Subsidiary brands as a resource and the redistribution of decision-making authority following acquisitions

Abstract

This paper analyses the moves global brewery companies undertake towards the distribution of decision making authority in their multinational organization and the likelihood of newly acquired subsidiaries to influence these moves. In this consumer goods industry, brands are suggested to be the primary subsidiary specific resource to influence these distribution processes. Empirically this paper explores three European acquisitions of the Dutch brewery corporation Heineken in Switzerland, Slovakia, and France. We explore whether differing brand value (regional/international, standard/premium) has had an impact on the subsidiaries" ability to maintain a certain degree of decision making authority after the take-over. The results of our case studies show, however, that the ownership of valuable brands may not be considered as a critical resource for subsidiaries here. Key wordsSubsidiary resources, Decision making authority, Decentralization, Headquarters-subsidiary relationships, Brewery industry, Brands, Heineken. 3 Subsidiary Brands as a Resource and the Redistribution of Decision Making Authority following Acquisitions AbstractThis paper analyses the moves global brewery companies undertake towards the distribution of decision making authority in their multinational organization and the likelihood of newly acquired subsidiaries to influence these moves. In this consumer goods industry, brands are suggested to be the primary subsidiary specific resource to influence these distribution processes. Empirically this paper explores three European acquisitions of the Dutch brewery corporation Heineken in Switzerland, Slovakia, and France. We explore whether differing brand value (regional/international, standard/premium) has had an impact on the subsidiaries" ability to maintain a certain degree of decision making authority after the take-over. The results of our case studies show, however, that the ownership of valuable brands may not be considered as a critical resource for subsidiaries here.

Managerial Risk‐taking in International Acquisitions in the Brewery Industry: Institutional and Ownership Influences Compared

“…In addition to numerous newspaper and magazine articles covering strategic and organizational issues on the four firms studied, selected information from the companies (mostly annual reports; see also reference list) as well as from secondary sources (e.g. Dieng, Dörrenbächer and Gammelgaard, ; Ebneth and Theuvsen, ; Elshof, ) was included.…”

“…Heineken was also an experienced acquirer. It has a long tradition of international full and partial acquisitions and had already reached a high level of internationalization by the 1990s (Dieng, Dörrenbächer and Gammelgaard, ). Heineken's experience is demonstrated by the far‐reaching integration of Cruzcampo, which successfully made its global brands ‘Heineken’ and ‘Amstel’ into market leaders in Spain.…”

Introduction

“…Such global marketing campaigns are particularly lucrative, as expenses for brands are fixed costs that are generally independent of sales volumes (Madsen et al 2011, p. 11). However, the centrally branded beers (such as Heineken, Budweiser, Stella Artois and Carlsberg) are produced locally, often at the expense of locally branded beers (Dieng et al 2009). …”

“…The latter firms, which by nature of their large home markets often lack international experience, have engaged in precipitous catch-up internationalization strategies in response to pressure from the stock markets (as Taplin et Furthermore, the brewery industry has experienced numerous smalland medium-sized cross-border acquisitions in recent decades (Ebneth and Theuvsen 2007). Heineken, the most active company in this respect (Madsen et al 2011), acquired no fewer than 35 smaller breweries around the world between 1990 and 2008 (Dieng et al 2009; for more information, see Dörrenbächer and Zaby, Chapter 8, this volume). Often, these acquisitions involve partial shareholdings.…”

“…Referring to a previous study on Heineken's small-and medium-sized acquisitions (Dieng et al 2009), which found that target firms are generally absorbed by Heineken (referred to as 'Heinekenization'), Dörrenbächer and Zaby investigate the likelihood of best practices being transferred from large acquisition targets to Heineken as the acquiring firm. The study finds little evidence of such transfers, even though the targets are resource rich, and even though Heineken has substantial experience in internationalization processes and acquisition integration.…”