The recent experience of several Indian companies provides valuable lessons for emerging market firms planning expansion beyond their local markets to the global scene. A New York Times article details the resistance encountered by some, such as steel conglomerate Lakshmi Mittal, in its attempt to acquire Arcelor, Europe's lead steel maker. By contrast, the industrial conglomerate Tata Group has been extremely successful, acquiring Bermuda's Teleglobe telecoms company, Britain's Tetley Tea, and South Korea's Daewoo truck operations, among others.
The difference? Buying small and staying under the radar is the strategy suggested by the Tata Group's executives. They hasten to note, however, that it does not guarantee a process free of questions regarding acquisition bids by foreign entities. Those were raised during Tata's bidding for the global undersea cables network of Tyco, a U.S. company. Auto parts manufacturer Bharat Forge also applies the low-key acquisition model, buying many small companies to achieve its current global stature.
Targeting acquisitions in sectors that are not considered national assets is a plus, although that did not help United Breweries, the world's third-largest spirits company. It recently withdrew its bid for France's Taittinger champagne producer, citing local resistance to the company's Indian roots.