Partial Case Analysis: Phase Separation Solutions (PS2): The China Question
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The document presents a five-minute analysis advocating for the expansion of a Canadian SME (ps2) into the Chinese market, emphasizing the attractiveness of this market due to potential growth and limited competition. It debates joint venture options, particularly recommending a partnership with Nahai for its strategic alignment and long-term sustainability over a collaboration with NIES, which presents risks. Additionally, an implementation timeline is outlined for expanding operations in China, including resource allocation and facility expansion plans.
Partial Case Analysis: Phase Separation Solutions (PS2): The China Question
- 1. -1- Phase Separation Solutions (PS2) Partial case analysis (debating position) MANA 695 John Molson School of Business Oct 2016, Bartosz Petrynski, Ganpathi Ramakrishnan, Varsha Shekhar, Praveen Shanmugam Slideshare note: this presentation is not an exhaustive analysis. It’s a 5 minute presentation supporting one of the debating positions.
- 2. -2- Canadian business not sustainable We have to expand geographically to China Strong relationships Exclusive rights Market dynamics Management capability Global product EXPAND TO CHINA China is an attractive market: • Large potential growth, • Limited domestic competition, • Opportunity for first mover advantage.
- 3. -3- Strategies for SME are limited Only Global, Regional and International are feasible Weak Strong Pressures for local responsiveness Press.forglobalintegration WeakStrong Global strategy Transnational strategy Multidomestic strategy International strategy Regional strategy
- 4. -4- Strategies for SME are limited Most suitable of PS2 is Regional Strategy Weak Strong Pressures for local responsiveness Press.forglobalintegration WeakStrong Global strategy Transnational strategy Multidomestic strategy International strategy Regional strategy
- 5. -5- PS2 in OLI-Framework Ownership, location and internalization advantages • Operational expertise and efficiency • Patents and exclusivity on Chinese market Ownership- specific advantages • Largest market in the world • Government favourableness Location-specific advantages • Control over intellectual property • Avoidance of tariffs and other barriers Internalization advantages
- 6. -6- PS2 in OLI-Framework To pursue horizontal direct investment in form of JV OLI framework Categories of advantages Ownership Location Internalization Form of market entry Licensing Export FDI (incl. JV) Yes No No Yes Yes No Yes Yes Yes
- 7. -7- We have three options to pursue PS2 don’t have capacity to invest in two JVs oror JV with NIES 1 JV with Nahai 2 JV with NIES and Nahai 3
- 8. -8- We have three options to pursue PS2 don’t have capacity to invest in two JVs oror JV with NIES 1 JV with Nahai 2 JV with NIES and Nahai 3 PS2 is just a SME • 3 managers • 15 workers • $5M revenue
- 9. -9- We have three options to pursue PS2 don’t have capacity to invest in two JVs oror JV with NIES 1 JV with Nahai 2 JV with NIES and Nahai 3 PS2 is just a SME • 3 managers • 15 workers • $5M revenue
- 10. -10- Rationale
- 11. -11- JV with NIES: pros and cons Attractive in short term, dangerous in long term
- 12. -12- JV with Nahai: pros and cons Sustainable, safe and profitable in short and long term
- 13. -13- JV with NIES or Nahai? NIES: no strategic value chain alignment R&D Input Logistics Operations Marketing and sales Output Logistics Service R&D Input Logistics Operations Marketing and sales Output Logistics Service PS2 NIES R&D Input Logistics Operations Marketing and sales Output Logistics Service JV with NIES
- 14. -14- JV with NIES or Nahai? Nahai: perfect value chain alignment R&D Input Logistics Operations Marketing and sales Output Logistics Service PS2 Nahai R&D Input Logistics Operations Marketing and sales Output Logistics Service JV with Nahai R&D Input Logistics Operations Marketing and sales Output Logistics Service
- 15. -15- JV with NIES or Nahai? Nahai: sustainable and growing marker Now + 10 years Time Sizeofmarket SmallLarge 7x bigger 16x bigger Growing supply Limited supply No supply Growing supply Note: explanatory only
- 16. -16- • First mover advantage JV with Nahai is recommended Sustainable, safe and profitable in short and long term • Commercial • Comment • Large market • Growing supply • Political risk • Comment • Competitors with 4 years • Value chain misalignment • Synergies • Established • Limited market • Declining supplyJV with NIES Strategic partner alignment Competitive advantage FeasibilitySustainabilityOptions JV with Nahai Excellent Satisfactory Poor Very poorGood
- 17. -17- JV with Nahai is recommended Sustainable, safe and profitable in short and long term Attractive in short term, dangerous in long term JV with NIES (soil processing) JV with Nahai (oil sludge processing) Sustainable, safe and profitable both in short and long term
- 18. -18- Implementation timeline Expand oil sludge treatment to petrochemical industries and oilfields across China: • by setting up more fixed facilities in different areas or • by undertaking turnkey projects 2012 • 3 onsite technical experts 2013 and onwards • CEO • 3 onsite technical experts • 3 new hires trained in TPS technology 2011 • CEO’s supervision • 2 onsite technical experts Expand the facility to 100,000 tons per year in facility at Zhoushan Setup a 10,000 tons per year facility at Zhoushan Phase 1 Phase 2 Phase 3 Timing Human resources allocation
- 19. -19- THANK YOU Slideshare note: this presentation is not an exhaustive analysis. It’s a 5 minute presentation supporting one of the debating positions.