Berufsakademie Heidenheim

Developing The British Extraction Technology Market -
Strategic Analysis and Concept for ESTA

Thomas Drabner

Contents

1 Introduction ... 1

1.1 Problem Definition ... 2
1.2 Objective ... 2
1.3 Methodical Approach ... 3
1.4 Definitions & Explanations ... 3

2 Theoretical Framework ... 6

2.1 Basics ... 6
2.2 Fundamental Elements ... 8
2.3 Integrated Strategic Planning – An Illustration ... 9

3 The Market Development Process ... 10

3.1 Targets ... 10
3.2 The British Market - Macro Surroundings ... 10
3.2.1 Market Characteristics ... 11
3.2.2 Politics ... 13
3.2.3 Regulations & Standards ... 13
3.2.4 Industry ... 14
3.3 The Extraction Technology Branch – Micro Surroundings ... 15
3.3.1 Market Size & Demand ... 16
3.3.2 Authorities Affecting Demand ... 17
3.3.3 Competitive Surroundings ... 18
3.3.4 Existing Distribution Standards ... 19
3.4 ESTA – A Characterisation ... 20
3.4.1 Company Profile ... 20
3.4.2 Products ... 22
3.4.3 Current Activities within the UK Market ... 24
3.5 SWOT Profile – An Interim Conclusion ... 25
3.6 Strategy Selection – Theory and Classification ... 26
3.6.1 Corporate Level ... 26
3.6.2 Business Unit Level ... 27
3.6.2.1 Generic Business Strategies ... 27
3.6.2.2 ESTA’s Business Strategy – Domestic and Abroad ... 28
3.6.3 Functional Level ... 29
3.6.3.1 Basic Marketing Strategy ... 29
3.6.3.2 The Marketing Strategy Path For ESTA ... 31
3.7 Marketing Planning – Basic Considerations for Implementation ... 32
3.7.1 Identifying Market Segments and Target Customers ... 33
3.7.2 Formulating a Product Strategy ... 34
3.7.3 Setting A Price Range ... 35
3.7.4 Establishing Distribution ... 36
3.7.4.1 Finding & Selecting Potential Sales Partners ... 37
3.7.4.2 Establishing a Relationship ... 39
3.7.5 Promoting the Development ... 40
3.7.6 Short – Term Schedule & Budget Estimation ... 41

4 Conclusion ... 42

1 Introduction

The globalization of today’s market place has been subject to great attention. Whether or not a company participates directly in international business, hardly anyone can claim not to be involved in any way in the global market place. In fact, due to saturation tendencies in the domestic market, the dependency on international customers as well as the ever increasing pace of global competition, nearly all companies of any size and business level are faced with the impacts of the world market.¹ Their performance, however, differs significantly. Especially for SMEs foreign expansion is the main challenge; minor foreign market knowledge, inexperienced staff and the dependency on day-to-day operations limit the possibilities for a systematic approach to foreign markets.²

In the literature of international marketing and management there is a variety of theoretical approaches concerning the process of internationalisation respectively the entry into foreign markets as well as market development. However, in many cases especially Small and Medium Sized Enterprises (SMEs) fail to interpret the theoretical approaches according to their needs and thus are confronted with a considerable gap between theory and their business reality.³

Being employed in a SME myself missing strategic planning and emotional decision-making has indeed been a part of my work experience during my cooperative studies. In my company I am now responsible as Area Sales Manager for the Scandinavian region, Austria and the United Kingdom and it will be my task to correlate the indications of theory with the necessities of the specific internal reality of my job assignment. As the company has started to re-organise export activities, the development of the British extraction technology market is a given task and at the same time the subject of my dissertation.

1.1 Problem Definition

“Due to the increasing competition the long-term continuity of companies depends on a conceptual approach on international markets. It can not be the aim to be involved in as many international markets as possible without any strategic basis. Furthermore, it is not enough to trust on coincidence in searching for international partners or the general international opportunity. Instead, there has to be a clear target and reasonable steps to reach it.” ⁴

In general, the previous statement summarises ESTA’s current struggle. The company has managed to export to several countries in the world either directly or by means of independent distributors generally based on random contacts. Initially, this supported the persistent growth of the company and contributed well to its reputation. However, as the competitive structure in the domestic market has increased and sales are threatened the company’s objective is now focused on the international market in order to ensure the ongoing success and growth of the company.

For this reason it has been recognised that random export involvement with no strategic basis is not appropriate for the common goal. Therefore potential markets have been selected for a more focused market development. Among those, building up of the British market is the current priority.

1.2 Objective

The objective of this dissertation is to provide a systematic hands-on approach within market development for ESTA in the British extraction technology market. Relating to major elements of a strategic planning process the emphasis is on investigating external surroundings of the foreign market and correlate them with the internal circumstances of the company. Based on a derivative of a basic market strategy suitable considerations for marketing planning are to be introduced. In particular, this should then relate to how to establish a real presence in the market and outline the basics necessary for this venture.

1.3 Methodical Approach

This dissertation is divided into four chapters. The first chapter refers to introducing the subject and contains problem formulation, purpose and the corresponding approach as well as essential definitions.

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1 cp. Niehoff, Reitz (2001:35 et sqq.)
2 cp. Perau R., Boving D. (2000:11)
3 cp. Holland (1997: 1 et sqq.)
4 cp. Holland (1997:5)