Siemens Gamesa, a leading renewable energy company, is the focus of this article, which examines its internationalisation strategy in Russia and Taiwan. First, the need for internationalisation and its complexity is discussed to set the context for Siemens Gamesa's expansion. The OLI paradigm (organisation, localisation, internalisation) is then presented as a framework for the internationalisation strategy. Special attention is given to the PEST (Political, Economic, Social, Technological) analysis for Russia and Taiwan, which provides critical insights into the specific challenges and opportunities in these markets. The article closes with a conclusion that summarises the key findings and discusses implications for the future of Siemens Gamesa in these regions.
Table of Contents
2. Necessity of Internationalisation and its Complexity
3. Siemens Gamesa
4. Internationalisation strategy- OLI Paradigm
Organization
Location- PEST analysis
Russia
Politic
Economic
Social
Locational summary of Russia
Taiwan
Political
Economical
Social
Locational summary of Taiwan
Internalization
5. Conclusion
Objectives and Research Themes
The primary objective of this work is to evaluate the feasibility and profitability of Siemens Gamesa's international expansion into the markets of Russia and Taiwan, utilizing the OLI paradigm framework to determine the optimal entry strategy.
- Analysis of internationalization necessity and corporate complexity.
- Evaluation of Siemens Gamesa's organizational competitive advantages.
- Conducting a PEST analysis to assess the external locational factors of Russia and Taiwan.
- Determination of internalization benefits through transaction cost theory.
- Development of a strategic recommendation for market entry.
Excerpt from the Book
4. Internationalisation strategy- OLI Paradigm
The electic theory, also known as the OLI framework issued by Dunning (1979) is a further development of the internalization theory from Buckley and Casson (1976). The framework carves out three different potential sources for a company to decide whether circumstances allow to widen their business activities through foreign direct investment (FDI) in production facilities.
The tool suggests that this kind of internationalisation can only be reached with competitive advantages of the organization (O) at domestic region to eventually utilize the internal capabilities to abroad specific countries which possess advantages in locational factors (L). Lastly, upon the identified competitive advantages and feasibility of country, the corporation has then to decide whether the internalization (I) of identified factors in the organization (O) bear beneficial aspects over dissemination of know-how to a third party via other distribution channels (Dunning, 1979).
FDI have its object in taking advantage of vertical integration, aiming to cover the whole supply chain which in turn lead to highest profitability of all possible internationalisation possibilities given. Thus, if the feasibility of FDI is given, a company shall pursue this way of internationalisation for highest profitability (Stein, 1992).
Summary of Chapters
2. Necessity of Internationalisation and its Complexity: This chapter defines the concepts of globalization and internationalization, highlighting the complexity of these processes influenced by macro-level external factors and internal firm capabilities.
3. Siemens Gamesa: This chapter provides an overview of the company's business activities, market position in the wind energy sector, and the strategic motivation behind their pursuit of international expansion.
4. Internationalisation strategy- OLI Paradigm: This chapter applies the OLI framework to analyze the firm's organizational strengths, assesses potential host countries via a PEST analysis, and examines the logic for internalization versus market-based transactions.
5. Conclusion: This chapter synthesizes the findings from the preceding analyses to provide a strategic recommendation, favoring the establishment of a production facility in Taiwan over Russia.
Keywords
Internationalisation, Globalization, OLI paradigm, Siemens Gamesa, FDI, PEST analysis, Russia, Taiwan, Wind energy, Competitive advantage, Market entry, Internalization, Transaction costs, Renewable energy, Strategy.
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the international expansion strategy of Siemens Gamesa, specifically evaluating whether entering the Russian and Taiwanese markets is feasible and profitable.
Which theoretical framework is utilized for the analysis?
The study employs Dunning’s OLI (Ownership, Location, Internalization) paradigm to assess the company’s competitive strengths and the suitability of the target locations.
What is the primary objective of the study?
The goal is to determine the best method for internationalizing business activities, specifically comparing market entry conditions in Russia versus Taiwan to propose a sound corporate strategy.
Which methodology is applied to analyze the target countries?
The author uses a PEST analysis, examining the political, economic, and social environments of both Russia and Taiwan to identify market barriers and opportunities.
What is the main finding regarding Russia?
The study concludes that expansion into Russia is currently risky due to economic stagnation, bureaucratic challenges, and political factors, making it less attractive than other alternatives.
What is the recommendation for Taiwan?
Due to favorable legal frameworks, high demand for renewable energy, and the local need for foreign technical expertise, the paper recommends establishing a production facility in Taiwan.
Why does the author prioritize vertical integration for Siemens Gamesa?
Vertical integration is recommended to preserve the firm's technical know-how and minimize transaction costs in markets where local knowledge is initially limited.
How does the collectivist culture influence the business recommendation?
The author notes that while cultural differences like the collectivist mindset in Taiwan present potential management challenges, they do not outweigh the significant economic and locational benefits for the company.
- Citar trabajo
- Sven Wahlers (Autor), 2020, The Company "Siemens Gamesa". Internationalization Strategy in Russia and Taiwan, Múnich, GRIN Verlag, https://www.grin.com/document/915195
