By taking an oil field supply and services company named Benood as a case, the purpose of this research is to strategically analyse the company’s expansion process by analysing the internal and external environmental factors, as well as evaluating and reviewing the possible modes of entry and the strategic consequences within three different locations which are: UAE, China and Nigeria.
Apart from the high costs attributed to the expansion process, when it comes to SMEs, their characteristics can pose additional challenges related to expanding. The limited financial resources and the managerial structure of SMEs can make them more vulnerable to environmental factors than large MNEs.
The literature review oriented the theoretical contribution by reviewing the applied frameworks, which aims to identify the major environmental factors that would affect the firm within each location. PESTEL analysis was applied to evaluate the macro external environment. On the other hand, Porter’s five forces, industry lifecycle and strategic group analysis were applied to evaluate the external micro environment which represents the competitive situation in each country.
Accordingly, value chain analysis and Hofstede’s cultural dimensions are the applied tools to analyse the major internal environment of the firm. Moreover, SWOT analysis summarised the major external and internal factors within each country in order to assess the evaluation of entry modes and strategic option.
Consequently, based on secondary data from governmental and trusted agencies, the findings of this research revealed that each location could offer lucrative opportunities to exploit, given that the industry represents a substantial percentage of the imports and exports within the three countries. At the same time, the firm could face several challenges in each location. For instance, the recent drop in oil prices could affect the value chain significantly.
Table of Contents
1. CHAPTER ONE: INTRODUCTION
1.1 GENERAL OVERVIEW:
1.2 BENOOD’S BACKGROUND:
1.3 IRAQ’S BACKGROUND:
1.4 PROBLEM ORIENTATION:
1.5 RESEARCH QUESTIONS:
1.6 AIMS AND OBJECTIVES:
1.7 SUMMARY:
2. CHAPTER TWO: LITERATURE REVIEW
2.1 EXTERNAL ENVIRONMENT FRAMEWORKS:
2.1.1 PESTEL Framework:
2.1.2 Porter’s Five Forces Industry Analysis:
2.1.3 Industry Life Cycle:
2.1.4 Strategic Group Analysis:
2.2 INTERNAL ENVIRONMENT FRAMEWORK:
2.2.1 Value Chain Analysis:
2.2.2 Hofstede’s Cultural Dimensions:
2.2.3 SWOT Analysis:
2.3 MODES OF MARKET ENTRY:
2.4 ANSOFF’S MATRIX:
2.5 SUMMARY:
3. CHAPTER THREE: RESEARCH METHOD
3.1 RESEARCH PERSPECTIVE:
3.2 RESEARCH DESIGN:
3.3 RESEARCH STRATEGY:
3.4 DATA COLLECTION:
3.5 STUDY LIMITATIONS:
3.6 RELIABILITY VALIDITY AND GENERALISABILITY:
3.7 ETHICAL CONSIDERATIONS:
4. CHAPTER FOUR: DATA COLLECTION, ANALYSIS, AND FINDINGS
4.1 EXTERNAL ENVIRONMENT ANALYSIS:
4.1.1 PESTEL Analysis:
4.1.2 Porter’s Five Forces:
4.1.3 Industry Life Cycle:
4.1.4 Strategic Group Analysis:
4.2 INTERNAL ENVIRONMENT ANALYSIS:
4.2.1 Value Chain Analysis:
4.2.2 Hofstede’s Cultural Dimensions:
4.2.3 SWOT Analysis:
4.3 ENTRY MODES ANALYSIS:
4.4 STRATEGIC REVIEW:
5. CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS
5.1 CONCLUSION:
5.2 RECOMMENDATIONS:
Objectives and Research Themes
The primary objective of this research is to evaluate the viability of an international expansion strategy for Benood Company, a petroleum services firm based in Jordan. The study explores how Benood can strategically mitigate risks associated with its current reliance on the unstable Iraqi market by expanding its operations into China, the UAE, or Nigeria.
- Strategic analysis of the international expansion process for SMEs.
- Application of environmental scanning frameworks (PESTEL, Porter's Five Forces, Industry Life Cycle, Strategic Group Analysis).
- Evaluation of internal organizational capabilities via Value Chain and SWOT analysis.
- Analysis of cultural factors and their impact on performance using Hofstede’s Cultural Dimensions.
- Review of appropriate market entry modes and strategic growth options (Ansoff’s Matrix).
Excerpt from the Book
1.1 GENERAL OVERVIEW:
Firms of all sizes consider to expand their operations internationally (Kotzaivazoglou et al. 2014). The number of small and medium enterprises (SMEs) that are adopting an expansion strategy is significantly increasing, where in most countries, SMEs represent the majority of the firms (Francioni and Musso 2014). Therefore, it tends to apply geographically diversifying activities in order to reduce the overall risks, as well as to decrease cash flow’s volatilities (Joliet and Muller 2013). However, expansion decisions could always be vital for the business since they may affect the profits directly, as the cost that comes along with this process increases significantly (Espínola-Arredondo et al. 2011). The idea of international expansion could be considered as a challenging strategic decision that may change the existing business model of the firm (Chen et al. 2015). Also, adopting this strategy could be combined with several threats such as operating under new regulations, new competitors and new market risks (Ernst & Young 2011). Furthermore, that the main hazard of adopting an expansion strategy is becoming over optimistic, as well as the lack of experience in the new market. The firm’s management should hence consider the potential costs and threats of taking this crucial decision, by reviewing the external environment factors, and improving the internal factors of the business before moving into the new market, in order to avoid the negative circumstances of this critical decision (Wilson and Bates 2003:254-255). This research is going to strategically analyse the process of adopting an international expansion strategy for a petroleum services company called “Benood” that operates from Amman, the capital city of Jordan, and considers international expansion into one of three potential locations which are: China, United Arab Emirates (UAE) and Nigeria.
Summary of Chapters
CHAPTER ONE: INTRODUCTION: Provides an overview of international business expansion, the background of Benood Company and the Iraqi market, and outlines the research questions and objectives.
CHAPTER TWO: LITERATURE REVIEW: Reviews core theoretical frameworks including PESTEL, Porter’s Five Forces, Value Chain, Hofstede’s Cultural Dimensions, and Ansoff’s Matrix to support the strategic decision-making process.
CHAPTER THREE: RESEARCH METHOD: Details the research strategy, design, and data collection methods, framing the study as an evaluative case study based on secondary data.
CHAPTER FOUR: DATA COLLECTION, ANALYSIS, AND FINDINGS: Applies the theoretical frameworks to the three potential markets (UAE, China, Nigeria) to analyze macro and micro-environmental factors, competitive landscapes, and internal organizational fit.
CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS: Synthesizes the research findings, offers final evaluations of market suitability and entry modes, and provides strategic recommendations for Benood Company.
Keywords
International Expansion, SMEs, Petroleum Industry, Benood Company, PESTEL, Porter’s Five Forces, Market Entry Modes, Ansoff’s Matrix, SWOT Analysis, Hofstede’s Cultural Dimensions, Strategic Management, Value Chain, Risk Mitigation, UAE, China, Nigeria
Frequently Asked Questions
What is the fundamental focus of this research?
The research focuses on the strategic analysis of the international expansion process for a petroleum services SME named Benood Company, specifically exploring potential entry into the UAE, China, or Nigeria.
What are the central thematic areas of the study?
The study revolves around environmental scanning (both internal and external), the challenges SMEs face when internationalizing, and the selection of appropriate market entry strategies in the oil and gas sector.
What is the primary research goal?
The primary goal is to evaluate the feasibility of adopting an international expansion strategy to help Benood Company mitigate risks currently linked to its dependence on the unstable Iraqi oil and gas market.
Which scientific methodologies are utilized in this work?
The work employs a qualitative, evaluative case study approach using secondary data, applying analytical frameworks such as PESTEL, Porter’s Five Forces, SWOT, Value Chain Analysis, and Hofstede’s Cultural Dimensions.
What topics are discussed in the main body of the text?
The main body covers a comprehensive review of theoretical literature, a detailed analysis of the macro and micro-business environments in the target countries, an internal assessment of the firm, and a critical review of potential market entry and growth strategies.
How is the research characterized by its keywords?
The research is characterized by its focus on SMEs, strategic international management, oil and gas sector analysis, and the application of established business frameworks to assess foreign market readiness.
How do oil price fluctuations impact the company's expansion strategy?
The study finds that falling oil prices create significant instability, forcing oil firms to cut investments and expenses; this negatively impacts equipment suppliers like Benood, potentially delaying the expansion strategy to protect profit margins.
Why are cultural dimensions important for Benood's expansion?
Cultural dimensions are analyzed because identifying differences between the home and host country is essential to avoid cultural collisions, ensuring employee commitment, and maintaining firm performance.
Which country appears most favorable based on the environmental analysis?
The research suggests that the UAE, with its lower entry barriers and existing free trade zone (FTZ) facilities, may offer the most viable opportunity for a direct export strategy compared to the higher competition and complexity found in China and Nigeria.
- Citar trabajo
- Zaid Deeb (Autor), 2016, International expansion process for SMEs. A strategic analysis of the oil field supply and services company "Benood", Múnich, GRIN Verlag, https://www.grin.com/document/318251
