 8.

85. TCL example informed by Tarun Khanna, Felix Oberholzer-Gee, and David Lane, “TCL Multimedia,” Case 9-705-502 (Boston: Harvard Business School Publishing, 2006).

86. Terry Yi, president of TCL overseas business unit, quoted in Tarun Khanna, Felix Oberholzer-Gee, and David Lane, “TCL Multimedia,” Case 9-705-502 (Boston: Harvard Business School Publishing, 2006), 8.

87. Charls Zhao, president, TCL Thomson Enterprise, quoted in ibid., 1.

88. Li Yuguo, quoted in ibid., 12.

89. Evan Ramstad, “East Meets West in TV Sets: Huge Sino-French Venture Is Still Tuning the Relationship,” Wall Street Journal, November 26, 2004, A7.

90. Andrew Edgecliffe-Johnson, Adam Jones, and Justine Lau, “TCL Forced to Close Units in Europe,” Financial Times, November 1, 2006; Justine Lau, “Poor Reception for China’s Global Push: TCL’s Problems Exemplify the Difficulties for Mainland Companies Desperate to Expand Abroad,” Financial Times, November 3, 2006.

91. Randy Zhou, analyst, Bank of China International, quoted in Justine Lau, ibid.

92. Saad Al-Barrak, presentation at Harvard Business School.

Chapter 7

1. Ravi Venkatesan, “Ravi Venkatesan, Chairman, Microsoft India,” video, product number 9-708-804 (Boston: Harvard Business School Publishing, 2007).

2. Eli Hurvitz, chairman, Teva Pharmaceutical Industries, “Teva Pharmaceutical Industries, Ltd.,” video, product number 9-708-806 (Boston: Harvard Business School Publishing, 2007).

3. Alan Rosling, executive director, Tata Sons, interview with authors, April 2007.

4. Daniel Schäfer, “Siemens to Pay €1bn Fines in Effort to Close Bribery Scandal,” Financial Times, December 16, 2008, 17.

5. Dionne Searcey, “U.S. Cracks Down on Corporate Bribes,” Wall Street Journal, May 26, 2009, A1.

6. Ibid.

7. Saad Al-Barrak, “Zain (MTC) Pre-Class,” video, product number 9-709-803 (Boston: Harvard Business Publishing, 2008).

8. Alan Ohnsman and Vipin V. Nair, “Mahindra will Help India Beat China to U.S. Auto Market (Update1),” Bloomberg.com, June 17, 2009, http://www.bloomberg.com/apps/news?pid=20601109&sid=aU7hSULUYEX8. See also Nick Kurczewski, “Mahindra Says Wait and See,” New York Times, June 28, 2009, Automobiles, 10.

9. “Tata’s Nano Is Headed to U.S.,” Detroit Free Press (Freep.com), June 11, 2009, http://www.freep.com/article/20090611/BUSINESS01/906110384/1014/BUSINESS01/ Tata+s+Nano+is+headed+to+U.S.