How ABM Should Change Its Business in Order to Enter UK - Case Study Example

How ABM should change its business in order to enter UK ABM is a US based company dealing with the provision of property maintenance services such as energy, electrical and integrated facility services. The company offers its service delivery in quite a number of ways in order to succeed in the market. First is the issue of on-site service delivery which enables the company to provide engineers who can give quick response to maintenance needs by customers. The second service delivery mechanism is through mobile maintenance in which small sites are visited and maintenance services such as lighting, plumbing and electrical services are offered. On-demand/call center are also used as alternative strategies to deal with the service delivery of the company. In this case sites that have daily maintenance needs such as groceries are catered for on-demand basis. However, these ways of doing business may not be appropriate for the UK. This is because multinational business involves a shift from one geographical, cultural and political environment to another. One way in which this company needs to change the way it conducts its business is by avoiding the use of on-site service delivery mechanism in conducting its business. It should rather establish its subsidiaries in the UK near its target customers and offer customized services; offering services in line with the needs, desires and preferences of its customers in the UK. This is due to the fact that the issue of distance matters in international business. In order for the company to prosper in the UK, given the issue of geographical distance, it may not be feasible for the company to establish onsite business in the UK as the business operates from the US. The costs and barriers associated with distance makes the company to make potential losses. The company should also avoid the use of mobile maintenance because the UK is mainly characterized by industrial clustering. In this case, industries with similar industrial activities or within the same industry are located close to each other (Porter 20). Therefore, it is important for the company to avoid mobile maintenance and use other mechanisms that may enable it to offer to many customers within an industrial clusters, e.g. many clusters located close to each other. If the company makes these changes in its business activities, it will still be able to make profits because it will be able to adapt to changes in international business. These changes will enable the company to maintain its business line while entering into new markets where new gaps and opportunities exist. As a result, the company will enjoy the benefits of expansion and economies of scale in international business. This includes the acquisition of new and wider range of customers. In other words, the company will increase its market share. As long as the issue of change in international involvement is adapted to, profits are feasible. After all, international involvement requires a change in ways of business and if this is done appropriately then the business will definitely still make profits. 2. First Solar’s Multinational Business Context First solar company is a company that offers solar cells as its primary products. Its technology is characterized by CdTe thin film technology which exhibits low-cost and moderate efficiency (Hallmon, Siegel and Burgelman 9). This technology is used in photovoltaic’s research and activities. The conversion rate of this technology is currently at approximately 11% which is expected to rise even more in the future. Good conversion efficiency of this technology has enabled the company to increase the cost-effectiveness of its electricity production. This technology is also simple, and this has enabled the company to enjoy lower costs than its competitors. In terms of its market, the company has been involved in offering its products to markets which offer subsidies. Germany, Spain and France are some of the countries which have a great concern for solar power (Hallmon, Siegel and Burgelman 7). In this regard, these countries have become the appropriate markets for First solar. This is because the countries in question have provided a good environment and offers subsidies that enable the business to reduce its costs and increase profitability. The company has devised a downstream integration as an entry strategy into the US. This is because the US does not offer subsidies like the European nations. Therefore, downstream integration was its main entry strategy to reduce costs in the competitive market. Most of the Customers of this company are located in the Europe. This is because the company is dominantly in operation in the UK. These customers are mainly residential, commercial, and utility solar consumers located in Germany and Spain among other European countries. However, there are also US customers of the company who are mainly systems integrators. Over the past decade, competition in solar industry has intensified. There are new companies in the market offering new technologies and winning the market. Some of the competitors include China’s Suntech power and Sharp electronics of Japan among others. Owing to increased competition and the nature of the company’s business, the company needs to involve itself in some activities that may boost international business strategies. Such strategies include arbitrage, aggregation and adaptation. In terms of adaptation, first solar should seek to adapt to new technologies in the changing solar industry in the world market. As competitors come up with new strategies, the company should be flexible enough to adapt to its environment. The company should also use aggregation. In this case, the company needs to accumulate its technologies in the world market and come up with an aggregate technology that can be used universally. The company also needs to use arbitrage strategy. In this case, the company should take advantage of difference in prices of products in different markets. The company purchases products in cheap markets and sells them in expensive markets. The company’s home base, portfolio, hub, platform and mandate can also enable the company to boost its multinational business. The European home base offers subsidies for solar businesses, so the company should use that source of capital to boost its international business. The company’s portfolio in different kinds of business lines may also enable the company to position itself well against risks in multinational business (Khanna, Palepu and Sinha Jayant 65). The hub and platform of the company is also good for multinational business in that the company’s European hub enables it gain many customers while its platform and mandate of dealing with a very vital product in the economy enables to be strategically placed in multinational business. 3. Zara’s Fashion products Zara Company is a multinational company which offers fashion products in the international market. The success of the company is attributed to the aggregation of unique value chain which may be disaggregated into: Vertical integration In-house production Gathering data for evidence Following with designs Manufacturing activities The company uses vertical integration as an international strategy instead of involving itself instead of outsourcing manufacturing in other countries where cost of production is low. The kind of production activities that add value to the company is are in-house production activities which involve offering designs to customers who have proven demand for the company’s fashion (Gallaugher 1). This involves gathering data as evidence that guides the company on the choice of designs to offer to the customers. This is often done in-house without outsourcing activities. Manufacturing activities also form part of the company’s main value chain activities. In this case, Zara Company manufactures designs that are targeted in the local market. These activities when aggregated make the company to achieve its multinational business objectives. From this analysis of Zara’s activities, it is clear that the success of the company relies mainly on the company’s strategy to keep activities within the company. It is therefore important for the company to keep activities within the company instead of outsourcing activities. Keeping activities within the company enables it to maintain its line of business where it is most familiar with and avoid risky and uncertain activities associated with outsourcing. Furthermore, keeping activities within the company increases the experience and skills of the manufacturing team. However, the company should offshore particular activities to other countries in the world. This should be done in similar by the company’s subsidiaries in the same manner as the mother company does. The offshore activities will enable the company to gain market share in the international market. Given the fact that the company manufactures its designs based on evidence from customers, the company may enjoy a worldwide customer loyalty if it off-shores its current value chain activities. Offshore of activities involves the transfer of local manufacturing personnel and capital to target international markets. The company will then manufacture its designs in the international destinations using its traditional methods from its country but sticking to the designs of international markets. In this process, the company will use its transported activities, hence keeping a constant line of business as it is from the local country. However, the company may use local distributors in the international destinations to gather data about the desired designs by customers and to distribute the company’s products. This should be done according to the set marketing plan from the company’s home country. In short, the company needs to operate as one; with its headquarters in the home country and subsidiaries in foreign countries. This is part of the company’s multinational strategy to maintain its operation in international business. This enables it to maintain its originality and offer its unique services universally in the world. The process also ensures that the company keeps product homogeneity across the world. Works cited Gallaugher, John M. Zara Case: Fast Fashion from Savvy Systems. 2008. Web. 6 Dec. 2012. Hallmon MJ, Siegel R and Burgelman R. First Solar, Inc. in 2010. 2010. Web. 6 Dec. 2012. Khanna, Tarun, Palepu Krishna, and Sinha Jayant. “Strategies That Fit Emerging Markets” Harvard Business Review 83.6 (2005): 63-76. Porter M. “Location, Competition, and Economic Development: Local Clusters in a Global Economy” Economic Development Quarterly 14.1 (2000): 15-34. Sull, D., and Turconi, S. Fast Fashion Lessons, Business Strategy Review, Summer 2008. Read More