IBX Global Resource Management - Case Study Example

IBX Case Analysis IBX Case Study Background & Introduction At the beginning of the 21st century era, globalization got contained to the world economies. It immensely came out as trend of the world trade system, and therefore it became the trend of the multinational corporations. Accepting globalization as method of progress, multinationals headed forward for growth and prosperity, which came through potencies of the internal resources (Forsgren, 2013). To achieve success in the longer run, it was the resource-based view which multinationals adopted. Though it was a daunting task to achieve success in the global market, but by putting on competencies in form of resources, multinationals were enabled to achieve this long-term success (Forsgren, 2013). IBX, which is one of the leading organizations in purchasing services market, adopted the same route of success (Currie, 2004). The organization relied on the resource-based approach to build up its marketplace and pace on the business field. To cross bridge of challenges, IBX as a multinational corporation adopted the route of strategic management. There came several ups and downs but after five years of progressive strategic management, the organization reached to the point of success, which ultimately its pioneers wanted (Forsgren, 2013). This study is a review of the IBX case, a multinational corporation that strives for success and prosperity in the global age. How the corporation created its value among customers and what strategies it adopted to achieve international market success are some questions which this study is going to answer. The purpose of this study is to analyze the case of IBX, by critically reflecting on the strengths and weaknesses of IBX’s global positioning strategy (Endara, 2006). IBX Case Analysis The Theoretical Perspective In contemporary times, business scholars have come around to understand the concept of multinationals, which reside on the global spectrum to conduct business and are inevitable to face challenges of the international level (Caligiuri & Stroh, 1995). The modern business theorists state that multinationals are always on the loop of international challenges, as this is how they are described as global organizations (Donleby, 2000). Conducting business across the borders and facing market competition from different countries is how multinationals proceed (Endara, 2006). Avoidance of the consistently travelling risk is never possible for multinationals (Rugman, 2013). These are some basic identification of multinational corporations. IBX being a start-up multinational falls in the same category of business (Caligiuri & Stroh, 1995). The organization contained major level of risk, uncertainty and market competition for which it required something distinctive and unique to come out to the global world standing. The organization needed a global positioning strategy to settle up its place at the international market (Rugman, 2013). The contemporary theorists identify that to drive the growth of a multinational requires strategic management of internal resources (Endara, 2006). It is the internal competitiveness of a multinational that enables it to do business on the global market level. Without developing internal capabilities, which are obviously from internal resources, a multinational cannot be signified as a multinational (Markusen & Maskus, 2001). It is mandatory for a multinational to adopt the resource-based approach, the approach that enables the organization to build its intrinsic force of drive. Similarly, it is mandatory for a multinational to consistently develop its internal resources to come out exceptional, peculiar and unique for the outer market environment (Forsgren, 2013). These are some basics, which IBX adopted to be called out as a leading multinational. IBX adopted the resource-based approach to begin its market related progression. Similarly, IBX incorporated the internal capabilities to come out distinctive and unique to the outer market environment. It was a journey of five aggressive years, which made IBX develop its internal strategic capability (Endara, 2006). Business scholars have also given importance to market orientation, which is a concept that leads to market worth and equity. This concept is a prerequisite, which a multinational has to fulfill in order to create value for its global market audience (Markusen & Maskus, 2001). Definitely, it is the mass consumer audience, which a multinational is looking up to capture, and to capture it significantly market orientation is the only competitive way possible. An argument stands out loud that those multinationals, which do not give much importance to strategic market orientation, are never able to achieve long-term market success (Carr & Markusen, 2001). Market orientation is one wheel of success, a pillar that gives foundation to the global organization. IBX do worked in this area of market orientation and therefore retrieved its global market worth and importance (Markusen, 1995). The organization builds its track for progressive market orientation, but at some point of time lost its value as it did not fully implied this strategic concept (Currie, 2004). Value creation was important for IBX in the purchase services market, where there is a lot competition and high value risk present, but this value creation was possible through market orientation, which is the most accepted marketing concept (Endara, 2006). The theory identifies another significant thing for a multinational and that is organization’s knowledge. Knowledge is important but it should be exceptional and unique knowledge and not an ordinary knowledge which mostly multinationals have (Markusen, 1995). When a multinational knows important things about its market which are unknown to competitors and market entities, comes out as an exceptional and unique knowledge (Charles A. Tryon, 2012). This kind of knowledge is truly a resource for the multinational, because it makes the organization proceed with higher competitiveness. IBX utilized its exceptional knowledge (e-procurement and supply relationships management-on demand) in the purchase services market, and this knowledge was reason of its growth and success in the market (Fernandez, 2008). IBX contained this exceptional knowledge and went on the value creation process by means of this vital knowledge (Fernandez, 2008). IBX in Search of the Value For a multinational, value creation is a significant process as what the modern business theorists signify (Mauborgne & Kim, 1997). They argue that to achieve the long-term market standing and business position, a multinational have to incorporate with its value creation process. Value creation is distinctive, it is according to what the consumers of the market demand and perceive (Barney, 2013). Definitely, it is the value that hits to the market audience and market competitors. Entering the market of oligopoly, where there were already big names to dominate, IBX came out with the distinctive value creation process (Amit & Zott, 2001). Value, which could distinguish IBX from its competitors, is something that the organization aimed for and worked for (Akio, 2005). Bizface, which was the earlier name of IBX, distinguished its value by means of unique market offers. It was e-procurement and the effective supply and distribution networks that made IBX to differentiate itself in the market. These were some of the valuable offers that made IBX induce itself in the highly competitive market (Amit & Zott, 2001). The literature on business precisely documents on the importance of value creation (Donleby, 2000). The literature asserts value creation is like a soul for an enterprise, especially the one that is moving across nations and showing diverse geographical visibility. Business theorists depict two types of value creation are important for such enterprises, emotional and functional which allow enterprises to intrude changing market situations (Qi, 2008). Leek and Christodoulides (2012) argues that functional value is more relevant or of importance to judge or acknowledge the position of an organization present at B2B (Leek & Christodoulides, 2012). Similarly, for IBX, which decisively remained on B2B, the functional value proposition is more relevant to understand and get comprehended. The authors assert that in B2B markets, organizations’ decisions are more inspired by functional qualities regardless of emotional branding which is only susceptible concept to individuals and not organizations as a system. Therefore, the need is to understand IBX’s functional value proposition rather than its emotional branding structure (Donleby, 2000). At the first, IBX offered innovative e-commerce by allowing suppliers and purchasers to become integrated at one forum (Qi, 2008). IBX integrated suppliers and buyers by means of e-procurement, which was a common solution IBX had for its mass global customers. This integration was exceptional as it was the first time ever any multinational “IBX” made this happen (Ho, 2013). This movement of supplier and buyer integration began with IBX value creation, which according to Kim and Mauborgne (1997) was innovative, highly advanced, and highly technological (Mauborgne & Kim, 1997). IBX incorporated value that was most suited to the contemporary times of business. The organization foreseeing the future involved those concepts in business, that were most liked and anticipated by modern times of business dwellers. It was the congruence of IBX with modern time, which made its value become highly productive and innovative. Kim and Mauborgne (1997) depict that organizations like IBX, which are aggressively innovative, have steeping financial growth. Their growth is unstoppable because of their styles of working which are highly innovative and highly productive. The authors points out to the importance of “value innovation” which IBX made and worked through in its period of performance and delivery (Mauborgne & Kim, 1997). Strategists at IBX worked decisively on the e-procurement section (Ho, 2013). They had the medium of e-commerce in their minds and therefore they started developing exceptional knowledge on e-procurement patterns and systems. The experience of the click-to-buy at Ericsson came out useful in this aspect (Endara, 2006). The IBX strategists utilized this experience to build their knowledge on E-Systems allowing them to offer unique value to the global market audience (Hartmann, 2001). Using the knowledge of e-procurement systems, IBX administrators brought both suppliers and buyers at one place, at one platform (e-procurement) of business and trade (Endara, 2006). They offered this common platform to get shared by all parties, dividing the cost and the benefit of the service equally in all entities. This was how IBX offered the cheapest solution to both suppliers and purchasers, becoming the pioneer in the e-purchasing business segment (Currie, 2004). The theorists contemplate that it is not entirely the unique value offering that enables the organization success. Adding to the unique value, a competitive strategy is needed by an organization in order to translate its valuable offerings to success and performance (James, 2012). Boo.com (an online cloth retailer) despite carrying the unique value failed to deliver because of its low-competitive strategy (Barney, 2013). By keeping a poor strategy, the website failed to translate its unique offerings into success and performance. The theorists argue that the core reason behind IBX initial success was it that it was able to translate its value system into success, By means of a global positioning strategy; IBX translated its value offerings into performance and success. In this way, it can be said that the comparative advantage, which IBX received at the initial level, was because of its aggressive global positioning strategy. The primary strength, which IBX had, was its global strategy, which enabled it to define and incorporate its value offerings (Endara, 2006). Adding to the value IBX offered the strategists work in a deliberate strategic way. Their direction was clear for creating value through strategic means. IBX confirmed its place in the global paradigm, by evolving its deliberate Corporate and SRM strategies (ROM, 2013). These strategies provided the reason to IBX to become a global leading organization. These strategies are actually what describe IBX’s distinctiveness and peculiarity in the purchase services segment (Endara, 2006). IBX global resource management According to contemporary business theorists, multinationals reside in precise market competition, and in that case they need to have internal resource capabilities to face that consistent amount of market rivalry. Actually, internal resource capabilities enable a multinational to obtain comparative advantage (Akio, 2005). The comparative advantage theory states that organizations like IBX, which are present on wider scale of business, should build their internal resource capabilities by keeping and adopting a comprehensive approach like “resource-based view”. The case of IBX indicates that strategists at IBX kept the resource-based view. They implied it as a culture of IBX in order to find the ultimate true success (Akio, 2005). The theorists argue that one of the secrets behind IBX’s success was its resource-based approach. Keeping the resource-base view the decision makers at IBX planned the expansion with transgression (Shapiro, 2006). This transgressive expansion enabled IBX to bring its feet on different geographies (Shapiro, 2006). The first expansion was on Nordic region, where IBX expanded as a pioneer of e-Procurement. Bringing the exceptional knowledge of e-Procurement, IBX induced its name in different Nordic countries including Finland, Norway and Sweden. This was the beginning of the organization’s success, starting off with a strategic and comprehensive approach “the resource-based view” (Akio, 2005). Exceptional knowledge of the industry is another significant reason of why IBX succeeded. The business scholars argue that uncommon knowledge is igniter of success of a multinational facing direct market competition or rivalry (Robinson, 2008). Theorists argue that exceptional knowledge is futile until and unless it is brought to some profound use of action. It is evident from the case of IBX that strategists at IBX made the best use of their exceptional and uncommon knowledge. The strategists knew about the unmet customer needs of the market (Endara, 2006). They knew about the managerial competencies that had to secure market competency and they knew about the comparative advantage of the merger with Swedish Gambro Corporation. Utilizing all this exceptional knowledge, strategists at IBX build their track towards success and inevitably towards effective global resource management (Caligiuri & Stroh, 1995). Utilizing the knowledge to its best and the resources to their best, IBX strategists planned out their route to effective global resource management. The strategists worked in order to achieve the right comparative advantage by utilizing the resources to their right competencies, and directions (ROM, 2013). At the beginning of 2001 IBX planned its effective global resource management policy. It was September 27th 2001 when IBX joined a new Nordic venture “Novo Nordisk”. From here IBX continued its growth and progress in the Nordic region. It was after two months of the new member’s joining, IBX received a five-year contract to manage Norway’s public sector domain by the Norwegian government (Qi, 2008). This was a one step further to growth and prosperity of IBX. The business theorists argue that whenever a multinational expands, it seeks for the right market opportunity. Opportunities are important as only opportunist organizations receive comparative advantages or able to secure the potential for the longer run (Endara, 2006). The best thing about IBX was that it never got late on opportunities. The organization’s expansion vision was great as it retired on every market opportunity that was being present or was prevalent. The thinkers and planners at IBX always kept a broad vision (Amit & Zott, 2001). Initially, they planned a strategy that could bring a decent start to the organization and later they deployed strategies that made the organization expand to multiple geographies. This was the vision of the greater Peter Lageson (Senior Vice President at IBX), which made the organization march for its ultimate growth and prosperity (Endara, 2006). IBX next step was expansion to Europe. There were major economies of scale present for IBX if it had utilized the opportunities of the European market rightly and timely (Tallman, 1997). The first expansion, which was made to France, came out as a failure. Business experts argue that it was the lack of commitment with clients, which brought IBX to a backdrop situation in the French market (James, 2012). However, to recover the position in Europe and to come out well to the global resource management policy objective, IBX contracted Trimondo. This contract allowed IBX to intake 5,000 suppliers present across the borders in more than 15 countries (James, 2012). The contemporary business experts argue that when multinationals expand, they always are in search of the partners (Tallman, 1997). Actually, these partners are what give the support and the backing required by the multinationals to expand. The same act of expansion was seen by IBX when it contracted Trimondo (a German contractor). The business experts at IBX tell that merging with the German contractor made IBX strengthened its position in the German market. IBX made revenues of $4.8 million just after contracting Trimondo. It was a deal that gave IBX a reason to expand to the German market (Endara, 2006). At the conclusive period of 2005, IBX came out aggressive with its global resource management policy objective. In November 2005, the organization signed contract with IKEA, which was at that time a prominent name in furniture retail (Barney, 2013). IKEA was a famous brand to import and export furniture worldwide. Right after this important contract, IBX signed another significant contract with the Lego Group, which was at that time one of the most powerful brands to provide e-commerce solutions. The deals made IBX strengthen its position on the global resource management policy (Klimek, 2011). Signing the contracts, IBX was successful to implement its suppliers network at the global market level (Donleby, 2000). This is how anchoring different countries’ market; IBX came out effectively with its digital solutions including e-procurement, e-payment and e-outsourcing. At this point, IBX was not restricted to one particular market but it was ready to provide apprehensive solutions to the global market audience (Donleby, 2000). These digital solutions of IBX proved out best for the world economies, best for environments and people of different countries and societies. The IBX solutions were entirely eco-friendly because they were all to cut down the use of natural resource involved in any logistics or offline trade purchasing (Endara, 2006). Now after 2006 the only challenge for IBX was to maintain its original pace of growth and prosperity. The challenge was to maintain the position in front of global competitors who were in imitation of IBX processes, value chain and the competitive price model respectively. Korsaa, (2010) argues that an organization’s original test is in front of its competitors (Korsaa, 2010). The better the organization performs in front of competitors, the more probable it is towards growth and prosperity (Amit & Zott, 2001). IBX contained its position of performance among its global rivalries, which were also in plans of expansion and cost optimization (Amit & Zott, 2001). IBX out classed the rivalry by opening up with its effective global positioning model. The anchoring strategy of IBX enabled it to perform within the pool of rivalry, which was intensive and was precise in affecting or breaking IBX’s anchoring tactics (Currie, 2004). Currie (2004) asserts that a multinational like IBX, which is present on the global market level, holds the tendency to expand. This expansion leads organization to growth and prosperity because it attains the comparative advantage required by the organization at the global market level (Currie, 2004). The Case of IBX tells that above all factors, IBX strategists’ reliance on internal resource capabilities is one of the prominent success factors of IBX (Forsgren, 2013). Without developing internal resources, it was impossible for IBX to become a global market leader. Building resources by means of process optimization and process transparency is how IBX performed and delivered. Those were competitive business models, employees’ rich experiences, and the exceptional knowledge of the organization that powered the internal resources of IBX. These powered resources ultimately brought down success for IBX (Ho, 2013). As the business theorists suggest, resource-based approach is what wins an organization ultimately in the longer duration of time and in the major market level. These are intrinsic competencies that win outer opportunities of the market and the market environment. The same is what IBX case tells that the organization’s reliance on internal potencies is great and consistent (Ho, 2013). It was because of internal capabilities, IBX translated its global positioning strategy into global market success and performance (Akio, 2005). Recommendations The success of IBX tells that the organization strategic agenda has remained positive and successful (Forsgren, 2013). The strategists at IBX took decisions that added to organization’s growth and prosperity. However, there were some alternative tactics, which IBX strategists could have played in the global market spectrum (Shapiro, 2006). This section is presenting some recommendations for IBX, in regards of the organization’s global positioning strategy and IBX’s value offering. The recommendations are about some alternatives, which IBX strategists could have taken at the time of market expansion and at the time of intensive market rivalry (Leek & Christodoulides, 2012). Contemporary experts of business argue that when organizations expand it leaves a cue for competitors that something is happening in the market. Currie (2004) argues that expansion should be clever as that it should not alert or stimulate the competitors (Currie, 2004). In case of IBX, the organization has to revamp its expansion strategy. Just moving and rushing across the borders is not how things will work in the future for IBX. IBX will have to think that how it will meet its giant competitors SAP, Ariba and Oracle which are in direct competition with IBX and IBX services (Donleby, 2000). The need is to understand the market oligopoly, which is high and prominent for IBX and IBX services. A mediation approach has to be adopted by IBX strategists for signaling its market rivalries, because if cues are revealed, the chances for new entrants to enter are wide open (Endara, 2006). The decision for merging with CommerceOne was a positive decision of IBX strategists. The decision was positive but it was not to its ultimate consequences. IBX instead of merging with CommerceOne should have acquired this facility completely (Amit & Zott, 2001). It was rich software experience, which IBX could have attained after attaining CommerceOne. For building software packages IBX always needed its partner CommerceOne. If IBX have taken the full responsibility, the full stake of CommerceOne, things would entirely be on the IBX control and possession (Amit & Zott, 2001). Dependency on partners for constructing e-solutions would have gone done if IBX have fully taken the CommerceOne website. Moreover, if CommerceOne was taken over, IBX did not required any internal fund raising which was needed at the time of Skanska’s order. The requirement of the order would have met quite easily if CommerceOne was IBX itself (Korsaa, 2010). These were some shortcomings, which IBX faced after backing off from the CommerceOne take over (Korsaa, 2010). It can be argued that IBX should have tried other options for fund raising instead of going to the public or taking into account the IPO option (Markusen, 1995). These options should have been the last ones especially for a company like IBX, which has out-proven its success in the global market level. IBX should have brought the venture partners to bring out their stakes (Qi, 2008). This is how private enterprises work, as they raise funds by taking the supporting of private partners instead of calling out the public entities. In this regard, the joining up of the venture capital partner “Cap Gemini” was a good strategic move of IBX. This joining ultimately gave full hand support to IBX to raise its funds and capital. However, the future will more clearly tell that how this venture will work out for IBX. For the present time being, it is an encouraging and good decision of IBX strategists (Qi, 2008). On a generalizing node, it can be stated that IBX should maintain its dominance in the market. Becoming responsible of the global resource system, now its responsibility of IBX to contain this legacy for the longer aspect of time (Akio, 2005). Definitely, if IBX evolves with the same agenda of change and transgression, it will prove out to its point of success and survivorship. This is how leader companies evolve and therefore it is recommended to IBX and IBX visionaries that they maintain the prestige that have carried out so long in the market (Endara, 2006). Conclusion This review of IBX case brings a comprehensive view about multinationals. How multinationals proceed especially when they are at the trajectory of the global market competition is the question which review study has answered. The case of IBX signifies that without developing internal resource capabilities, a multinational can hardly stay at its position of a multinational. This is the basic identification of a multinational that it has the right intrinsic strength, the right intrinsic potential to capture the global market audience. IBX faced several ups and down at its journey of success and performance but the fact is that the organization proceeded consistently in developing its core-competencies. Becoming a “value innovator” was not so easy for IBX but by developing the intrinsic strength-the intrinsic capabilities, IBX made so happen. Moreover, it can be said that it was IBX’s leadership that gave the confidence to the IBX individuals and IBX stake partners. Without the aggressive vision of IBX’s leadership, it was impossible for the company to become the global leader in e-commerce. List of References Akio, T., 2005. The Critical Assessment of the Resource- Based View Of Strategic Management. Ritsumeikan International Affairs, 3, pp.125-50. Amit, R. & Zott, C., 2001. Value Creation in E-Business. Strategic Management Journal, 22, pp.493-520. Barney, M., 2013. Leading Value Creation: Organizational Science, Bioinspiration, and the Cue See Model. New York: Palgrave Macmillan. Caligiuri, P. & Stroh, L., 1995. Multinational Corporation Management Strategies and International HR Practices. The International Journal of Human Resource Management, 6(3), pp.495-506. 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