and Rapid Growth Arild Aspelund Outline The traditional categorization of entry modes Characteristics in terms of Resource commitment Control Flexibility Efficiency Hybrid structures Entry modes under resource constraints and rapid ID: 244231
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Slide1
International Entry Strategies and Rapid Growth
Arild
AspelundSlide2
OutlineThe
traditional categorization of entry modes
Characteristics in terms of:
Resource commitment
Control
Flexibility
Efficiency
Hybrid structures
Entry modes under resource constraints and rapid
growth
The
role
of
social
capital
Some
examples
from
Norwegian
High
Tech
Start-UpsSlide3
What are Entry Modes?Often cited in order of commitment and control
Direct Sales / Export Sales
License / Franchise
Agent / Distributor
Sales Office
Joint Venture
Acquisition
Wholly-Owned Subsidiary
Hybrid structures can be a combination of any of these, but often includes a partner.Slide4
Entry modes (1)Export SalesResource commitment
Low
Control
High
Flexibility
High
Efficiency
Low
License / Franchise
Resource commitment
Low
Control
Medium
Flexibility
Medium to low
Efficiency
HighSlide5
Entry modes (2)Agent / DistributorResource commitment
Low
Control
Low
Flexibility
High
Efficiency
Medium to high
Sales Office
Resource commitment
Medium
Control
High
Flexibility
Medium
Efficiency
MediumSlide6
Entry modes (3)Joint VentureResource commitment
Medium
Control
Medium to High
Flexibility
Low
Efficiency
Medium
Acquisition
Resource commitment
High
Control
High
Flexibility
Medium
Efficiency
Medium to HighSlide7
Entry modes (4)Wholly-Owned SubsidiaryResource commitment
High
Control
High
Flexibility
Medium to High
Efficiency
Medium
Hybrid Structures
Resource commitment
Low
Control
Low
Flexibility
Case specific
Efficiency
Case specificSlide8
Some Examples of Hybrid Structures (1)Taken from Gabrielsson and Kirpalani (2004)
MNCs acting as system integrators
Examples:
PC brand makers (e.g. PCs and Logitech)
Hardware and software suppliers (e.g. Motorola and Opera Software)Slide9
Some Examples of Hybrid Structures (2)Taken from Gabrielsson and Kirpalani (2004)
MNCs distributing complementary products/services, also often called client followership (
Bell, Crick and Young, 2004
)
Examples:
Internet providors (Telenor and Norman Antivirus)
B2B/C end product supplier (Johnson and Johnson)Slide10
Some Examples of Hybrid Structures (3)Taken from Gabrielsson and Kirpalani (2004)
Value net partners; technology and marketing partners
Examples:
Software developers (e.g. Linux and ez.no)
High-end commodities (Italian design) Slide11
Some Examples of Hybrid Structures (4)Taken from Gabrielsson and Kirpalani (2004)
Internet as infrastructure: distribution, marketing, customer interaction, and sales
Examples:
Internet retailers (Amazon or Play.com)
Niche oriented commodities (African art)Slide12
Managerial Lessons
Managerial Lessons
There are many examples of entry modes that are not in mainstream marketing textbooks
Creativity only limitation!
The
“international entrepreneurship – performance” dilemma
Is
it safe to rely on channels that you do not own?
Examples here are examples of new entry modes – might not be good examples of international marketing development
Build alternative channels with higher degrees of control
When establishing cooperative structures - make sure you do end up locked
inSlide13
Siebel SystemsSlide14
Siebel Systems
How can you describe Siebel’s business model?
How does it compare to others at the time of the establishment of the venture?
How does Siebel use partners for marketing purposes?
Which effects does this have for the firm’s possibilities for growth?
Do you think Siebel could have managed such growth with a different business model where they internalized implementation?
In which ways do this business model lay the foundation for a rapid growth?Slide15
Example: Siebel Systems- Competition and Marketing
Competition
ERP Software Companies, and smaller specialized vendors (about 400)
Focus on CRM!
“That is what makes us untouchable”
Market channels
Typical order size $1 – $10 million
729 external partners
Alliances
Consulting
Software
Platform
Content
Siebel (10-15%), system integration (70%), hardware (10%),
content (5%), other software (5%)Slide16
Example: Siebel Systems- The Vision
“We are here to build a great company. A company that has achieved the highest levels of customer satisfaction. A great place to work. A good member of the community. A provider of exceptionally high-quality products. A company that carries itself into the marketplace with the highest levels of business integrity and business ethics. A company composed of dedicated, accomplished professionals, committed to the customer. We are here to build a company in which we all can take great pride”
Tom Siebel
The prime example of how
Customer Focus
permeates the identity of Siebel Systems!Slide17
Example: Siebel Systems- The Values
Core Values:
Customer Satisfaction – We regard it as a privilege to serve our customers. We make 100% customer satisfaction our overriding priority.
Professional Courtesy – We comport ourselves with the highest levels of business ethics and professional courtesy.
Professionalism – We demonstrate the highest levels of professionalism and quality in everything we do.
Goal and Action Orientation – In pursuing our objectives, we have a bias for action.
“Siebel Systems is the first company where I have seen an excellent performer fired because he ignored the values of the company. Either you play by the rules or you’re out.”
Siebel employeeSlide18
Example: Siebel Systems- The Sales Organization
Legal Services
Sales
Alliances
Finance
Professional Services
Corporate Marketing
Product MarketingSlide19
Example: Siebel Systems- Human Resource Management
Mandatory quarterly report of personal objectives
Transparent
Generally transparent through
my
Siebel
Tom Siebel publishes his report for every employee to see through
my
Siebel
7 days into each quarter, TMT reports personal objectives
15 days into each quarter, middle management reports
21 days into each quarter, all employees have reportedSlide20
Example: Siebel Systems- Human Resource Management
Customer Satisfaction
“We measure customer satisfaction as if it were money”
Quarterly
Employee satisfaction
Every 6 months
Partner satisfaction
Quarterly
Business Performance
Weekly and continually on competition and market movements through Siebel
e
Business
Applications
Product quality
Internal quality check on
Beta Versions,
continually on operational products
Individual performance
QuarterlySlide21
Example: Siebel Systems- Human Resource Management
Employee Relationship Management – ERM –
my
Siebel
Coordination and management of an organization with global dispersion and heavy dependency on external parties is a challenge
Value-based management requires channels through which you can communicate corporate visions, values, organization and remuneration
Simply speaking, you need an arena where you can tell everybody how it works…Slide22
Example: Siebel Systems- Human Resource Management
Bonus awards
Tied to achievements of personal objectives
Sales targets
Customer satisfaction
Also dependent on the performance of other functions
Product Marketing
on
Sales
etc.
Heavy use of stock ownership and stock options plans
40 % of the company was owned by employees
Ranking and discharging the bottom 5 % of employees every 6 month…
Workforce Improvement InitiativeSlide23
Siebel SystemsSummary and Conclusions
Summary
Siebel Systems faces an enormous challenge
Extreme growth, 0 to 10 000 employees in a decade…
Globally disperse organization, multicultural
Heavily dependent on partner performance
Siebel Systems have developed an organization that has coped with those challenges
They have done so partly by organization, party through values and human resource
management
The
’alliance-based’
marketing system
The values management system
The people management system -
MySiebels
But in the core, there is a fundament on customer satisfaction that add value to Tom Siebel’s exit…