failures and success stories

8/2/2019 Failures and Success Stories

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FAILURE STORIES

EBay

Among the darlings of the internet boom of the late '90s, eBay was almost unique. Unlike the

eternally promising (at the time) Yahoo! or Amazon, from eBay's foundation in 1995 they wereprofitable. With a good global track record and with little public fanfare, eBay launched its

Japanese site on February 28, 2000. Two years later when eBay pulled the plug on its Japanese

operations, they reportedly held an insignificant 3% of the Japanese online auction market. eBay

had been crushed by Yahoo! Japan Auctions--launched to immediate and enormous success

approximately six months prior to eBay's entry. Whereas eBay charged commissions of up to 5%

and required acutely risk-averse Japanese users to submit credit card information on signup,

Yahoo! Japan Auctions charged no commissions and met the particular needs of Japanese users

to a tee.

Paul Anders Schwamm, a Tokyo based entrepreneur with 16 years experience of assisting andmanaging Western enterprises in Japan sees the failure of eBay as a classic case study on how

not to launch a business in Japan. "It seems that they did just about everything wrong" he

explains. Schwamm identifies three key mistakes that eBay committed. "Firstly, they hired the

wrong person as country manager. Secondly, they tried to force Japanese consumers to fit the

company's American-centric service model, rather than modifying the company's service model

to meet local market needs. Thirdly, they did something that American companies are notorious

for--and something that I think cost them dearly--namely, they made exaggerated announcements

about their entry into the Japanese market, well before they had a localized product ready to

launch in Japan."

Tips how to succeed:

First, in the selection of country manager, both think the issue of language is overplayed.

Explains Schwamm, "If companies want a bilingual person to facilitate communication with the

home office, they can hire a bilingual executive assistant, translator, or interpreter for a fraction

of what it costs to hire a country manager. Making language skills a key recruiting criterion

severely reduces the pool of potential candidates. Rather than focus on language skills, foreign

companies should care about the truly important things, like a country manager's strategicthinking ability, his track record managing comparable businesses, industry knowledge, and,

ultimately, whether or not he can successfully build and motivate a local team, introduce new

products, and gain market share in a highly competitive market."


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Why Wal-Mart Failed in Brazil

Columbia Business School professor Nelson Fraiman, who was born in Uruguay and played a

significant role in designing the schools new Entrepreneurship and Competitiveness in LatinAmerica (ECLA) program has some advice for North American companies hoping to succeed inLatin America.

Firms in North America are getting better, but still arent very good at learning about local

cultures, Fraiman said during our recent conversation. Large firms like Wal-Mart have gone tocountries like Brazil and failed the same way theyve gone to countries like Korea and failed,

the same way theyve gone to countries like Germany and failed mainly because of notunderstanding the local culture. The U.S. can become better at learning about the people and

working together as equals, rather than imposing a series of systems and procedures that workhere, but dont necessarily work there.

Little details do matter, Fraiman continues. If a country like Germany doesnt like to smile,then dont smile when you say have a good day. Little details are what usually kills

American companies that forget to pay attention.

A lot of these entrepreneurs grow locally, and theyre not aware of what it means to competeglobally. If you want to get better, you have to shape up in your processes before you can think

of going global. Thats the integral part of the program, explains Fraiman.

While the program is designed to help Latin American entrepreneurs compete globally, there arealso inherent benefits for North America when we take an interest in helping Latin American

businesses.

Were part of the same region, and I think its important for the U.S. to have successful

businesses in those countries, so the countries dont go the way of, say, Venezuela with theinstability, says Fraiman. If you include most of the people in the well being of the country,

then it will be a stable country. Thats what you want for your neighbors in South America, froma U.S. perspective. It brings stability to the region if the region becomes successful.

Germans demand decent working conditions in exchange for making Germany such a successful

and prosperous economy.

Walmart refuses to give workers the respect they deserve.


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SUCCESS STORIES

Dominos Pizza

Initially, Dominos Pizza transferred its Western offerings direct to the Indian market, but the

company eventually realized that it had to bow to local tastes, as Arvind Nair, chief executiveofficer at Dominos Pizza India explains. Initially, our focus was to stay only in metropolitan

areas, but in the last two years we have felt the need to spread ourselves into mini metros and

B-category towns. We have also experimented with our taste options, especially when we went

into smaller towns. We have focused on more regional flavours now, he says. As a result of this

change of strategy, Dominos came up with localized toppings such as Peppy Paneer and

Chicken Chettinad. This move was greeted with a wry smile from Dominos main Indian

competitor, US Pizza, which was the first to offer local topping. In 1995, when we offered

tandoori chicken and paneer toppings, some made fun of us saying, why not offer spaghetti and

pasta toppings? The same companies are now offering chole and spicy masala pizzas, says

Wahid Berenjian, the managing director for US Pizza. He told the Hindu newspaper Business

Line that US brands such as Dominos made the mistake of thinking that US tastes are universal.

You cannot change the taste buds that were developed more than a thousand years ago, he said.

Citibank.

When Citibank entered the Indian market, the firms aim was to target only high-income

earners. But, in the words of the Business Line newspaper, Citibank soon realized that in India it

makes sense to go the mass banking way rather than the class banking way.

MTV.

When MTV India was launched, the aim was to bring Western rock, rap and pop to the sub-

continent. Now, however, the music policy has shifted to accommodate Indian genre such as

bhangra.

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