Thus, it establishes a foothold in a new region without making a risky investment. In the mid-1990s, Autoliv used that approach to establish operations in East Europe and South America. Now it is doing so in Asia.
In South Korea, Autoliv formed a joint venture with Mando Machinery, the country's largest automotive supplier. And in Japan, it formed an alliance with NSK Corp. to produce seat belts.
This strategy 'has worked for Autoliv all over the world,' says Scott Upham, president of Provi-data Inc., a consulting firm based in Ann Arbor, Michigan. 'It is a very attractive strategy.'
Indeed, Europe accounted for only 50 percent of Autoliv's $4.2 billion revenue last year. North America generated 40 percent of sales and Asia accounted for 10 percent.
The exception to Autoliv's step-by-step strategy was the blockbuster acquisition of Morton International Inc.'s safety restraints business. The 1996 acquisition transformed the conservative Swedish company into the world's largest maker of airbags and seat belts.
In a new market, Autoliv starts by producing seat belts, says Autoliv President Lars Westerberg. Meanwhile, European and American suppliers initially supply components. Then, Autoliv gradually buys from local suppliers. Usually, the first locally made components are textiles and steel housings.
To run its overseas factories, Autoliv seeks local managers whenever possible. 'We have very few expatriate managers,' Westerberg says. 'They are very expensive, and they are only a temporary solution. They last for two or three years, and then they want to go back home.'