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| World Marketplace |
Arms Reach
John Kenkel
02/01/2007
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However, despite BAE Systems’ success, most
European firms will likely experience some opposition and will be limited (in
the near term) to U.S. entry strategies based on alliances, partnerships and
smaller tactical acquisitions. Similarly, European nations will not likely
welcome with open arms a U.S. entity’s attempt to buy large European firms.
Despite some small-scale buys within Europe, U.S. companies have expressed
frustration with their inability to access European markets. Overcoming the
entangled alliances of European industry remains a challenge for U.S. firms, as
do the roles played and influence peddled by European governments.
Successful
penetration into dual markets requires more than simply targeting products.
Firms attempting a dual market presence must develop tailored entry strategies
for accessible markets in order to achieve niche positions in the appropriate
defense market. After defense firms establish this benchmark, they can pursue
more aggressive growth strategies. Finmeccanica, for example, focused on new
acquisitions, while maintaining Italian managerial oversight. Alternatively,
Thales has focused on domestic leadership, leveraging in-country relationships.
EADS has also relied on domestic leadership, but has shown more aggressive
tendencies with new investments.
While UK firms have enjoyed the greatest
success in accessing U.S. markets because of a joint development history and
reciprocal market access, other international firms are meeting with success
with less aggressive strategies. U.S. firms must make an effort to engage these
new players or risk losing market share as a result. The time to act is at hand.
Without a well-conceived strategic plan to meet the competitive alliances that
are currently forming, domestically and even regionally focused defense firms
run the risk of being left behind in the marketplace.
John Kenkel is senior director of Jane’s Strategic Advisory Services in Washington, D.C.
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