STRATEGY IN ACTION

Strategy in Action

Strategy in Action

Outline of the Study

The purpose of this study is to make a strategic plan to for the Davis Service Group Plc which is a large multi SBU organization currently operating in the UK and EU.

Discussion

The process of penetrating and then developing an international market is a difficult one, which many companies still identify as an Achilles' heel in their global capabilities (Horst, 2002). In fundamental terms, entering a new country-market is very like a start-up situation, with no sales, no marketing infrastructure in place, and little or no knowledge of the market. Despite this, companies usually treat this situation as if it were an extension of their business, a source of incremental revenues for existing products and services (Grant, 2001). Two aspects of the typical approach are particularly striking.

Critical review of the past performance

Davis Service Group Plc is a large multi SBU organization which is currently operating in UK and EU. In 2001 the company expanded its textile maintenance services operations through acquisitions in the enlarged EU area (Fiol, 2001). The company's financial statement and annual reports show that the company is very good and it has gained the competitive advantage through its best services and best products quality and gaining the increased profit every financial year. Given the success of the last expansion, the management team is now looking for ways to expand the company's geographical markets in the Far East (Erramilli, 2001). In particular they have decided to grow the tool hire (HSS) SBU by entering Australia organically because of the strong potential for tool hire in that large market.

Objectives for Entering a New Market

The company should first decide the main objective of entering the new market. Companies enter international markets for varying reasons, and these different objectives at the time of entry should produce different strategies, performance goals, and even forms of market participation (Day, 2008). Yet, companies frequently follow a standard market entry and development strategy. The most common, which will be described in the following section, is sometimes referred to as the “increasing commitment” pattern of market penetration, in which market entry is via an independent local distributor or partner with a later switch to a directly controlled subsidiary (Dahringer, 2001). This approach results from an objective of building a business in the country-market as quickly as possible but nevertheless with a degree of patience produced by the initial desire to minimize risk and by the need to learn about the country and market from a low base of knowledge (Coyne, 2006). These might be described as straightforward financial objectives that are oriented around long-run profit maximization in the country, so this internationalization strategy could be described as the default option.

Analysis of Firm's Specific Abilities

In order to enhance its function to Australia, the company should make a critical analysis on its own specific abilities. Firm-specific capabilities refer to what a firm can do with its assets. They include the cognitive processes by which the firm understands and translates its ...