Page 266 -267 Which corporate international strategy would you classify ABB as u
ID: 467128 • Letter: P
Question
Page 266 -267
Which corporate international strategy would you classify ABB as using? Explain your answer.
Why has ABB used acquisitions and joint ventures as dominant entry modes in international markets?
What other alliances might make sense for ABB, and why?
Hitt, Ireland & Hoskisson. (2016). Strategic Management: Concepts and Cases: Competitiveness and Globalization, South-Western College Pub. 12th edition ISBN: 978-1305502147
Hitt, Ireland & Hoskisson. (2016). Strategic Management: Concepts and Cases: Competitiveness and Globalization, South-Western College Pub. 12th edition ISBN: 978-1305502147
Explanation / Answer
1.
ABB is using multi-domestic strategy to cater the markets across the globe. ABB has selected this strategy because they serve in different geographical territories around the world that differ on the basis of business environment, local needs and preferences, purchasing power, economic growth, stability as well as infrastructure level of the country. Thus, local responsiveness is a must to be successful in that particular region. Thus, ABB has adopted multi-domestic strategy to customize the product portfolio as per the local needs. That is the reason why the company is getting successful and enhancing reputation in the market.
2.
ABB has used acquisitions and joint ventures because it gives them an immediate / quick presence, understanding and market share in the business place. It has helped ABB to prevent the uncertainties of the future as they can start offering their products & service without any delay. Besides, acquisition and joint ventures give ABB a fair idea, knowledge and complex understanding of the market with an able ally who compliments ABB in strengths and competencies.
3.
ABB can also use licensing method of alliance. A new / existing company in a geographical area where ABB is not present, can acquire the license of ABB brand name after meeting quality specifications. In return, ABB will get royalty / monetary benefits due to the use of its brand name. It will popularize the ABB without entering into the market.
ABB can also collaborate with contract manufacturers who can work for ABB. Contract manufacturers will produce products under the brand name of ABB and ABB will market these products on a revenue sharing model basis.
Above methods are low cost and it can save capital investment on the part of ABB. Thus, ABB can think of these approaches also.
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