Handelsbanken Case Study

1. What entry modes into foreign markets has Handelsbanken applied throughout its history?  

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2. Like all internationalised organisations, Handelsbanken is facing the global-local dilemma. Discuss how this dilemma is handled in practice. What is done globally and what is done locally? Drawing on Bartlett and Ghoshal’s framework, how would you describe Handelsbanken’s internationalisation strategy?

Global Local Dilemma

GLOBAL:

-       Government drivers

o   Technical standards

-       Cost drivers

o   Scale economies

-       Competitive drivers

o   Interdependence between countries

LOCAL:

-       Adapt to customer needs and behavioural norms

According to Ghemawat’s CAGE framework:

-       Cultural distance

o   Different social norms

-       Administrative and political distance

o   Absence of shared political or monetary association

-       Economic differences

o   Different consumer incomes

o   Different costs and quality of natural, financial, and human resources

o   Different information or knowledge

GLOBAL VS LOCAL

® Particular local strategy implemented by Jan Wallander who was against marketing strategies, not based enough on customer needs according to him

Globally vs locally

3 levels:

-       Branches: core level

-       Regional head offices

-       Corporate headquarters in Stockholm

Globally:

Only two major aspects of business remain centralized at Handelsbanken

o   Corporate culture:

§  Decentralization and cost-consciousness culture

§  Internal training programs to reproduce the culture in every work situation

§  Managers internally recruited to ensure they fit to the corporate culture

o   Credit process:

§  Central management remains in control of larger loans to customers ® permit them to avoid a risky loan on the local level

§  But top management not allowed to grant a loan that have been denied by the manager of the branch

Locally:

Local branch offices considered as the core business,

Handelsbanken is a decentralized bank

o   Local branch office

§  To adapt offer to consumer needs

§  Each consumer is allocated to a local branch

§  Church tower principle: closest to the customer’s location

§  Costs and revenues allocated to the local branch

o   Branch management

§  Knowledge of the local market

§  Independent decision about promotion of products

§  Targets set according to the market, previous financial results, performance of comparable branches

o   Today Handelsbanken is still known as the most decentralized and cost-consciousness bank

Bartlett & Ghoshal framework

In this case: Multi-domestic firm : Low integration/high responsiveness pressures