(This is an abridged version of the case IMD-3-2051.) Danfoss decided to make China a second home market – aiming for growth of 50% a year and quadrupling sales in China by 2008. This case focuses on Danfoss China’s Motion Control division, which among other things sold frequency converters. As in many markets in China, the market in which Danfoss was competing had two major segments: the premium segment dominated by leading multinationals and the “good enough” segment where many of the key players are local Chinese companies. At the time of the case the good enough segment was growing about three times as quickly as the premium segment and Danfoss was thinking about entering this fast growing market. To do this Danfoss had evaluated several of the local Chinese players as acquisitions targets, and had picked Holip as the best potential target. Erhardt Jessen, a vice president of the division, has to recommend whether to acquire Holip and, if yes, the strategy that Danfoss Motion Controls should adopt for Holip. Key issues that he would have to address included the continued use of the Holip brand and the degree to which Holip should be integrated into Danfoss. The (A1) case is almost identical to the (A) case, but has less information on Holip. It describes the overall Danfoss situation and issues and describes in some detail the history of Holip, its business model and its strategy. The (A1) and (A2) cases allow the class to be split into two groups: one seeing the situation through the eyes of Danfoss and the other seeing the situation through the eyes of the Holip management team. This leads to a richer classroom discussion of the two perspectives than is possible if the whole class has read the (A) case.
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