Reference no: EM132902957
Thai Union's Foreign Market Entries
A family business founded in Thailand in 1977 by a Chinese immigrant, Thai Union Frozen Products Plc has become one of the world's largest seafood processors, with subsidiaries in France, India, Indonesia, Japan, Norway, the United States, and Vietnam. Thai Union's international growth started with exports to Japan and the United States in 1988. In Japan, a joint venture (JV) with a local trading partner soon followed. In the United States, Thai Union went step-by-step to build up its market presence. Exports were followed by sales offices. Acquisitions of Chicken of the Sea and Empress International then followed in the 2000s. In Europe, Thai Union made a big splash in 2010 by acquiring MW Brands, a French manufacturer and distributor of canned seafood. At €670 million, this acquisition was the second largest outward foreign direct investment (FDI) deal in the history of Thailand. In 2014, Thai Union added further European brands to its portfolio by acquiring King Oscar in Norway and MerAlliance in France.
Thai Union's strategy focuses on exploiting its lower cost base arising from (1) low-cost skilled labor in Thailand and seafood caught off the Thai coast, and (2) product diversification that enables full exploitation of the raw seafood. The best parts of fish and shrimp become high-end food products, and the residual is used, for example, for pet food.
The purchase of European firms is primarily motivated by market-seeking motives, but it also adds fishing and processing capacity. With the acquisition of MW Brands, the share of Europe in Thai Union's total sales jumped from 11% to over one-third, thus reducing its dependence on the US market. MW Brands became the market leader in Britain, France, Ireland, Italy, and the Netherlands, with brands such as Conserverie Parmentier, John West, Mareblu, and Petite Navire. These brands represent a strategic asset that could be further exploited in other European markets. In addition, the European acquisitions also supported efficiency-seeking motives by adding four processing plants in France, Ghana, Portugal, and Seychelles to its existing facilities in Indonesia, Thailand, the United States, and Vietnam. These acquisitions also increased the fishing fleet from four to nine vessels.
The ambitions of CEO Thiraphong Chansiri (son of the founder) do not end with such acquisitions in Europe. In 2015, Thai Union pursued a $1 billion bid for Bumble Bee Foods in the United States in an effort to move into higher margin, premium products. In short, if you are a seafood lover, Thai Union has probably come to a plate near you-or in front of you.
QUESTIONS:
- What are some of the unique resources and capabilities that Thai Union has?
- How many foreign market entry modes does Thai Union use? What are their advantages and disadvantages?
- Why does Thai Union use more acquisitions lately?