DAIKIN AIRCONDITIONING INDIA PVT. LTD.: EXPANDING MARKETS
FROM INDIA TO AFRICA AND THE MIDDLE EAST CASE STUDY
SOLUTION
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SYNOPSIS
At the end of March 2023, Daikin Airconditioning India Private Limited (Daikin India), a wholly owned
subsidiary of Daikin Industries Limited (Daikin), reached the milestone of US$1 billion in turnover.2 It aimed
to surpass $2 billion in the next three years and to grow by 10 times in the next 10 years. Daikin, founded in
n
1924 and headquartered in Osaka, Japan, was the world’s largest maker of air conditioning (AC) equipment.
The company had entered the Indian market in 2000 and fared poorly there until 2009. In 2010, Kanwal Jeet
tio
Jawa, who had over three decades of experience in the AC business, had joined Daikin. Jawa, the first Indian
and inpatriate on the company’s Japanese board of directors, had turned around its Indian subsidiary, which
had since become a top player in India and South Asia. Did Jawa’s decision to expand production facilities to
lu
make India an export hub and to replicate the Indian AC model for Africa and the Middle East, as well as
other emerging markets, make sense? Should India be an alternative production destination for Daikin, given
So
the world’s prevailing post-pandemic “China plus one” strategy? Given that the AC industry grew through
incremental innovation and could therefore move quickly toward commoditization, could Daikin compete
with other rivals and grow sustainably in India and other emerging markets?
OBJECTIVES
• Identify the factors critical to successfully doing business in emerging markets.
• Evaluate the strategy for expanding internationally from one emerging market to other emerging markets.
• Analyze the impact of geopolitical tensions on the sustainability of the global supply chain.
• Evaluate the role of technological innovation in sustainability strategy to gain and maintain competitive
advantage in emerging markets.
• Recommend a strategy for developed market multinationals to compete and grow sustainably in
emerging markets.
The Case Solution Starts From page 5
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ASSIGNMENT QUESTIONS
1. How did Daikin India achieve its successful turnaround?
2. Why was Daikin India assigned to lead Daikin’s market entry in Africa and the Middle East?
3. Assess Daikin’s Africa and Middle East strategy and its implications.
4. Given that the AC industry grew through incremental innovation, could Daikin differentiate itself and
compete with other rivals to grow sustainably in India and other emerging markets?
5. How should Daikin have adjusted its strategy to account for rising geopolitical tensions?
The Case Solution Starts From page 5
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ANALYSIS
1. How did Daikin India achieve its successful turnaround?
lu
use the article “How to Win in Emerging Markets: Lessons from Japan,” by Ichii, Hattori,
and Michael (2012) to explain the challenges of many Japanese companies doing business in emerging
So
markets and then analyze how Daikin addressed these challenges and successfully turned around in India.
Many Japanese companies internationalized from the bottom in developed economies to the top of the
consumer pyramid in developing countries. However, these companies later struggled to move into the
middle and low-end market segments, where the profits could be made through economies of scale and
scope. To catch up with their rivals in these segments, they have had to formulate strategies to overcome
four structural challenges.
Structural Challenges for Companies Doing Business in Emerging Markets
Aversion to the Middle and Low-End Market Segments
Most companies that enter emerging economies look for their opportunities in the middle and low-end
segments of those markets. However, most Japanese companies have focused on the high-end segment and
used a strategy that makes them successful in developed markets. While the size of high-end segment in
developing countries is increasing, the competition in that segment is intense. Korean companies like LG
The Case Solution Starts From page 5
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pl
m
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EXHIBIT -2: SWOT ANALYSIS FOR DAIKIN INDIA
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INTERNAL FACTORS EXTERNAL FACTORS
Strengths Opportunities
tio
→ Emerging markets, particularly in India,
→ Localization and people-centred
Africa, the Middle East, and other Asian
management
lu
markets
→
→
POSITIVE →
→
So
FACTORS
→
→
→“
→
→
Weaknesses Threats
→ Weak institutional environment in emerging
→ Higher prices
markets
→ Increasing cost while having to keep
NEGATIVE →
FACTORS →
→
→
The Case Solution Starts From page 5
FROM INDIA TO AFRICA AND THE MIDDLE EAST CASE STUDY
SOLUTION
e
pl
m
Sa
SYNOPSIS
At the end of March 2023, Daikin Airconditioning India Private Limited (Daikin India), a wholly owned
subsidiary of Daikin Industries Limited (Daikin), reached the milestone of US$1 billion in turnover.2 It aimed
to surpass $2 billion in the next three years and to grow by 10 times in the next 10 years. Daikin, founded in
n
1924 and headquartered in Osaka, Japan, was the world’s largest maker of air conditioning (AC) equipment.
The company had entered the Indian market in 2000 and fared poorly there until 2009. In 2010, Kanwal Jeet
tio
Jawa, who had over three decades of experience in the AC business, had joined Daikin. Jawa, the first Indian
and inpatriate on the company’s Japanese board of directors, had turned around its Indian subsidiary, which
had since become a top player in India and South Asia. Did Jawa’s decision to expand production facilities to
lu
make India an export hub and to replicate the Indian AC model for Africa and the Middle East, as well as
other emerging markets, make sense? Should India be an alternative production destination for Daikin, given
So
the world’s prevailing post-pandemic “China plus one” strategy? Given that the AC industry grew through
incremental innovation and could therefore move quickly toward commoditization, could Daikin compete
with other rivals and grow sustainably in India and other emerging markets?
OBJECTIVES
• Identify the factors critical to successfully doing business in emerging markets.
• Evaluate the strategy for expanding internationally from one emerging market to other emerging markets.
• Analyze the impact of geopolitical tensions on the sustainability of the global supply chain.
• Evaluate the role of technological innovation in sustainability strategy to gain and maintain competitive
advantage in emerging markets.
• Recommend a strategy for developed market multinationals to compete and grow sustainably in
emerging markets.
The Case Solution Starts From page 5
, e
pl
m
Sa
n
tio
lu
So
ASSIGNMENT QUESTIONS
1. How did Daikin India achieve its successful turnaround?
2. Why was Daikin India assigned to lead Daikin’s market entry in Africa and the Middle East?
3. Assess Daikin’s Africa and Middle East strategy and its implications.
4. Given that the AC industry grew through incremental innovation, could Daikin differentiate itself and
compete with other rivals to grow sustainably in India and other emerging markets?
5. How should Daikin have adjusted its strategy to account for rising geopolitical tensions?
The Case Solution Starts From page 5
, e
pl
m
Sa
n
tio
ANALYSIS
1. How did Daikin India achieve its successful turnaround?
lu
use the article “How to Win in Emerging Markets: Lessons from Japan,” by Ichii, Hattori,
and Michael (2012) to explain the challenges of many Japanese companies doing business in emerging
So
markets and then analyze how Daikin addressed these challenges and successfully turned around in India.
Many Japanese companies internationalized from the bottom in developed economies to the top of the
consumer pyramid in developing countries. However, these companies later struggled to move into the
middle and low-end market segments, where the profits could be made through economies of scale and
scope. To catch up with their rivals in these segments, they have had to formulate strategies to overcome
four structural challenges.
Structural Challenges for Companies Doing Business in Emerging Markets
Aversion to the Middle and Low-End Market Segments
Most companies that enter emerging economies look for their opportunities in the middle and low-end
segments of those markets. However, most Japanese companies have focused on the high-end segment and
used a strategy that makes them successful in developed markets. While the size of high-end segment in
developing countries is increasing, the competition in that segment is intense. Korean companies like LG
The Case Solution Starts From page 5
, e
pl
m
Sa
EXHIBIT -2: SWOT ANALYSIS FOR DAIKIN INDIA
n
INTERNAL FACTORS EXTERNAL FACTORS
Strengths Opportunities
tio
→ Emerging markets, particularly in India,
→ Localization and people-centred
Africa, the Middle East, and other Asian
management
lu
markets
→
→
POSITIVE →
→
So
FACTORS
→
→
→“
→
→
Weaknesses Threats
→ Weak institutional environment in emerging
→ Higher prices
markets
→ Increasing cost while having to keep
NEGATIVE →
FACTORS →
→
→
The Case Solution Starts From page 5
