The Spanish Engineering compan - Research Paper Example

Research Report Introduction For every multinational company, it is essential to select proper strategies for entering into new as well as unexplored markets and also expanding its business worldwide. There lay several companies that operate successfully in a niche market without expansion. However, there are also certain companies for which it becomes inevitable for them to enter into a new market in order to maximize their sales, increase their profit, create brand awareness and maintain stability. With this concern, the research paper intends to discuss and analyze a market entry strategy plan for a Spanish based engineering company, which would aid it in entering into new business markets and likewise expand business (DPCDSB, 2015). Business History The company is a renowned engineering company of Spain, which is operating in excess of 40 years. The company is highly experienced in electrical installations, industrial building, cooling, ventilating and heating. Moreover, the company is also engaged in producing fire fighting equipments, piping of chemicals and various liquid products, petroleum storage products as well as various types of foundations and structures. The company possesses an in-depth knowledge and experiences about various industrial sectors including oil, chemicals, food and beverage, plastic transformation, ceramic and iron and steel industries. In order to operate in the competing environment, it becomes necessary for the company to acquire detailed information regarding the market that would help in ensuring long-term sustainability and most vitally acquiring a better scope of market expansion opportunity. Since it is an engineering company, it has been able to acquire various technical as well as regulatory aspects of engineering that are of high demand in Spain. However, the company deals in various areas that include: Implementation of projects for storage or industrial facilities along with buildings Legalization of projects for the same Contracting out varied engineering associated services Source: (Enterprise Canada Network, 2015) Mission and Vision Statement The mission of the company is to acquire leadership position in the management as well as development of infrastructure along with other services. Apart from this, the company intends to create value for the stakeholders and at the same time focus on making greater level of sustainable development (Enterprise Canada Network, 2015). However, the vision of the company is to overcome various challenges of making sustainable development in the business activities in order to provide a better life for the present and future generation people (Enterprise Canada Network, 2015). Organizational Goals The primary organizational goal of the company is to provide premium quality services to the customers through an effective customer support that would facilitate higher customer satisfaction. Another major goal of the company is to attain a significant position in the field of engineering industry along with maintain long-term sustainability (Enterprise Canada Network, 2015). International Market Goals The Spanish Engineering company has established a significant position in Spain and it is planning to expand its market all over the nation along with other international countries with several objectives. These objectives included increasing the volume of sales, creating greater brand awareness and thereby maximizing the volume of profits. For the expansion of market in a global context, it is essential for the company to understand the social, political as well as economic complexities in the international market. The company is therefore intending to conduct a thorough market survey all around Spain and certain selected international countries wherein it is planning to expand its market. This will help in analyzing the internal as well as external business market environment, which will lead towards greater success in international expansion (Enterprise Canada Network, 2015). Locations and Facilities Since the company is situated in Spain, therefore the facilities of the company are located in the country itself. However, it is planning to expand its market to various international countries along with the enlargement in the figure of operating facilities. The company possesses the ability to manage large projects outside the country, which is one of its major advantages towards operating in the international business settings in an efficient way (Enterprise Canada Network, 2015). 2. Organization Ownership/Management/Staffing The Spanish engineering company is one of the most renowned engineering companies of Spain, which is performing varied operational functions for several years. It can be apparently observed that the company is providing its services to various small, medium as well as large scale business enterprises belonging to Spain. Thus, the company possesses adequate experience and knowledge about various industrial sectors that would contribute towards further growth and development of the company. However, the company holds an effective management, which supports the company in handling various critical situations. The employees and the staffs are being recruited from all over Spain all well as outside the country based upon their work experiences and merit to ensure their effectiveness. Proper training and development of the employees are also conducted by the management of the company to make them efficient in their respective work areas. Moreover, the employees and staffs are provided with various benefits and thus their satisfaction level is highly considered, as employee satisfaction leads to the success of any organization. Since the company is being operating for more than 40 years, therefore the management team of the same is likely to be experienced about the market scenario and also the staff are technically sound to perform various activities, leading towards the growth of the company (Enterprise Canada Network, 2015). Level of Commitment by Senior Management The top level management of the Spanish Engineering company is highly effective in managing various aspects of the organization and implementing strategic decisions that lead towards greater organizational success. However, the level of commitment in the organization by the top level management is much high and the same is being made in various areas including organizational safety and quality management. Organizational safety is one of the major aspects that contribute to the success of the organization. In order to make the workplace free from injuries and accidents, organizational safety plays an imperative part. Safety programs are being implemented by the company and proper training along with preventive measures are adopted for protecting the personnel from operational or organizational hazards. In addition, the company is highly committed in maintaining quality management in its organizational activities and provides better services to the customers (Enterprise Canada Network, 2015). Strategic Alliances For any company, an effective strategic alliance proves to be beneficial in expanding its business in new markets either in the domestic or the international country. Similarly, the Spanish Engineering company is also planning to establish strategic alliances with the organizations of domestic as well as international countries that would serve beneficial for the company to establish its business successfully in the new markets. The company has been planning to set up joint ventures with the companies through which the knowledge and resources can be shared with each other and therefore create a separate legal entity that would serve profitable for the company (Enterprise Canada Network, 2015; ASAE, 2014). Labor Market Issues Labor problems are common in every organization irrespective of whether it is a medium or large scale. It is one of the major factors, which hinders the performance and the productivity of the employees as well as the companies. In this regard, the Spanish engineering company also faces various labor market issues that would create an obstacle for the company to expand its business domestically as well as internationally. Spain was one of the countries, which got affected by the Euro-Zone crisis, making the unemployment rate to increase by a considerable degree. However, with time, the problem has solved to a certain extent and the labors are getting employed to various industries with the establishment of new business organizations in the country (Corujo, 2013). Skilled labors are easily available in the country, which is an advantage for the Spanish engineering company to improve its performance as well as productivity, but the discrepancies among the labor union may highly disrupt its working environment. Thus, effective measures are necessary to be taken by the company that would solve the labor issues and provide a stable working culture as well as support in expanding its market (Fundación de la Innovación, 2015). 3. Products and Services By taking into concern the business nature of the Spanish engineering company, it could be affirmed that the products and the services of this company are all technical based and therefore proper and effective maintenance is required to maintain the quality of services of the same. Amongst the services provided by the company, the decisive ones include electrical installations, industrial cooling, air-conditioning, ventilating, producing fire-fighting utensils, piping of petroleum and use of various chemicals. However, the company possesses certain competitive advantages that help it to operate in the competing environment and assure long-term sustainability. The company is viewed to be gaining huge experiences in various fields of its operating activities during the years of its operations, which would help in delivering the best possible engineering services to the clients. However, the company does not follow niche product strategy and thus there are various ranges of products and services of the company, which are being provided to various industrial sectors irrespective of the type of the industry. The main benefit, which can be obtained from the same, is raising the amount of sales and total turnover as well (Enterprise Canada Network, 2015). Considering that the Spanish engineering company does not operate in niche markets, there is no limited appeal for the products and services of this company. The services are oriented to various industrial sectors and the company tries to offer the best probable services to the customers. This would help the company to expand internationally as well as in the new markets with the high chance of acceptability of its products. If the company is able to maintain the quality of it services in international country along with providing the same according to their requirements, there will be a long-term demand for the products and services being provided by the company to the end users. Since the Spanish engineering company provides only services, therefore there lay least chances of the company to face any problem relating to tariffs, quotas or non tariff barriers. Thus, outsourcing is easily possible to various international countries without any restriction from the government of such nations, which is an added advantage for the company. However, it has to be kept in mind that for the success of international expansion or entering into a new market, it is highly essential to provide services to the clients as per their respective demand. It would serve more beneficial if the services are being modified or customized as per customers’ requirements (Enterprise Canada Network, 2015). 4. Market Overview of Spain Market Research While conducting the market research of Spain, it can be found that there has been an improvement in the economy of the nation after the Euro-zone crisis, which created a huge platform for the development and growth of various industries. As a result of the Euro-zone crisis, a significant downfall in the economy of Spain can be witnessed, which affected the industries prevalent in the nation. Gradually, the country was able to revive its economy that led the industries to prosper in the form of creating enormous opportunities for the business establishments to expand domestically as well as internationally. However, the market attractiveness of engineering industries in Spain depends on various factors including political along with economic environment, market size, key market segments and other market related factors. However, for the Spanish engineering company to expand its business in Spain, it is much essential to conduct an in-depth market research of the country that will help in understanding the demand for its services in the particular sector. This will help the company to expand successfully in the country along with earning huge amount of profit (Banco Santander, 2015; Berechet, 2014). Political Environment Spain is a sovereign state of European Union and it possesses a stable political environment that encourages the development of business establishments. Even though the King is the head of the country as well as the commander in chief, but the political system is typically based on parliamentary democracy. Therefore, Spain is a democratic country, which is being governed under constitutional monarchy in the form of parliamentary government. The respective government of the nation is highly cooperative with the local businessman and potential entrepreneurs, which motivates them to expand their respective businesses in the country. However, the role of the King in the country is ceremonial and thus the nation is being administered by the Spanish Government. Through legislative elections, the Prime Minister is being elected by the Parliament, who is regarded as the head of the government. The individual i.e. the Prime Minister holds the ultimate power and is responsible for the execution of various laws along with regulations. Overall, the political scenario of Spain is free from any turmoil and thus there exists a stable political environment. This encourages new business establishments in the country along with facilitates the existing companies to experience maximum growth as well as development. Therefore, the political environment prevailing in Spain would encourage successful expansion of the Spanish engineering company in the country (Berechet, 2014). Economic Environment The economic environment of a country also highly influences the success of any business firm. In this regard, the success of a company mainly depends upon the purchasing power of the consumers and this power mainly gets determined based on amount of income and availability of credit from the government. There are certain economic factors including interest rates, Gross Domestic Product (GDP), inflation and currency charges of a country that affects the growth and development of business in a country. However, in context to the expansion of Spanish engineering company in Spain, it is essential to consider the above discussed economic indicators. After starting recovery from the fiscal deficit since the year 2009, Spain has gained its economic stability to a greater extent and by the year 2018, it is predicted that the country will be able to revive completely. Majority of the people of Spain are unemployed and thus the household consumption is also reduced that results in lowered GDP. The current GDP of Spain is 2.19 percent of world economy, which is much lower in comparison with other developed countries. Specially mentioning, the strategic locations of the nation highly attract the foreign investors to invest in the economy and the government also encourages them to conduct the same. As the economy of Spain is still growing and foreign investors are emerging in the country, therefore it is a positive opportunity for the Spanish Engineering company to enter the new markets of the country in the form of earning more profit (Banco Santander, 2015). Tariff and Non Tariff Barriers It is worth mentioning that the Spanish engineering company would not face any sort of tariff as well as non-tariff barriers while entering into the new business markets of Spain because the company provides services rather than offering tangible products to the customers. However, the free trade agreement being passed in recent years would allow the company to expand its business in various international countries without paying any tariff for global trade (Datamonitor, 2010). Industry Trends and Other Market Factors Observably, there is a high demand for the engineering industry in Spain, as many new establishments are being developed in the country and thus these required services that can be provided by the Spanish engineering company. Moreover, the government rules and regulations also encourage the development of industries in the country and thus the entry of companies in new markets has become much easy. There are fewer competitors in the country to compete with the Spanish engineering company, which is an additional advantage. Labor and capital are also easily available in the country because of high rate of unemployment and easy credit availability from the financial institutions (Datamonitor, 2010). 5. Market Entry Strategy Selection Target Market Identification Depending upon the market scenario of Spain and analyzing its various environmental factors, it can be affirmed that the Spanish engineering company will be able to fulfill its desired target to get newly established in this nation and ensure long-term sustainability. Specially mentioning, as the company is well experienced with the food and beverage along with iron and steel industry, it can target these industrial sectors. If the company plans to expand internationally, it may target the industries that have high demand for the services being provided by the company. For this, a thorough market analysis of the foreign country is required, which will help in understanding the overall demand of the services to be offered by the company in the respective business markets(Enterprise Canada Network, 2015). Description of the Key Competitors A major competitive advantage of the Spanish Engineering company would be the less availability of the competitors in the country, which may help in its successful expansion. Even though there are fewer competitors in the market like Abantia and Comsa, the company can compete with these competitors through the implementation of proper strategies and providing services to the clients according to their demands (Abantia, 2015; COMSA, 2015). Entering the New Market There are various strategies being implemented by the companies to expand their respective businesses in new markets. In relation to the Spanish engineering company for entering a new market, it would be beneficial to select strategic alliance. Strategic alliance generally refers to a business arrangement in which two or more companies cooperate with each other for their mutual benefit. Both the partners may make strategic alliances with various resources of the companies including products, capital equipment, funding, expertise and intellectual property among others. Thus, the Spanish engineering company may make strategic alliance with the competing engineering companies established in Spain that would serve beneficial for the expansion of its business in the country. Similarly, with respect to international expansion, strategic alliance with the existing engineering companies of those countries would prove to be beneficial for successful international expansion of the Spanish engineering company. One of the major advantages of establishing strategic alliances is that the competitors can be easily converted into business partners thereby working collaboratively towards accomplishing a common objective. Since the engineering company is also planning to establish its business in the foreign countries, therefore the above discussed strategic alliance would be an important tool towards expanding its business successfully in the foreign countries (ASAE, 2014). Pricing Strategy Implementing a proper pricing strategy is essential for successful expansion of the engineering company in Spain as well as in the foreign countries. It would be beneficial for the company, if the prices of the services are being set based on the prices being charged by the competing companies. For this, it is necessary to conduct a detailed market survey for understanding customer demands with regards to a particular service based on which the prices of the services are to be charged. However, amongst the prevalent pricing strategies, penetrating pricing would be highly beneficial for the Spanish engineering company. Justifiably, using the penetrating pricing strategy, the company would charge lower price for the services at the initial stage of its business and thereafter increase the price after gaining significant market position both domestically and internationally (Spann, Fischer & Tellis, 2009). Promotion Strategy For the success of a business establishment, it is much essential to select an effective promotion strategy, which will help to promote its services to the targeted customers efficiently. Since the Spanish engineering company is going to expand its business in new markets, therefore it becomes necessary to promote its products in the respective markets that will help in creating brand and product awareness amid the people at large. However, advertisement may serve as the most effective means to promote the services to the targeted customers. As the targeted customers would be mainly the industrialists and the business owners, therefore it is important to select such medium, which can be easily accessible to them. Moreover, establishing a good relation with the potential customers will also help the company to promote its diverse range of services (Belch & Belch, 2003). 6. Regulatory and Logistical Issues Intellectual Property Protection For establishing new business establishments in Spain, the Spanish engineering company is required to follow the Spanish Copyright law, which will provide the right to ownership of the particular services offer by the company to the end users. Copyright protection is essential for a company, as it tends to prevent the misuse or copying products by other companies. Moreover, the approach of copyright protection would also help in securing confidential information of the company. However, violation of copyright of the Spanish Engineering company by any other person or companies is a severe offence and high penalty may be charged along with adopting strict legal actions. In addition, the company may also use patent rights that would also help in protecting the intellectual property of the company. Patent is generally the right that is being granted by the government of the respective country wherein a company is going to establish its business. With regards to the Spanish engineering company, patent would protect the process, new inventions and machines from being used or copied by other companies or individuals. The main theme of patent right is to protect the innovative ideas being implemented within the company by the company owner (Up Counsel Inc, 2015). Other Regulatory Issues There are various regulatory issues that may be faced by the Spanish engineering company in expanding its business in the new markets of Spain and other foreign countries. Permission and license should be taken by the government for setting up new establishments in a particular area of the country. Moreover, there are separate tax structure that are being applicable for various sectors of industry and thus the Spanish engineering company also requires to follow a particular tax structure. In addition the government has made it mandatory for every company having more than 50 employees to provide insurance facility to the employees and organizational members. The immigration laws being implemented by the governments of various countries may also arise as a question of concern for the companies to enter the new markets of foreign countries. As per the law, the companies those are planning to establish their respective businesses in other countries are being verified properly whether they are experienced enough to set establishments in those countries (The Heritage Foundation, 2015). 7. Risk Factors There are various market risk factors that may influence the expansion of the Spanish engineering company both domestically and internationally. The existence of competitors may evolve as a potential risk for the company, which would affect its successful expansion. Even though there are fewer competitors of the Spanish engineering company in the Spanish market, still there exists a risk from the existing players. Moreover, the economic turmoil in the domestic or foreign countries may also be a major risk factor for the company. It is not necessary that the economy would remain stable all the time and thus the fluctuation of economic situation of those countries may create difficulty to expand business successfully. In addition, decrease in the financial situation of the countries wherein the company is planning to establish its business may create difficulty to operate successfully and thus may suffer loss (Datamonitor, 2010). Non-availability of raw materials and fluctuations in the prices of raw materials could also be regarded as the crucial risk factors for the Spanish engineering company that may hamper its business operations at large. Thus all these market risk factors are non-avoidable and thus the company is required to implement effective strategic measures that would help to overcome the same. However, the company may also face risks relating to credit and currency, if it is expanding internationally. The change in price of the currency of one country against the other would affect the company to operate in the international country. Similarly, various political turmoil situations prevalent in Spain and other international countries wherein the company is going to establish business also affect its business operations (Datamonitor, 2010). 8. Implementation Plan Key Activities For proper implementation of the market entry plan, it is essential to focus on certain major areas that would help in the successful expansion of the business of the Spanish engineering company in Spain and other international countries. Major focus should be given on the targeted customers as well as their satisfaction in terms of providing them the best possible services and support. Market should be surveyed properly in order to understand the demand for the services being provided by the company and also thorough knowledge is also required to be acquired regarding its competitors. Proper promotion and pricing strategies should be selected that would create awareness among the targeted customers and increased attraction towards the company. Moreover, it is also necessary to understand properly various risk factors that are related with the company and based on which formulate effective strategies can be framed towards mitigating the same. Evaluation Criteria Process The success of the implementation of the plan would be based on the acceptability of services offer by the Spanish engineering company to the customers in Spain and other foreign countries. Regular monitoring is required to be made and also researches as well as surveys are required to be conducted for understanding the rate of acceptability. Expert personnel will be appointed by the company who will be responsible for tracking and monitoring the areas wherein improvement is necessary. References Abantia. (2015). The Abantia group, applied engineering solutions. Journal, pp. 1-3. ASAE. (2014). Benefits of strategic alliances and partnerships. Retrieved from http://www.asaecenter.org/AboutUs/content.cfm?ItemNumber=137633 Banco Santander. (2015). Spain: Economic and political outline. Retrieved from https://en.santandertrade.com/analyse-markets/spain/economic-political-outline Belch, G. E. & Belch, M. A. (2003). Advertising and promotion. Journal, pp. 1-23. Berechet, C. (2014). Legal and political environment in Spain. Retrieved from https://s3.amazonaws.com/ATR/case2014_spain.pdf COMSA. (2015). Construction infrastructures. Retrieved from http://www.comsaemte.com/wps/portal/ComsaEmteWP?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/WPen/WebPublica/Negocios/Area+de+Sitio+Construccion Corujo, B. S. (2013). Crisis and labor market in Spain. Journal, pp. 1-18. Datamonitor. (2010). In-depth PESTLE analysis. Country Analysis Report, pp. 1-83. DPCDSB. (2015). Why do companies expand internationally? Retrieved from http://www.dpcdsb.org/NR/rdonlyres/0535EFD9-639D-4D95-B7AA-461E34742340/63623/Chapter_221.pdf Enterprise Canada Network. (2015). Spanish engineering company specialized in projects for industrial sector is looking for partners for outsourcing / subcontracting agreement services. Retrieved from http://www.enterprisecanadanetwork.ca/?lid=VEA8W-9VKHJ-QM37N&comaction=profile&pkProfile=26961&sort_by=dtUpdated&sort_direct=DESC&offset=&intPage=3 Entrepreneur Media, Inc. (2015). 5 regulatory issues that could affect your business in 2015. Retrieved from http://www.entrepreneur.com/article/241915 Fundación de la Innovación. (2015). The labor market in Spain: trends and analysis. Retrieved from http://www.fundacionbankinter.org/system/documents/8930/original/Chap_I.pdf Spann, M., Fischer, M., & Tellis, G. J. (2009). Skimming or penetration? Strategic dynamic pricing for new products. Journal, pp. 1-52. The Heritage Foundation. (2015). Spain. Journal, pp. 403-404. Up Counsel Inc. (2015). Intellectual property protection. Retrieved from https://www.upcounsel.com/intellectual-property-protection Read More