Accounting for almost 30 percent of world GDP, the United States is the world's largest
and most demanding market for almost everything from oil to microprocessors to premium
coffee. Companies around the world aspire to do business in the U.S., or at least with U.S.
companies in their home markets. By doing so, they learn much about the latest
management practices, they can be closer to the cutting edge of innovation, and they can
boost their reputations by supplying well-known U.S. firms.
The market size of the U.S makes it an important target but, in addition, foreign companies
often feel they have to crack the U.S. market in order to gain respect. No CEO can lead a
global company if that company does not have a strong presence in the USA.
So how do you penetrate the U.S.market? The annals of business are littered with foreign
companies that have never quite succeeded in the USA. But here are four companies that
have. Each carries a special lesson.
1. Royal Bank of Scotland. This company built up a strong retail market share in the U.S.,
not under the RBS brand, but through a series of acquisitions of regional (not national)
banks. RBS is adding value for its shareholders by letting these banks retain their
individual brand identities, by focusing on improving back office efficiencies, and by
having the highly respected CEO of one of the acquired entities lead the combined U.S.
organization. Meanwhile, RBS is building its B2B brand with institutional clients on Wall
- November 2007 acquired ABN AMro- biggest merger deal in financial services hi tory
http://business.timesonline.co.uk/tol/business/columnists/article4622329.ece [Aug 28]
- fear of overpaying for ABN affecting US business; considering strategies
- loss of $1.35 billion in the first half of the year [Aug 9 2008]
2. IKEA. IKEA offers a furniture retailing value proposition and experience unparalleled
in the U.S. market. There are no national furniture retail chains, making market penetration
easier. IKEA's location selection expertise and their established global supply chains enable
them to offer exceptional category-killer prices that are further keys to success.
quot;No CEO can lead a global company if that company does not have a strong presence in
3. ING. The Dutch bank converted its weakness (no retail branches in the U.S.) into a
strength. Following a successful Canadian market test, ING gave its entrepreneurial general
manager the green light to offer retail banking services to U.S. consumers but exclusively
on an online basis. Taking advantage of its low no-bricks-and-mortar cost structure, ING
was able to offer generous rates on certificates of deposi . Just four years on, ING is the
third-largest holder of consumer CD investments in the U.S.
4. Dyson. The British home appliance maker earned a break when it managed to get a Best
Buy buyer to take one of its vacuum cleaners home to test. The buyer was impressed.
Fortunately for Dyson, Best Buy became the first U.S. retailer to stock Dyson vacuum
cleaners—other U.S. retailers invariably follow Best Buy's lead. Electronics retailing in the
U.S. is concentrated (10 chains control 60 percent of the market) and tough to penetrate.
But Dyson could not have succeeded had its products not been superior to other vacuum
cleaners already in U.S. stores.
A current case, well worth watching, is the effort of Tesco, the British retailer, to enter the
U.S. market with the new Fresh & Easy chain of discount grocery stores. Avoiding
geographies where Wal-Mart is entrenched, Tesco has so far opened 50 stores in the
growth markets of California, Nevada, and Arizona. The question is whether Tesco's
assortment and value proposition will be appreciated by enough consumers fast enough for
weekly store sales to reach profitable levels. Stay tuned.
Join the discussion on Harvard Business Online.
Four Companies that Conquered America
By John Quelch [April 2, 2008]
The concept of “Global Marketing” has been a relatively recent term in the corporate
world, but this simple adage has transformed cultures and revolutionized the way business
is conducted around the world in the 21st century. John Quelch’s views on tackling
marketing in the United States throw unique light on the aspirations of many corporations
intending to “go global” by doing business in the US. The 21st century mode of doing
business, coupled with multiple business locations across countries, time zones and
outsourcing has transformed the business mentality of many corporations that has increased
the competitive nature of the way business is done. Quelch’s opinion of four corporations
conquering the landscape of American consumerism (Royal Bank of Scotland, IKEA, ING
and Dyson) present a spectrum of business companies and models that have been
successful in penetrating US consumer and corporate sectors. IKEA and Dyson represent
business models that have achieved immense brand recognition amongst US households,
and complimenting them are two other corporations – Royal Bank of Scotland and ING
that have been finance service industry successes, and together these corporations represent
a dynamic scope of business models that have succeeded in getting the attention of the
American consumer, media, and corporate world.
IKEA over the last decade has become a major player in the US furniture/interior
decorating industry and has set itself and its customers high quality and customer service
benchmarks. By dismissing the notion of inexpensive things being of poor quality, IKEA
has strived to capture the creativity and affordability of US households, and this has made
it one of the most successful foreign corporations in the US. As Quelch points out the fact
that the “lack of any national furniture retail chains” favored IKEA’s entry into the US, and
made the process of capturing market share from smaller players like Wal-Mart, Home
Depot, easier given the specialization of IKEA and it’s brand recognition worldwide.
IKEA’s corporate responsibility in maintaining an environment friendly inventory of
furniture proved to be very useful in its strategy of penetrating the US, as “the Proposition
65 (restricting formaldehyde emissions) passed by California voters increased the
credibility of IKEA” [Natural Step 2] that had already adhered to International standards,
gaining good credibility in the United States. By differentiating in products and developing
a unique business model of focusing on the customer, IKEA’s stores add a unique blend of
quality and consumer experience that has made it so successful. The credibility and
dedication of IKEA towards enhanci g customer experience is evident from it’s humble
beginnings in Sweden in a small store founded by IngvarKamprad in 1943 that has
transcended decades to become a leading furniture outlet across the world. With IKEA’s
rapid foray and extension in the US, many challenges need to be met in regards to
maintaining production costs, and preserving the brand identity of a corporation that has
been central in transforming American consumerism and shopping.
The Royal Bank of Scotland emerged as a front-runner in the US financial service
sector by rapidly scaling up its business and acquiring domest c financial companies in the
US. The “ABN-Amro acquisition (the largest ever financial merger) in November 2007”
[Fasken] boosted RBS’s credibility within the corporate sector of the US and propelled the
company into being one of the world’s largest conglomerate in financial services. Its
branding strategy as Quelch points out, in acquiring and being a back-end provider of
financial services to domest c US banks, enhanced RBS’s capabilities in penetrating the US
market, and by leveraging the numerous acquisitions in . RBS employed a branding and
marketing strategy of allowing its acquisitions to function on their own, as opposed to
migrating it to the RBS brand, and this unique strategy helped RBS to gradually establish a
brand identity amongst its US customers. However, as recently as August 2008, the
company posted huge financial losses amounting to $1.35 billion, and fears of the ABN-
Amro deal being signed on unfavorable terms continues to daunt the investors, although it
is only in the next few months, the company’s strategies are to be observed to get a clear
picture of it’s financial health and it’s US strategy for the coming years.
Another US mass consumer oriented company is Dyson, that revolutionized the
household chore of vacuuming, and it was this trivial concept that put James Dyson, the
founder of Dyson Inc. and his company. By “developing a bag less vacuum cleaner”
Dyson’s prospects at catering to an International consumer base brightened as it was an
innovation that transformed households and eliminated the use ofbags which was a
painstaking process to begin with. Although James Dyson found it hard to market his
innovation in the UK, the test in Japan proved successful and quick the US market
became a lucrative market to target. Quelch’s views of Dyson being successful in the US
because of partnering with Best Buy might be a little exaggerated given the focus on
innovation and engineering Dyson emphasized that generated quality products at affordable
prices. James Dyson’s vision on constantly innovating on its core product helped
successfully market the company and brand to it’s US consumers, and remains to be seen
how it’s expansion pans out in the US in the coming years.
ING US is another successful corporati n that used it’s financial business services and
leveraged that with online technology to take away market share at a brisker and more
efficient rate than it’s competitors
With these four companies capturing the imagination of corporate and consumer
America, Quelch’s definition of a global company being defined wi h an American centric
vision and involvement proves to be a strong proposition that invariably is true today.
Although, the US will remain one of the leading markets, emerging markets such as India,
China offer a lucrative consumer base and it is yet to be seen how US companies capture
attention of these countries that are thriving with a huge middle class waiting to be
[Forbes] Clark, Hannah. James Dyson Cleans Up. Forbes.com – CEO Network
August 1, 2006. http://www.forbes.com/ceonetwork/2006/08/01/leadership-
[IKEA] Official US IKEA Catalogue. http://www.ikea.com/us/en/