Sany: Will It Be Sunny in Europe?
- Pages: 7
- Word count: 1544
- Category: Europe
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SANY being one of the leading companies in China in construction equipment manufacturing, set out to explore other international markets. The company’s success in India, the Middle East and North Africa boosted its confidence to enter more markets. It would be important for SANY to lay out risks and benefits of entering the European Market. Perhaps this is not the right time for SANY to invest in Europe because of the recession. At the moment the Eurozone has a lot of financial stress on it. This stress can eventually lead to a financial meltdown. In fact the best countries to invest in at the moment for SANY would be in developing countries especially as the economy is booming due to a rise in middle class and heavy domestic consumption of goods.
Another problem facing the organization was customer views and opinions in the European market. With a large inflow of Chinese joining the Asian population in Europe, Chinese became important contributors to growth of the European economy. Europeans had a mixed impression and attitude towards this change. For some, it was great opportunity to earn more money by manufacturing and selling high quality products or services and for others, Chinese businesses aggressiveness in low and mid-end markets, low cost productions and operations and rapid market development worried the Europeans. In addition to this, the intensive media exposure of the quality problems associated with ‘Made in China’ products and high import volumes from China, worsened the situation. This led to stricter quotas for import, increasing number of anti-dumping cases and high technical standard requirements for low end products. At the moment SANY are investing in ‘developing’ countries so standard of goods is not posed as a problem whereas in ‘developed’ countries the standard of goods and services is expected to be higher.
Another problem that SANY may face in Europe is competing with already established global players. SANY has to think about speed in European markets. SANY may need to add more capabilities to enter this market, along with a number of corporate functions need to be designed.
SANY needs to design a business strategy for entry into a new international market. The company needs to carefully design the strategy, develop necessary capabilities and adapt to local environments effectively. It would be challenging for SANY to enter Europe as the already well positioned German PM Group will provide tough competition.
SANY will have to realign its operating model to fit into the European mold. They would have to transport Sales and Marketing managers from China to work in Europe. In addition SANY also has to recruit local European staff in all the countries where they are expanding. Apart from the technical qualifications, the knowledge of English as well as other European languages would have to be a focal point.
SANY could also perhaps enter into a joint venture with another European company in the same or related industry to make the group’s entry into Europe smoother. The partner company need not be as large as the PM Group or Caterpillar.
In order to counter the intensive media exposure SANY should launch a viable advertising strategy and company should expand their product line and increase the standard of the products. This will help stable the intensive media exposure of the quality problems associated with ‘Made in China’ products.
The company’s success in India, the Middle East and North Africa shows that it might be best for SANY to invest in developing countries especially as the economy is booming due to a rise in middle class and heavy domestic consumption of goods. It could be considered to look at more developing countries as target markets.
Considering the Chinese businesses low cost productions, operations and rapid market development, SANY should emphasize its integration skills and should improve innovation in fields such as comfort, design, reliability, safety, user-friendliness and stability to beat its German competitors.
SANY has already launched its US plan but one of the main problems it faced was developing a right strategy to enter the European market and make it one of the most profitable markets for SANY. The best solution for SANY would be to develop and design a business strategy for entry into the Market that not only increases its profits in the market but also to catch up with those already established global players and industrial leaders. Along with this SANY should invest in standard of products, innovation as well as advertising.
The company needs to carefully design the strategy and develop necessary capabilities. The company needs to adapt to local environments effectively to help take down language barriers. It would be challenging for SANY to enter Europe and compete with established PM Group. To be able to do this, the company should realign its operating model to fit the European market. They should have highly trained Sales and Marketing managers from China joining the European group. This will help as SANY’s success can be attributed to its fast-paced and efficient quality improvement management. Heavy R&D; regular communication among engineers; sales and marketing staff and capability to access updated industrial information made the company innovative and responsive to the local Chinese market. In order to maintain the same Chinese essence of the company, in Europe, the company will need to bring in quality trained managers from China. It will also help as these managers would have good knowledge and training to help take the company forward. They would be able to understand all workings of SANY. SANY will also need to recruit local European staff in all the countries where they are expanding. This will add a fresh outlook to the company and could further help in developing the company.
The company needs to conduct sufficient market research to determine the correct country for entry into Europe. Choosing the correct country to enter the market, will protect SANY from future problems. SANY will need more capabilities to enter this market, along with a number of corporate functions that will need to be designed. The corporate functions will enable SANY to gain recognition and networking in the European Market.
In order to sustain its technological edge over its competitors, each year SANY is known to spend 5% of revenue on R&D to upgrade its products in line with the tenet of “Quality Changes the World”. The company should increase these while entering the European market in order to attract potential customers and also to compete with competitors. SANY should emphasize its integration skills and improve innovation in fields such as comfort, design, reliability, safety, user-friendliness and stability.
Due to the intensive media exposure of quality problems SANY should launch a viable advertising strategy emphasizing upon the group’s achievements globally, along with showcasing prestigious projects completed by them, for instance, The Hong Kong International Finance Centre. The media campaign should also encompass facts that SANY complies with European standards by focussing on the European Certifications like the German TUV Certification, that the company already has. This will also help in stabling the intensive media exposure of the quality problems associated with ‘Made in China’ products. Customers will be more satisfied with SANY’s products if they increase the standard of goods and services. This will be good for SANY as the company is already established itself in international markets and is a global competitor.
The concept described in the module deals with conflict and competition. Due to the concept of the case, competition between firms will be looked at in particular. SANY operates in a number of nations and in different cultures. The company’s 12 overseas affiliations cover over 130 countries and its products are exported to more than 80 countries and regions worldwide. It is also listed on the Shanghai Stock Exchange and its founder controlling stake of 42.7% in SANY Heavy Industry. Due to these reasons, CAGE Theory is extremely relevant to SANY. CAGE theory includes cultural differences, administrative and political distance, geographic distance and economic or welfare distance.
It helps organizations to distinguish between those markets that could be receptive to change and those that would be too costly to enter. CAGE Analysis can help SANY understand the difference and leap at foreign opportunities with far less risk. The differences in all of these can be vast when operating on an international scale like SANY. Cultural differences will be very relevant to SANY as the countries they operate in such as India, China, Middle East and North Africa. All of these countries have many languages, different religions and social norms. SANY has experienced this on a worldwide scale and therefore as a company, SANY will be able to conduct marketing on an international scale. Pricing strategies play a key role in international business as different countries’ markets have varying price levels.
The CAGE theory can be used to assess the European market according to three conditions, the market attractiveness to the new entrant, the likelihood and extend of competitors’ reaction as well as the competitors’ clout- the relative power to fight back. This is relevant in the case of SANY as they can conduct the required research according to Putzmeister (PM) Group and Catepillar.