International Business Management. Case Study "Sany: Going Global"

Table of Content

1. Introduction

2. SANY's background
2.1. Main Figures
2.2. Internationalization milestones

3. Business model

4. Value creation
4.1. Internal value creation
4.2. Value creation abroad
4.2.1. Service
4.2.2. Value Creation through Putzmeister Acquisition
4.2.3. VRIO model

5. Recommendations
5.1. Growth and further value creation
5.2. Increase benefits of both, customer and SANY, through technology
5.3. To be a better global corporate citizen

6. Conclusion

7. References

Table of Figures

Figure 1: Main Figures of SANY 2

Figure 2: Internationalization Milestones ofSANY 3

Figure 3: Business Models of SANY 4

Figure 4: Business Model Canvas of SANY 5

Figure 5: Porter's Value Chain ofSANY 6

Figure 6: Value Creation Service worldwide 7

Figure 7: Benefits and impact of the Putzmeister Acquisition 8

Figure 8: VRIOModel ofSANY 9

Figure 9: Joint Venture with Jinkosolar 10

Figure 10: Technology recommendations along the Product Development Process 11

Figure 11: Ethics, values and cultures in Business 12

1. Introduction

In today's fast moving and globalized world, international expansion plays an incredibly crucial role for Companies.

The reasons for internationalization can be quite different: Saturated domestic markets, a high number of competitors, diversification, revenue opportunities, economies of scale and so on. However, these reasons all have one thing in common. It is about growing the Company by expanding the business field. Because in times of globalization, those who do not learn and grow will not stand still, but fall behind.

This report examines the international business management of the Chinese Company SANY, which mainly operates in the global construction market.

To do so, chapter two provides a brief overview of the Company and its milestones in internationalization. After the presentation the used business models, it comes to the interesting part of SANY's value creation both internally as well as in the foreign markets. The main and ending part of the paper is focusing on recommendations in order to achieve three main targets in the future, which includes growth, technology as well as ethics and culture.

2. SANY's background

To get a better understanding for the later analysis, value creation and international business strategies, this chapter gives a small but specific overview of SANY mainly related to internationalization.

2.1. Main Figures

First of all, the following graph shows the main figures of the Chinese construction Company.

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Figure 1: Main Figures of SANY

Looking at the figure one, the power and size of the Company becomes clear. Over the past two decades, SANY has become a massive global player in the "Heavy Construction Industry", exporting its products to more than 150 countries worldwide. Looking at R&D investment, the importance of innovation is also clear. SANY has a total of four R&D centers around the world and invested more than 954 U.S. dollars in R&D, an increase of more than 33 percent over the previous year.

2.2 Internationalization milestones

To better understand the later analysis and recommendation section, it is important to take a brief look at SANY's international milestones. The following chart shows the company's most important and significant Steps in terms of globalization.

Internationalization Milestones

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Figure 2: Internationalization Milestones of SANY

Looking at the chart above, it almost shows the secret of SANY's successful path over the past decades. It can be seen that various expansion strategies were used in the past. In 2002, the Company started international exports, and in 2007 and 2008, SANY entered leading construction markets such as the US and Germany through greenfield Investments. Later in 2012 and 2014, the Company invested in further brownfield expansions through the acquisition of Putzmeister in Germany and the joint venture with Palfinger AG in Austria. These are just a few examples of Investments and market entries SANY made in the past, but it clearly shows their Vision and strategy. How these Investments have created value is explained in more detail in chapter four.

3. Business model

Having looked at the company's background, it is now time to examine SANY's business models. In general, the Company uses two different business models, which are shown in the chart below.

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Figure3: Business Models ofSANY

As can be seen in the chart, SANY's two business models are licensing and direct sales to end customers. However, this has not always been the case. The key here is SANY's adaptability to market developments.

In the very beginning, SANY only sold directly to customers and also began exporting abroad. Over the years, market demand changed more to a rental concept. For example, in 2000, more than 30 percent of SANY's customers were construction Companies, and more than 50 percent of them owned their equipment, meaning they bought it directly from SANY. Nowadays, Companies prefer to rent the equipment instead of buying the equipment, which leads to a huge shift in SANY's business models. Nowadays, the second business model through dealers and rental Companies accounts for more than 80 percent of sales (Lai, R., Lippert, S., Hua Dai, N. and Deng, D., 2013, p.8).

Distributors and rental Companies have been integrated into the sales channel to ease the liquidity bürden on the Organization. This is because the distributor still pays SANY in the forms of a onetime payment (Lai, R., Lippert, S., Hua Dai, N. and Deng, D., 2013, p.8).

To dive deeper into the business model of SANY, the following presents its business model canvas. This tool gives a quick but very precise overview of the Company.

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Figure 4: Business Model Canvas of SANY

According to the Business Model Canvas, it is important to highlight some key points to know for what follows.

SANY's main activities are very related to its value creation, namely revenue generation, very good research and development processes, internationalization process, and aftersales support. These activities also represent the main revenue cost structure, which is listed on the left side at the bottom of the canvas. Through the excellent aftersales Service, SANY is in very close relationship with its customers, which are mainly the distributors and the end customers. The part of value proposition is part of the next chapter "Value creation" (Lai, R., Lippert, S., Hua Dai, N. and Deng, D., 2013, p.67).

4. Value creation

Value creation is the performance of a Company that sets it apart from its competitors and is therefore the primary objective of any Company. Creating value for customers helps to seil the products and Services. On the other hand, there is also the creation of value for Shareholders and investors, the higher the value creation here, the more investment capital can be secured for the business activities (Referenceforbusiness.com, 2021).

In order to analyze SANY's value creation in more detail, the internal value creation will be looked at first and then the value creation abroad.

4.1. Internal value creation

For the internal value creation part, the tool of Porter's Value Chain is used, which can be seen below.

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Porter's Value Chain is an excellent tool for analyzing the internal value creation of a Company. The most important points are explained in more detail below.

First of all, it is important to understand the basis of all other points of value creation. It is located in the support activities and is called Technology Development. SANY is an absolute role model in technology, research, innovation and development. Every year the Company invests significant amounts of money in the development of products, Services and innovations. This is one of the most important internal cornerstones of SANY's success (Lai, R., Lippert, S., Hua Dai, N. and Deng, D., 2013, p.6).

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