INTERNATIONAL STRATEGY - CASE STUDIES
DELFINGEN
Background
The core business of French-based group Delfingen is the manufacture of solutions to protect wiring harnesses in the automotive industry. Frenger International has maintained a close relationship with the company over nearly twenty years supporting Delfingen’s international business development in several continents (Europe, USA, Asia).
Frenger's role
Frenger was retained to develop and oversee delivery of an entry strategy for Delfingen into the US automotive manufacturing market.
The first stage was to analyse the main competitors of Delfingen in the USA and to evaluate the potential for Delfingen's innovative solutions. Based on this work, alternative entry routes were to be defined and evaluated strategically and financially.
The market was dominated by three key players sharing almost 90% of total product sales between them. Competition was very intense and only one of the three was making significant profits. The arrival of Delfingen in the USA via a greenfield venture would increase the level of competition further and therefore increase considerably the risks of failure and the time to break-even. It was therefore decided that an acquisition was the lowest risk option and the most likely to generate profits.
Conclusion
Frenger International subsequently managed the acquisition process for Delfingen in the USA. After initiating discussions with all three major competitors, Delfingen completed the acquisition of the number 2 and 3 players within 6 months. At a stroke, it had become the leading player in the US market with sales of $50m and plants in Michigan, Kentucky and Texas.
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