"What is of supreme importance in war
is to attack the enemy's strategy."

Sun Tzu


Despite having the #1 selling brand, this multinational company’s investment in its three year-old Korean affiliate had tripled because it was caught in a raging “credit war.” While winning the marketing battles, it was losing the profit war, with no prospect of truce, much less victory, in site. The company was on the verge of withdrawing from the market, even though it had far deeper pockets and had never exited an overseas market. But senior management had grown tired of sustained losses and the drag on their management resources, and decided it was time to get out, even if it meant a complete loss on the company's investment.

Both of the company's two local competitors had more developed distribution channels, 
and both relied heavily on profits from different but related product lines that dominated their respective categories. The multinational company's expatriate manager convinced senior management to acquire one of its competitors, and then helped its local partners execute the acquisition. Armed with the two leading brands and the strongest distribution system, the merged company was able to establish normal credit terms, which led to sustained profitability for the next ten years.

This was absolutely a war for survival. While the publicly-traded multinational needed to beat their local competitors at their own game, it was bound by reporting requirements that
didn’t apply to the local companies. Rather than continue to "invest" in extended credit terms with uncertain prospects for re-payment, it decided instead to invest in the acquisition of one of its competitors in order to achieve the dominant scale it needed
to set new terms for the industry. 

Because management was willing to re-assess its options and take a bold step, it was rewarded with an acquisition that worked beyond everyone’s wildest dreams.

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