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Banco Santander, Spain's largest commercial bank, announced in July 2004 the acquisition of Abbey National Bank, the fifth largest U.K. commercial bank. This transaction was the largest ever cross-border acquisition in European banking and would result in the 10th-largest bank in the world. Discusses the main sources of value creation from international expansion and acquisitions in the commercial banking industry. Also, highlights the barriers to integration within the single market of the European Union in a regulated service industry such as commercial banking.

Huawei was China's largest telecommunication equipment provider. It boasted annual revenue of US$6.7 billion in 2005, 60% of which came from international sales. Globally, Huawei had a strong position in the market for low-end routers and switches, offering products that were 40% cheaper than its competitors. However, unlike the threat from most Chinese companies, Huawei's threat came not from low-cost manufacturing but from low-cost engineering. Can Huawei leverage its strengths to climb up the technology value chain, replicating its success with low-end telecom networking in high-technology products and services? Can it build a global brand?

This case sets the stage for the 2012 case study "Constructing a Base-of-the-Pyramid Business in a Multinational Corporation: CEMEX's Patrimonio Hoy Looks to Grow." This revised 2006 case study explores Patrimonio Hoy in 2006, the sales, distribution, and savings program of CEMEX intended to serve Mexico's large self-construction housing market. CEMEX is currently the world's third largest cement producer. Over the years, Patrimonio Hoy has gone from a small, centrally-funded project to a US$25 million revenue generator for CEMEX. This case explores the initiative's opportunities for growth and expansion into new markets.

In November 2005, Microsoft launched Xbox 360, its latest game console. It was an extraordinary event, not because of the glamorous business executives and journalists hanging around the event, the super cool festival mood soaking the Mojave Desert, or the graphic technologies dazzling the giant consoles surrounding the conference room. Rather, the air was filled with a mix of trepidation and excitement about the viability of the company's new strategy of moving beyond Windows-based PCs. Everybody in the room wondered whether the company could regain its past glory by entering new territories. What opportunities and challenges, they wondered, awaited the company in markets in which it did not have proprietary advantage? What specific strategies did it have to adopt to capitalize on the opportunities and counter the challenges? How best could Microsoft execute its diversification strategy?

Provides an overview of the course Competitive Dynamics: Strategy and Tactics and discusses challenges facing those who wish to use game theory to assist in strategic and tactical decision making.

D'Aquino Quimica S.A. is a Brazilian manufacturer of a broad line of cleaning chemicals and distributors of cleaning equipment for industrial and commercial uses. Mr. Gabany is evaluating a sales opportunity in the state of Pernambuco, where the Federal University has requested bids on a large cleaning services contract. The terms and size of this contract are very attractive. The transaction is, however, premised on D'Aquino's willingness to supply 40% of the order against cash payment on delivery, without invoice.

Ina Food Industry Co. Ltd was situated in Ina, Nagano Prefecture, and surrounded by the soaring mountains of Japan's Alps. Amidst this idyllic setting, Mr. Hiroshi Tsukakoshi, Ina Food's 68-year-old chairman, had led the company through an incredible 48 years of continuous revenue and profit growth. The company was a leading manufacturer of powdered agar, a traditional gelatin product derived from seaweed. In 2005, news about the medicinal benefits of agar led to a boom in demand, but Tsukakoshi felt that this was an unfortunate event and believed that if management was not preoccupied purely with revenue, and instead focused on establishing steady growth, the company would continue to exist for a long time. This in turn would please everybody who was directly or indirectly associated with the company. He was confident that Ina Foods was a new model for Japanese small- and medium-sized businesses under a new management philosophy that brought happiness to employees and community. He felt he had done a good job so far. The business had prospered and did not pose any urgent problems. But he also felt that he should not simply sit back and savor his success. There were tremendous growth opportunities and he knew operations should be improved before those opportunities could be targeted.

With the recent loss of public confidence in firms in America, Australia, Britain, and other countries, more companies are being forced to promote themselves to their internal and external stakeholders in order to maintain and protect their reputations. Advises firms to communicate their reputation message in the form of a corporate story--a narrative that speaks about the company's mission, morality, and modes of operation--and then provides guidelines for creating and evaluating these stories.

In the wake of globalization, still more regional clusters are globally outsourcing (purchasing components that were originally manufactured internally) or offshoring (globally relocating manufacturing while maintaining ownership control). Policy makers and business strategists alike are searching for theoretical frameworks to understand the underlying dynamics of this global reshuffling of production activities and how this will affect innovation and competitiveness. Examines production relocation from a regional perspective and shows that the impact of globalization on regional clusters depends on the modularity and digitalization of the regional production activities, which affect stickiness and coordination costs.

Immigrants in developed countries who send money to and buy goods for relatives in the developing world are creating a vast new international market.

Strategists are not alone in finding failing markets irresistible. Governments and social groups ranging from unions to the World Wildlife Fund also respond to market failures. Governments typically seek to fix failing markets, often with prescriptions of what companies can and cannot do. Activist groups are also out to change corporate behavior, but they rely on social pressure to reach their goals. Many companies that compete successfully in the market environment stumble when it comes to dealing with governments and social groups. Microsoft's near breakup by the U.S. Department of Justice and Wal-Mart's less-than-stellar performance against groups who oppose the retailer's stores are just two of many examples. "Strategies Beyond the Market" overviews an additional set of tools that strategists can use to contend with and exploit forces in a company's government, legal, and social environment.

As of 2006, Microsoft is finding that their dominant position in client and server operating systems is under attack from Linux. While Linux has only 3% of the worldwide installed base of PC operating systems, it had captured 20% of the server market by the end of 2005 and was quickly becoming a formidable alternative for productivity programs with OpenOffice. Linux's "business model" to compete against Microsoft is significantly different than those of traditional for-profit software companies. Linux is open source (all code is made available for redistribution by anyone) and harnesses the collective power of thousands of programmers--both independent and employees of major software firms such as IBM, HP, Intel, Sun, and Dell--which allows it to work out bugs quickly and release new operating systems several times per year. Students are faced with the analysis of competitive interaction between Windows' and Linux's business models and value loops and are asked to reason whether a clear winner will emerge.

Japanese corporations faced the looming threat of hostile takeovers because of the rapid dissolution of cross-shareholdings that began in the 1990s; in particular, between creditor banks and corporate borrowers. As a result of this uncoupling the share of stable shareholders, those in long-term business relationships with the corporation, fell by half over the past 10 years. On the other hand, foreign ownership of Japanese companies, which used to account for only a small percentage of all outstanding shares, rose rapidly. Thus, the proportion of free-floating shares has risen significantly, implying that buying out a company by means of a takeover bid in Japan has become far easier. Although Japanese corporations have traditionally believed that hostile takeover bids have little chance of success, Hidemaru Yamada, president of Nireco Corp.--a high-tech measuring device manufacturer--felt the need to introduce "poison pill" defenses to counter possible hostile takeover bids from foreign investors. Nireco assessed the situation regarding the introduction of poison pills, taking into account Japan's institutional infrastructure, its laws, and its economic conditions; in March 2005, it announced a "security plan," which included an issue of subscription warrants to existing shareholders in the event of an unfriendly takeover bid.

Barilla, the world's largest pasta company, has introduced a new high-quality, high-priced product line that features a range of authentic Italian food products sourced from artisan producers. Management believes the line will appeal to consumers seeking healthier foods and convenience, and will help extend Barilla's brand identification beyond pasta. However, the new line is a bold departure from Barilla's core competencies of high-volume production and sales of fast moving, low-priced goods. Provides an opportunity to discuss trends in consumer eating habits, supply chains for locally-produced goods, and changes in retail formats. In addition, provides an opportunity to discuss the difference in investment philosophy between a family-owned company and a publicly-traded company.

MySQL, an open source software firm, grew from a small $10 million company in 2004 into a successful $60 million business by 2006. As it had anticipated, MySQL attracted the attention of the big three IT companies, IBM, Microsoft, and Oracle. Actively defending their high-margin, $10 billion database business, the big three implemented various strategies to combat their open source competitors. Details these actions and explores MySQL's options for preserving and growing its business in an increasingly competitive and hostile environment.

RKS has designed a revolutionary electric guitar and needs to decide how to best market their innovation. The iconic status of existing electric guitars, and the lack of any recent radical innovations in the category, pose challenges in securing consumer adoption. If the company goes it alone, it needs to determine the type of consumer most likely to adopt the new product, taking into account the novel aspects of the RKS guitar. Alternatively, the company could find a marketing partner or license its novel design to a bigger player. Rich in descriptions of consumer behavior that enable a discussion of the process that would lead consumers to purchase a new product. Also, outlines the company's design philosophy, which was developed to help its designers get into the mind of the consumer.

In July 2006, Mitsuhisa Ishikawa wondered how he could further enhance the success and visibility of his animation production company headquartered in Tokyo, Production I.G. For the year ended May 2006, Production I.G. had sales of 5,439 million yen ($47.3 million), operating profit of 404 million yen ($3.5 million), and 184 employees. Its recent film Innocence: Ghost in the Shell 2 competed at Cannes Film Festival in 2004, and the company had gone public in December 2005. These were no small accomplishments for a Japanese animation production company. Indeed, despite the global success of Japanese animation, the industry was fragmented with about 430 animation production companies and dominated by distributors--TV stations, movie distributors, DVD distributors and advertising agencies, which held the lion's share of content copyrights. Distributors controlled the funding and contracted the production out to animation production companies. As a result, most of the latter were small companies laboring in obscurity. As such, no Japanese animation production company came even close to the size of Walt Disney Co.: in 2005 Disney had revenues of $32 billion, whereas Toei Animation, the largest animation production company in Japan, had revenue of only 21 billion yen ($175 million). To Ishikawa's mind, one of the key decisions concerned the mix of the "contents garden" that his company should aspire to. Should he increase the share of animation productions based on manga (comics and print cartoons) relative to original-productions (i.e. animation stories created entirely by Production I.G.)?

Describes the formation and rapid growth of a drug testing company. The company needs to decide whether to enter the painkiller testing market, in addition to growing its drug treatment center business.

A global real estate investment firm is trying to decide whether to enter into a property derivative transaction to help it effect a change in asset allocation. The market for real estate derivatives is beginning to grow quite rapidly and the firm is trying to understand how to use these instruments in managing its business.

Over the past 20 years, waves of liberalization have all but washed away protectionist barriers in developing countries. As multinational corporations from North America, Western Europe, Japan, and South Korea stormed into the emerging markets, many local companies lost market share or sold off businesses--but some fought back. India's Mahindra & Mahindra, China's Haier Group, and many other corporations in developing countries have held their own against the onslaught, restructured their businesses, exploited new opportunities, and built world-class companies that are today giving their global rivals a run for their money. In this article, the authors, citing the results of their six-year study of "emerging giants," describe the three strategies these businesses used to become effective global competitors--despite facing financial and bureaucratic disadvantages in their home markets. Some capitalized on their knowledge of local product markets. The Philippines' Jollibee Foods, for instance, has profitably battled McDonald's because it realizes that Filipinos like their burgers to have a particular soy and garlic taste. Some have exploited their knowledge of local talent and capital markets, thereby serving customers both at home and abroad in a cost-effective manner. India's software companies, for instance, recognized the possibility of providing services to overseas customers at least a decade before Western companies even considered hiring Indian software professionals. And some emerging giants have exploited institutional voids to create profitable businesses. China's Emerge Logistics, for instance, helps foreign companies navigate the country's disjointed transportation system and baffling bureaucracy, guiding them all the way from ports to retail outlets. The authors' research indicates there's more than one way to skin the proverbial cat: Some emerging-market companies compete in several countries, but others sell only at home.