Present and Future of the Strategic Capabilities and Opportunities of the CFTP - Case Study Example

CASE STUDY: INTERNATIONAL DEVELOPMENT, CFTP: OPPORTUNITIES AND STRATEGIES Name Institution Professor Course Date Questions 1. Identify the present and future of the strategic capabilities and opportunities of the CFTP. Discuss and access the strengths and weakness of the capabilities. Strategic capabilities entail the set of resources, skills and capacities that helps in establishing a permanent competitive edge for business (Bruner 2004, p. 914). Strategic capabilities help firms to attain high returns besides establishing organisational dexterity. The present strategic capabilities for CFTP include its knowledge, relationships with members of the supply chain, skilful and quality management, expertise and engineering skills, competent workers, high-quality service, flexibility and speed, training opportunities for staff, younger team and adequate equipment. The future strategic capabilities include research and development, change, strategic alliances and partnership with local firms. With respect to research and development, the company has continuously practiced sustainable development through inventing and developing machineries that requires no chemical fertilizers. The firm’s core competences relate to satisfying the customers need and are founded on organisational knowledge and skills. The company also has distinctive capabilities that cannot be imitated by other firms besides threshold capabilities required for the firm to attain its needs to compete in the market. The firm also hold dynamic capabilities that allow its strategic capabilities to recreate and renew its strategies to meet the requirements of the changing business environment. The firms’ relationship with governmental regulations in host nations promotes its competitive edge. The firm’s market power is another capability that helps CFTP in attaining a competitive edge. This capability helps the firm to augment its bargaining power and attain economies of scale. Market power also allows the firm to anticipate surfacing prospect in foreign nations, coordinate vertical integration and augment profit margins. Strengths and Weaknesses of Capabilities The fact that CFTP hold adequate equipment, skilful workforce, capital resources, effective and inclusive management and training prospects ensures that the company provides high-quality services to its clients. These capabilities help the company in winning an extensive market-share besides securing a competitive edge. In addition, these strategic capabilities allow the company to win invitation to tender. The capabilities also place the company at a position where it can collaborate and cooperate with other companies which in turn help the company to gain easier access to the market. Collaborating and cooperating with other firms helps the firm to broaden its skills as the firm concentrates on its speciality. However, cooperating with other firms can lead to loss of market given that some firms can copy the expertise and skills of the firm. Sub-contracting or partnering with other companies can also lead to loss of market share and low pricing (Melle & Ulvoas 2010, p.6). CFTP hold the ability to engage in a group of firms when tendering. This form of tendering allows one firm to be the major contractor. This strategy make huge firm to dismiss sub-contractors prices thereby pushing small firms out of the business. The company can also choose to specialise in what it is good at and as a result can provide a competitive and satisfying prices. This strategy allows the firm to engage in partnership that facilitates understanding of market and provision of quality services. There are new prospects for the company in other countries such as north-African nations. Increased environmental concerns have increased the need for CFTP services, hence more opportunities for the company. 2. Discuss at least four different of the entry mode. Identify the advantage and disadvantage of the entry mode. Which one is the most suitable for the CFTP? Export CFTP has continued to grow due to the skills of its staff and the positioning of high-quality services in the home market. To ensure that the company penetrates foreign markets, it engages in exports. Exports entail one of the market entry strategies for international companies. According to Neelankavil (2009, p.147) exports are services and goods produced by a firm in home country and sold to clients in foreign country. Exporting is a simple entry strategy for small-medium-sized businesses. Advantages Exports offer firms a prospect to sell their products and services to other countries. This strategy increases the revenue and experience of the firm. Exports helps firms in attaining extra profits, test the market for expansion besides attainment of economies of scale in domestic operations. In addition, exporting enhances the productivity of a firm besides allowing firms to tap into novel market without investing much effort and time. Disadvantages Exporting market entry mode incurs increased transportation cost which can push a firm out of the market. Exporting firms also experience trade barriers in form of tariff and nontariff obstacles such as tedious goods inspection, extra documentation and additional certification. The company may also face issues with ineffective and inefficient local agents. Exports leads to comparatively lower return rates compared to other entry modes. Wholly-Owned Subsidiary Wholly-owned subsidiaries are a mode of market entry where the parent company own a hundred percent of the firm’s common stock. The parent firm own the shares of the firm and there lack minority shareholders in wholly-owned subsidiary. CFTP can establish other firms or local branches in foreign market and still maintain the ownership of the company. For instance, CFTP has invested in establishing local branches in other regions such as Hungray and Poland Advantages This entry mode allows the firm to maintain control of its core capabilities. Wholly-owned subsidiary offers a means of efficient control over the operations of the firm in diverse nations which makes easier international strategic coordination. Wholly-owned subsidiaries allow small business to locate their subsidiaries in cost-effective regions and serve other markets from these regions, hence economies of scale and augmented competitiveness. Disadvantages This mode of entry is expensive as it calls for huge capital. In addition, the danger of loss is noteworthy especially if a firm ventures in unproven markets. If a firm acquires to establish a foreign company, the integration of diverse cultures prompts management problems. Strategic Alliances In case of constructing a motorway in EU, specialised firms have to cooperate with each other. This collaboration entails strategic alliance. Strategic alliance entails an arrangement amid two firms to share resources to perform a given mutually beneficial task. Two or more firms pool resources to establish a separate business. In strategic alliance, every company uphold its independence while obtaining a novel prospect. Advantages Strategic alliances allow rapid entry into a market through exploiting the existing strengths of participants. These alliances allow firm to gain access to raw materials and technology. In strategic alliances, firms share cost and risks of the new venture Disadvantages Strategic alliances limit the return and control that every firm can enjoy. Companies may surrender control over technology, may hold inadequate control over other subsidiaries which function under the alliance. In addition, incompatible organisation cultures may trigger conflicts Joint Ventures While bidding for tender in EU, the call for tenders can be divided into smaller parts while interested firms can establish a group of firms where one of the firms is the major contractor. This entails a joint venture. A joint venture entails establishing a company that is jointly owned by two or more partners. In joint ventures partners share the ownership of a firm on equal basis. Advantages Joint ventures allow for transfer of skills and technologies, generation of sufficient funds for investments and lower risk. This mode of market entry ensures rapid short-term growth of sales on foreign markets and increased economic returns. Firms share cost and risks of the new venture. Disadvantages The management procedure may be laden with conflict and intricacies due to incompatible organisational cultures. Firm in joint ventures encounter delayed return on investments and investment risk. In joint ventures firms lose control of their resources. Drawing on the nature, advantages and disadvantages of each entry mode, wholly-owned subsidiary is the most suitable entry mode for CFTP because it increases the competitiveness of the firm. The firm also maintain the control of its core capabilities. 3. Using the CFTP case study identifies the factors (internal, external and culture) that are likely to affect the export business strategy (culture analysis and Porter’s diamond can be used). Any factors will more important for CFTP? Any counties will more suitable for the CFTP export business? Also identify the business level of CFTP. CFTP deals with the building sites for motorway borders, railway borders, waterway banks and changing old queries into green areas. The company’s main role is to restore green areas and stabilise the ground. With respect to Porter’s Diamond model there are several factors that affect export entry model for CFTP. These factors include Firm strategy, structure and rivalry, demand conditions, factor conditions and related and supporting industries. CFTP hold a practical organisational structure with effective management. The company is sectioned in to different departments where each department is tasked with a different role. The export department addresses the company exports and its target market includes restoration of industrial wasteland and transport infrastructure construction. The conditions set by the governing authority that calls for sustained development affect the firms export entry mode. The fact every local branch is managed young staff hired locally facilitates export (Melle & Ulvoas 2010, p.6). Competition in the industry can affect the export entry mode. Based on the case study, there are several firms offering similar services and hence to get a contract, the firm must bid to win a tender. Based on rivalry with other firms, the firm has to cooperate with other firms in their areas of speciality. With respect though demand condition, CFTP provides high-quality service measured with respect to the requirements, weather limitations and purchasing power of the richest nations. However to ensure successful export entry mode, the firm must adjust to the constraints and needs of foreign clients. Based on the factor condition, the company has enough human resources, capital resources, knowledge resources, physical resources and quality equipment to compete with rival firms. With respect to related supporting industries, there are numerous competitive supporting and supplying industries that CFTP can partner or collaborate with (Melle & Ulvoas 2010, p.6). The company favours partnership in co-contracting with local firms to respond to calls for tender. The company partners or sub-contract with other companies an aspect that allows the firm to provide competitive prices. Partnership with other firms allows the firm to understand the local market and their export needs. Internal factors that influence the CFTP export entry mode include control and experience. The company hold operational and strategic decision-making power. Control allows the firm to safeguard supplies; coordinate activities; guarantee quality products and influence marketing and logistical activities for products in its target market. However, in export entry mode, the exporting firm hold no power over marketing activities in its foreign markets and this negative affect the export entry model. The degree to which the firm has engaged in international operations also affects export entry mode. CFTP hold international experience in Morocco, ORGUD, Hungary, Poland and other regions (Melle & Ulvoas 2010, p.7). With respect to external factors, the CFTP export strategy has not been fruitful because the purchasing power of foreign clients is weaker and production factor becomes more restrictive and incompatible with the service price. The export strategy is also influenced by tax surplus and export tax. As a result the external factor affecting the firms’ export entry include government regulations, cost of doing business and intensity of competition. Competition in service provision and supply from other firms affects the firm export strategy. However, to overcome negative effects of export strategy, the company has the potential to recruit more staff, acquire or rent machines, purchase raw materials in their host nations to free itself from administrative limitations and exorbitant prices linked to exporting materials and transferring workers. Another external factor that affects the firm export strategy is culture. However, CFTP embraces cultural diversity through allowing its branches to be managed by managers recruited locally to avoid incompatibility caused by cultural differences (Melle & Ulvoas 2010, p.6). As a result, the company recognises and respects the culture of its host nations and this aspect helps in market penetration given that the managers hold perfect understandings of the local market With respect to power distance, CFTP embraces equality where both genders are represented in its management. Business level entails methods and plans that a company utilises to conduct diverse functions in its business operations. In CFTP, the manager is accountable for getting workers to do their duties and focus them in attaining the objectives and goals of the firm. The firm has a CEO and other unit managers who coordinate unit operations. The unit operations are divided into sections, departments and individual job roles. These groups are coordinated by their respective managers. For instance, Morgane Leroux is the CFTP operations Director but formerly, she was in charge of engineering and design department (Melle & Ulvoas 2010, p.8). As a result, the company makes use of human resources and it ensures that skilful manpower is in place for provision of quality services. The company hold effective and efficient resources, quality services that cannot be imitated. Drawing on the provisions of the case study, the company has a marketing unit, finance, unit, operations unit, human resources unit and research and development unit. . Reference List Bruner, R.(2004). Applied mergers and acquisitions. UK: John Wiley & Sons. Melle, D., & Ulvoas, G 2010, ‘ International development, CFTP ( French Landscaping Works Company): Opportunities and Strategies’, ESC Bretagne-Breast, 1-11. Neelankavil, J.P 2009. Basics of International business. USA: M.E Sharpe, Inc. Read More