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Managing co-branding

strategies: Global brands


into local markets
Russell Abratt
Professor of Marketing, Huizenga Graduate School of
Business & Entrepreneurship, Nova South Eastern University,
Fort Lauderdale, Florida

Patience Motlana
Graduate Researcher, Graduate School of Business, University
of the Witwatersrand, Johannesburg, South Africa, and
Marketing Director, Malaika Farms, Johannesburg

Co-branding is an important
strategy for the transition of
brands. For multinational
companies with global brands, it
raises the chances of success in local
markets. For local firms with strong
brands, it secures their future through
foreign investment and access to technology
while maintaining consumer franchise and
loyalty. In this review of co-branding and its
relationship to consumer choice behavior, two
case studies in the food industry lead to a set of
guidelines for managers who want to use a cobranding strategy in brand transitions.

he transition of well-known local brands into


global ones is an important issue. Local brands
have high brand equity, whereas well-known
global brands have very little equity in local markets. Cobranding, a term used interchangeably with brand alliances, co-marketing, joint branding, and symbiotic marketing, involves the long- or short-term association or
combination of two or more individual brands, products,
or other distinctive proprietary assets to form a separate
and unique product. The brands can then be represented
physically or symbolically through the association of
brand names, logos, or other proprietary assets of the
composite brand.
As a strategy, co-branding has been very successful in the
United States. A number of co-branding agreements have
proliferated in a number of contexts, including advertisements, products, product placements, and retail outlets.
In South Africa, which reentered the global market in
1994 after years of isolation due to apartheid, there has
been an increase in merger and acquisition activity
because of many multinational companies wanting to
enter the post-apartheid South African market. The result
has been an increase in co-branding, with well-known
South African brands being taken over by international
brands that are not well known there.
Simonin and Ruth (1998) report that cooperative brand
activities have enjoyed a 40 percent annual growth rate in
the US. Co-branding is being used more and more as a
strategy for introducing consumer products. With the rising popularity of brand extensions and the use of brand
leveraging, many new products are launched as cobrands. Moreover, brand alliances are becoming more frequent as marketers try to capitalize on the complementary features of different brands.
The strategy of co-branding is becoming so commonly
used in brand transition because it builds on the inherent
equity of all the brands involved. During a transition
phase, both brand names are kept for a while, giving consumers and trade alike some time to adjust to the new
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product name. A common way to achieve consolidation is


by harmonizing the package designs and logotypes. This
ensures that those consumers who are loyal to the brand
that is to be discontinued gradually learn to appreciate
the visual language of the brand that is staying.
The links created by co-branding can either enhance or
detract from consumers perceptions of each constituent
brand and can act to create a new unique perception of
the co-branded product. One brand is presented in the
context of another, and vice versa, such that judgments
about the alliance are likely to be affected by prior attitudes toward the individual brands. Moreover, future
judgments about each brand are likely to be affected by
the context of the other. Attitudes toward the alliance
itself can even influence how both brands are evaluated.
Perceived fit of the products and of the brands may also
influence consumers attitudes toward a co-brand.
Dual branding gives the brands involved equal prominence. It often involves the use of a corporate or family
brand name together with a mono brand name. For
Nestls Kit-Kat chocolate bar, Nestl is the family brand
and Kit-Kat is the mono brand name. Moreover, co-branding can take on a variety of forms. These include: ingredient co-branding, such as Volvo advertising that it uses
Michelin tires; same company co-branding, such as Kraft
Lunchables teaming up with Oscar Mayer meats, another
Kraft product; and multi-sponsor co-branding, such as
Delta Airlines pairing with American Express through the
Sky Miles credit card.

Reasons for co-branding


Acquisition is one good reason to employ the strategy of
co-branding. Often, the acquiring company obtains a rich
archive of brand heritage that can be used to boost declining products. The strategy can help gain more marketplace
exposure and fend off any threats from competitors. It
limits the risks of entering into a new product category in
which consumers may question a new companys abilities. And it appears to be a winning proposition for compatible product categories.
Co-branding is also typically used as a marketing strategy
aimed at capitalizing on brand value. Dual branding plays
a key role by increasing the chance that the two products
will be regarded as being similar in quality. When two
brands are linked through a co-branding arrangement and
the target brand is not as well known as the context
brand, the effect of co-branding is to increase assimilation. Thus, the image of the target brand could converge
with the better-known brand and adopt its brand value in
the eyes of consumers. Rao, Qu, and Ruekert (1999) suggest that when a brand cannot effectively signal its high
quality, such as when it is first entering a new market, an
effective way to do so would be to form an alliance with a
relatively well-known brand.
44

Park, Jun, and Shocker (1996) suggest that two brand


names may provide greater assurance about product quality than one on its own. The fact that there is a second
brand name on a product may signal to potential buyers

The two names in a co-branded


product may give consumers more
information on which attributes
are important and thus make the
brands more attractive.
that another firm is willing to put its reputation on the
line. As long as both firms gain from the alliance, then the
alliance makes sense.
The financial risk of entering new markets is becoming
more and more expensive for product manufacturers. Rising media costs, more extensive and aggressive use of promotions by established firms, and the costs of obtaining
acceptable distribution levels apparently account in large
part for such a price tag. To enter new markets, then,
many firms are using established brand names. As valuable assets, brand names may be used together with others to form a synergistic alliance. The two names in a cobranded product may give consumers more information
on which attributes are important and thus make the
brands more attractive.

Co-branding and consumer


choice behavior

key issue in evaluating the effectiveness of cobranding as a strategy is to determine how the
impressions of one brand are transferred to or
affected by the brand to which it is strategically linked.
Levin and Levin (2000) argue that dual branding provides a
potentially strong context for evaluating the separate
brands. A dual branding situation involving a new component that is not well defined, yet is assumed to share the
same values as the other component, is likely to achieve the
greatest level of assimilation. The unknown brand has no
position in the minds of consumersthat is, no positive or
negative associations. It usually takes on the identity and
values of the known one. The consumer has not formed
any attitudes about it and thus associates it with the wellknown co-brand. It is important, then, for the unknown
Business Horizons / September-October 2002

brand to have the same quality and attributes as the wellknown one. If it does not, it could end up with dissatisfied
consumers, which will hurt the equity of the well-known
brand in the long run.
Park, Jun, and Shocker explored the effects of using a dual
brand and found that by combining two brands with complimentary attribute levels, the composite brand appears to
have a better attribute profile than a direct brand extension. This improved profile seems to enhance composite
brand effectiveness in influencing consumer choice and
preferences.
In making a choice, consumers are guided by a products
brand name, which serves as a cue for consumers and represents images they have formed based on past experience
with it, or on information they have obtained about it. A
variety of associations may have been developed around
brand names that are subsequently paired in a co-branding situation. Although the product may be new to the
consumer, the constituent names may not be. As a result,
the constituent brand names are used to help the consumer judge the co-branded product in the absence of any
other information. Co-branding and the links it creates
can either enhance or detract from consumer perceptions
of each constituent brand, and can create a new, unique
perception of the co-branded products.
Washburn, Till, and Priluck (2000) found that consumers
attitudes toward a particular brand alliance influenced
their subsequent attitudes toward the individual brands
that were part of the alliance. They also found that attitudes toward the partner brands prior to the alliance significantly affected attitudes toward the alliance.
Simonin and Ruth evaluated consumer attitudes toward
brand alliances and concluded that prior brand attitudes
as well as product and brand fit are related to attitudes
toward the brand alliance. They also found that brand
familiarity plays a key role in understanding brand
alliance evaluations and their spillover effects. In cases
where one brand in the co-branding situation is more
salient because of familiarity through advertising, it will
exert more influence on an evaluation of the composite
brand. If both brands are highly familiar, they contribute
equally to consumer evaluation of the alliance.

The study

ur study focuses on two cases in which co-branding was employed to introduce new international
brands into the South African market. The brands
were Danone, a French maker of yogurt, and McCain
Foods, a Canadian frozen food company. The choice of
local companies was determined by the fact that both
have huge brand equity with their current brands. Clover

Managing co-branding strategies: Global brands into local markets

SA is a dominant player in the yogurt market, and Irvin


and Johnson (I&J) is a major player in the frozen food
business. Danone had entered into a joint venture with
Clover SA in 1997 to establish a company called Danone
Clover. Danone had 55 percent of the equity and Clover
45 percent. McCain acquired 100 percent of I&Js frozen
vegetable division in July 2000.
The study was conducted by analyzing secondary data,
specifically, primary research reports the companies had
commissioned for their co-branding strategies. The aim
was to gain an understanding of how both companies
approached those strategies. The data obtained were studied using content analysis.

McCain Foods
In the year 2000, the total frozen vegetable market was valued at around R371 million (US$37 million). I&J dominated the market with a 66 percent volume share, while
the next biggest players, the retailer brands (Pick n Pay,
Shoprite Checkers, and Woolworths), accounted for
another 15 percent. From 1999 to 2000, the market experienced a steady decline in overall market
volume. Simultaneously, the fresh vegetable category was experiencing both
volume and value growth, mainly
because consumer preferences were
changing as consumers became more
health conscious. Frozen vegetable woes were further
compounded by the fact that fresh vegetables were receiving a lot of support from most major retailers.
Market penetration of frozen vegetables was fairly low at
around 35 percent. Despite this low penetration, however,
I&J was a very well recognized name among both consumer buyers and non-buyers. Spontaneous awareness
among buyers was in excess of 90 percent. Previous consumer research had indicated that I&J was synonymous
with frozen vegetables among consumers who had them
in their consumption profile. In fact, the I&J brand name
was closely associated with frozen foods in general.
There was relatively little activity in the frozen vegetable
market, and although I&J was the market leader it showed
virtually no evidence of innovation. With the market in
decline, I&J had to refocus its strategy on its core business,
frozen fish, so it placed its frozen vegetable division on
the market.
In July 2000, a deal was clinched
between I&J and McCain Foods of
Canada for McCain to become the new
owner of the frozen vegetable division. A world-renowned producer of
french fries and other frozen products, McCain
acquired the frozen vegetables and potato section of I&J
in an acquisition that involved both the food services

45

division and the retail division. Foreign-owned and foreign-based, McCain was virtually unknown in the South
African market. Moreover, although it was internationally
famous for its potato products, it was fairly new to frozen
vegetables. (Apart from Australia, the South African market
was the only place where it had taken on that category).
This meant there was no equity for the McCain brand
name in South Africa, whereas the I&J brand name had
substantial equity there. I&J products themselves were
sold under a spread of well-known names such as Young
and Tender, Harvestime, Table Top, and Catercraft. In
terms of I&Js brand portfolio, the sales volume share
structure was as follows: Young & Tender had 25.4 percent, Table Top 15.3 percent, and Harvestime 15 percent.
(Catercraft was very small at around 0.9 percent, and was
focused mainly on the catering industry).
The main concerns McCain had to contend with in
launching its brand in South Africa were:
I&J continuing to own the frozen fish category as well
as prepared foods. The fact that the I&J brand name
would still appear in frozen food retail outlets might
cause some confusion in consumers minds.
The challenge of efficient and effective brand transition. McCain wanted to make the transition as soon as
possible so that consumers would adjust fairly quickly
to the change. It did not want to prolong the process.
The issue of how to package the McCain brand name
to increase the chances of consumer acceptance.
The question of how to maintain the current consumer
base in I&J frozen vegetables, while at the same time
creating buy-in for the McCain brand.
Qualitative research was conducted in September 2000,
the primary focus of which was to understand (a) levels of
brand awareness for I&J frozen vegetables, (b) consumer
perceptions of the frozen vegetable market, (c) consumer
product preferences, (d) brand usage, and (e) consumption patterns. The researchers held eight focus group discussions with about 10 participants in each. Respondents
were taken from both buyers and non-buyers and were
spread across various demographic groupings. Apart from
the specific objectives mentioned above, the research was
also used as an opportunity to test the waters for the
McCain brand. In the initial research stages, consumers
were asked to respond to a number of questions about
their views on frozen vegetables and their favorite brands.
It became clear that I&J was a first choice in terms of
frozen vegetables for all consumer buyer groups.
Having completed the brand-specific research, consumers
were asked to sort the following brand packages into similar groups: Woolworths, Pick n Pay, Shoprite Checkers,
Top Crop, Young and Tender, Table Top, and Harvestime.
Consumers tended to group the better-known retailer
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brands together, with the exception of Woolworths (perceived as premium quality), which was grouped together
with the I&J brands. The exercise was repeated shortly
after, but it now included a McCain package, whose
graphics were very similar to those of I&J Young and Tender. The researchers found consumers again grouping the
retailer brands (Shoprite Checkers and Pick n Pay). Harvestime and Table Top, with similar pricing, were grouped
together, whereas Woolworths was classified alone. The

The research results confirmed


McCains suspicion that it would
be very difficult to break into the
local market by using its brand
name alone. Such a move would
lead to rejection even from loyal
I&J customers.
McCain package was placed together with the I&J package.
The rationale provided was that the consumers were taking their cue from the graphics as well as the colors employed to guide them.
Consumers were then asked to identify which brands they
bought frequently. In response to this question, most said
I&J. When asked which brand they would buy if that one
was not available, they tended to opt for either Harvestime
or Table Top, citing the fact that these were brands they
had already seen on the shelf.
The next part of the exercise had consumers evaluate a
package that was dual branded, with McCain fairly large
at the top of the package and the I&J logo in the main
body of the package and on the front panel. When the
consumers were asked to do another package sort, they
grouped this package with the I&J package. The rationale
they gave was that adding the I&J name to the McCain
package gave the assurance that the quality of the product
was the same as that of I&J.
The qualitative research conducted for McCain yielded a
number of interesting results. Respondents suggested that
if the I&J package was simply withdrawn from the market,
they would switch to competitor products that were
familiar to them. If I&J frozen vegetables were withdrawn
from the freezers and simply replaced with the McCain
brand, they would move off the brand totally. If their
usual I&J package was not available but there was a packBusiness Horizons / September-October 2002

age with the dual branding instead, respondents would be


more motivated to try it because the inclusion of the I&J
name gave them some assurance that the product would
be the same. The I&J brand name, it seemed, was the security blanket for most of them. In the absence of the dual
branded package, they would choose familiar brands such
as Table Top, Harvestime, or the house brands. All respondents agreed that McCain was unknown and therefore not
a safe choice.
These research results confirmed McCains suspicion that
it would be very difficult to break into the local market by
using its brand name alone. Such a move would lead to
rejection even from loyal I&J customers. Results also highlighted the fact that ultimately it was very important for a
company contemplating a name change to simply inform
consumers of what was happening.
In order to launch its brand name into the South African
environment, it would be critical for McCain to use a cobranding strategy. With the decision made, McCain management sought permission from the head of I&J to use
the I&J brand name together with the McCain name. Permission was duly granted and an agreement was drawn
up permitting McCain to use the I&J brand name on all
frozen vegetable packages that were previously branded
I&J. McCain could use the I&J name for a three-month
period effective from the time of launch into the retail
market. The use of dual branding would include all packaging, and reference could be made to the packaging in
printed communication. The strategy was to advertise the
co-brands in the print media only and have in-store promotion with the packaging highlighted.
The way the brand names would physically appear on all
packages was investigated thoroughly before deciding on
the preferred choice. The options presented were
to include a loose strip over the full package explaining
the transition and incorporating the I&J brand name
to include the I&J logo in the package design (as was
presented during the research)
to attach a fix-a-form to the package
The proposed options involved a number of issues. The
first was cost. The second was that of practical application.
The product was a wet product, so it would be nearly
impossible to keep a form attached to the frozen poly
bag. Special glue would have to be sourced. Ultimately,
because of cost considerations, management agreed to
include a 40mm strip the standard length of the poly bag
that contained both brand names on either side of the
width of the package. In addition, there was a statement
in between the two brand names informing consumers
that McCain was now the proud owner of all I&J frozen
vegetables and assuring consumers that they would con-

Managing co-branding strategies: Global brands into local markets

tinue to enjoy the same quality as they had come to expect from I&J. At the end of the third month after launch,
the 40mm strip was to be removed from the packages.
Advertising research suggested that after three months
there was still confusion as to what the brand name was.
Some consumers had clearly not made the mental switch.
Many still believed the brand was I&J. They had not fully
grasped the fact that a brand transition had occurred,
mainly because of the similar package colors and designs.

Clover Danone
Danone entered into the South African market in December 1995 through the purchase of a share in the Clover
company, South Africas leading fresh dairy producer. In
December 1997, an agreement was
signed with Clover to start up a company called Danone Clover, with 55
percent of the capital held by Danone
and 45 percent by Clover. At that time,
Clover was the biggest yogurt producer in South Africa,
with a 48 percent volume share. The next largest competitor had only a 15 percent share.
Although unknown in the South African market, Danone
was a very strong brand internationally. Similarly, Clover
was a solid brand in the South African market, having
very strong positive associations with dairy products. Previous consumer research had also indicated that consumers perceived Clover to be a high-quality brand.
In March 1998, Danone launched its first brand in South
Africa, Danone Corner yogurt. It was perceived as a very
innovative product for South Africans and helped gain
some brand recognition for Danone. The launch was
heavily supported on television and in print media, which
probably helped in terms of creating awareness for the
Danone brand. Danone still needed to co-brand with
Clover, however, because it could not maintain the high
cost of promotion and advertising for all the products,
especially the more mature ones. Co-branding, it believed,
would be the most cost-effective approach.
The strong launch of this new product, and the fact that
Danone owned more stock than Clover, convinced
Danone to capitalize on its success, and it began to
research the possibility of incorporating the Danone brand
name into all the traditional
Clover fruit yogurts. Consumer
studies, both qualitative and
quantitative, were conducted
in order to explore a number
of consumer perceptions of the two brands
involved. The research primarily sought to understand
consumers views on Clover the brand as well as Clover
yogurts. In terms of branding, the specific questions

47

addressed in the research were whether to brand the fruit


yogurts with Clover only, or co-brand them Clover
Danone.
The question of branding them Danone only was never
contemplated, for a number of reasons. Although an international company, Danone was relatively unknown in
South Africa. Danone Corner was very new and, despite
its apparent success, did not yet claim any substantial
market volume. Clover was a strong brand in South Africa
and it would probably be disastrous to remove the name
from the packages. The company believed the Clover
brand name could be leveraged more. The brand was
strongly associated with yogurt. And the name had very
strong positive quality perceptions.
The qualitative research also included a question about
the intention of purchasing the product if it was branded
in one of the ways being studied. In addition, marketers
explored the possibility of upweighting, or increasing, the
size of the dominant brand, Clover, as well as the alternative of upweighting the size of the Danone brand name to
determine how this would influence consumer preferences.
The question of intent to purchase the yogurt when
branded as either Clover or Danone yielded interesting
results. Researchers found that the intent to purchase was

exactly the same with Clover as it was with the combined


brand names. The association between Danone and the
yogurt developed as a result of the launch of the Danone
Corner. This appeared to have a positive influence on consumers preferences. Moreover, it appears that the quality
associations of both brands had a positive influence on
the perception of the composite brand.
The results of the research facilitated a decision to go with
dual branding, Clover Danone, which necessitated a redesign of all the Clover yogurt cups. The new design incorporated the Danone logo, which added to the already
strong branding of Clover by bringing to the fore attributes such as quality and innovation. Clover already had
the reputation for quality, and Danones high-profile
launch of Danone Corner reinforced consumer associations with these attributes.
Both brands were able to leverage off the equity each had.
Clover benefited from the international expertise of
Danone as well as the exposure it would gain with the
global brand over time. There were also gains to be made
for Clover because of Danones ability to innovate and the
quality associations the brand had. On the other hand,
Danone was able to leverage the huge brand equity Clover
had in the South African market, as well as Clovers strong
association with dairy products.

Figure 1
Comparative analysis of company co-branding strategies

48

Key tenets of co-branding


& consumer choice

McCain / I&J

Clover Danone

Short-term strategy to shift


brands and launch new product

Strategy employed over 3 months to


switch from I&J to McCain

Strategy appears to be more long-term


joint branding still used after 2 years

Leverage of brand names

McCain able to leverage high equity of


I&J brand name

Both brands able to leverage off each other

Product fit and brand fit

Brand names linked to same product


categoriesI&J and McCain both in
frozen foods

Brand names both linked to dairy products;


both companies have expertise in yogurt

Involvement of the consumer

Market research conducted to determine a


direction for co-branding

Market research conducted to determine a


direction for co-branding

Packaging implications

Co-branding involved a redesign of the


packaging to incorporate new brand name

Yogurt cups had to be redesigned to include


changes

Implementation of process

Needed to employ supplementary medium


to communicate changes

Needed to employ supplementary medium


to communicate changes

Evaluation of process

Advertising research and sales data used to


assess effectiveness of strategy

Consumer research and sales data used to


evaluate strategy

Business Horizons / September-October 2002

Sales results since the conclusion of the joint venture and


the rebranding to Clover Danone suggest that the cobranding had a positive impact on sales. Clover Danones
market share of yogurts increased from 48 percent in
1997 to 57 percent in 2000. The next biggest competitor,
Dairy Belle, had a 12 percent share, followed by Parmalat
with 11 percent. Awareness of Clover, both spontaneous
and aided, was very high.

nalysis of the secondary information presented


in these two cases allows us to draw a number of
conclusions about co-branding and its implementation, as summarized in Figure 1. Co-branding is an
effective strategy in terms of brand transition. In both
these cases, the firms wanted to build on the inherent
equity of the existing brands. Both McCain and Danone
were unknown in the South African environment, despite
their international prominence. By partnering their products with locally well-known brands, the perceived value of
the composite brands increased.
Some insights have also been gained on how consumers
evaluate co-branded products. The Clover-Danone case
indicated that co-branding enhanced consumers perceptions of the constituent brands. It also showed that linking a less familiar product with a more familiar one positively influenced consumers perceptions of the co-brand.
The McCain case was less successful, but it certainly was
not a complete failure. In terms of the effectiveness of cobranding as a strategy, one would conclude that it is very
effective for getting brand recognition and acceptance of
the lesser-known brand.
Co-branding could be a win-win strategy for both partners if implemented correctly. This is especially so in the
case of Clover Danone, where the strategy appears to be
more long-term. The lesser success of the McCain case was
due mainly to its short-term strategythree months compared to Danones three years. Thus, timing is a key to
successful implementation, and considerable study and
analysis are needed to ascertain the optimal length of the
transition period.
To move brands using a co-branding strategy, managers
must take into account five steps (see Figure 2). First, consumer perceptions are key. It is crucial to conduct market
research prior to simply changing brand names. Consumers must be fully apprised of the changes that are happening to their brand.
Second, product fit plays a vital role. Consumer perceptions of products in similar categories being co-branded
are more positive than if the categories differ. The bases of
fit include product-related attributes and benefits, as well

Managing co-branding strategies: Global brands into local markets

Figure 2
Brand transition process using co-branding

Understand consumer brand perceptions

Consider product fit of both brands

Leverage company strengths of both brands

Consider the packaging of the co-brand

Consider the timing of the transition

as benefits related to common usage situations or consumer segments.


Third, managers must leverage the strengths of the two
brands involved in co-branding. Each partner company
must use its particular strengths in order to ensure success
in the alliance.
Fourth, managers must consider the most effective way to
introduce the co-branded product. Its physical appearance
in terms of packaging is important. By maintaining the
core characteristics of the newly introduced brands packaging, a firm can positively influence consumers preference for the co-brand.
Finally, companies must establish the length of time the
transition strategy will last. This will obviously depend on
the costs and resources managers have for the task. It
appears that a longer transition period is better than a
shorter one. Time is needed to reduce the confusion consumers are likely to experience.
For multinational companies with global brands, cobranding raises the chances of product success in local
markets. For a local company with strong brands, it
secures their future through foreign investment and access
to technology. Above all, the consumer franchise and loyalty are maintained.

49

References and selected bibliography


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Bliss, Michael. 1996. Co-branding in Europe. International Journal of Bank Marketing 14/6: 36-40.
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Levin, Irwin P., and Aron M. Levin. 2000. Modeling the role of
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Park, C. Whan, Sung Youl Jun, and Allan D. Shocker. 1996. Composite branding alliances: An investigation of extension and
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Rao, Akshay R., Lu Qu, and Robert W. Ruekert. 1999. Signalling
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Business Horizons / September-October 2002

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