The impact of globalisation on Germany ́s Electrical Installation System companies

How favorable are the current conditions for further growth?


Master's Thesis, 2015

118 Pages, Grade: 2,0


Excerpt

Table of contents

Table of contents

List of figures

List of tables

List of Abbreviations

Abstract

Acknowledgements

Definition

Difference between Globalisation and Internationalisation

1 Introduction
1.1 Management Issues
1.2 Thesis aims
1.3 Research design
1.4 Thesis Structure

2 Review of current thinking
2.1.1 Ethical reflection

3 Theoretical framework
3.1 PESTEL
3.2 Yip ́s Internationalisation Driveŕs
3.3 Porter ́s Five Forces
3.4 Market entry modes
3.4.1 The International Strategies
3.5 The Theories – a summary

4 Methodology
4.1 Research method
4.2 Ethical issues
4.3 Critical Review

5 Data collection
5.1 Industry focus
5.1.1 The German Electrical Installation System Market as target group
5.2 Assumptions
5.3 Design of Questionnaire
5.3.1 General Information
5.3.2 Strategic Position
5.3.3 Strategic Choices
5.3.4 Further Growth
5.4 Survey respondents
5.4.1 Structure of sample
5.4.2 Investigation Barriers

6 Data analysis
6.1 General Information
6.2 Strategic Position
6.2.1 Which are the external environmental factors on the strategy of Germen Electrical Installation System companies?
6.2.2 Which influences have competitors or suppliers in connection with globalisation on their strategy?
6.2.3 What are the globalised markets where GEISC are noticeable active?
6.3 Strategic Choices
6.3.1 Does GEISC have internationalisation strategies?
6.3.2 What are the globalisation strategies pursued by the German electric installation system companies?
6.3.3 How favourable are the conditions for further growth?
6.4 Secondary data analysis
6.4.1 Employees Trend
6.4.2 Turnover trend

7 Survey interpretation and findings
7.1 General
7.2 Strategic Position
7.3 Strategic Choices
7.4 Further Growth

8 Conclusion

9 List of references

10 APPENDICES
10.1 Appendix A: Market entry modes- Advantages & Disadvantages
10.2 Appendix B: Survey questionnaire
10.3 Appendix C: Summary of survey results

List of figures

Figure 1 Conceptual framework

Figure 2 Thesis structure

Figure 3 Relevant investigation areas

Figure 4 PESTEL, Environmental influences on organisations, Source: Johnson, Whittington, Scholes, 2011

Figure 5 Yip´s Total Global Strategy, Source: Prentice Hall, 2003

Figure 6 Porter´s international strategy evaluation matrix Source: Johnson, Whittington, Scholes (2011)

Figure 7 Theory evaluation matrix

Figure 8 Research design 2nd level

Figure 9 Research process

Figure 10 Production growth in Germany´s industry, Source: Statista, 2013

Figure 1.1 Amount of employees in the German Electrical industry, Source: DeStatis, 2014

Figure 1.2 Survey results - companies form

Figure 1.3 Survey results - company size

Figure 1.4 Survey results - main markets of GEISC

Figure 1.5 Strategic position

Figure 1.6 Survey result - Impact on GEISC strategy

Figure 1.7 Survey result - Political influence

Figure 1.8 Survey result - Economical influence

Figure 1.9 Survey result - Technical influence

Figure 2.0 Survey result - Environmental influence

Figure 2.1 Survey result - Legal influence

Figure 2.2 Survey result - quality and cost factors

Figure 2.3 Survey result - cost aspects

Figure 2.4 Survey result - competitor strengths

Figure 2.5 Survey result - globalised markets

Figure 2.6 Strategic choices

Figure 2.7 Survey result - Internationalisation strategy

Figure 2.8 Survey result - Pursued strategy of GEISC

Figure 2.9 Further growth

Figure 3.0 Survey result - Further growth

Figure 3.1 Survey result - growth target

Figure 3.2 Employment trend, Source: Statista, 2013

Figure 3.3 Total turnover of GEISC, Source: ZVEI, 2014

Figure 3.4 Export turnover, Source: ZVEI, 2014

Figure 3.5 Domestic turnover, Source: ZVEI, 2014

Figure 3.6 Variation of GEISC turnover, Source: ZVEI, 2014

List of tables

Tabelle 1 Survey overview

Tabelle 2 Survey results

Tabelle 3 Survey result- annual turnover

Tabelle 4 Turnover overview, Source: ZVEI, 2014

Tabelle 5 Market entry modes: Advantages & Disadvantages Source: Johnson, Whittington, Scholes (2011)

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

Abstract

The aim of this thesis is the following topic: Does the globalisation impact the strategies of the German Electrical Installation companies and how are the conditions for further growth?

To achieve the research aims several methods are defended by the researcher. For the theoretical framework, the PESTEL Analysis, Yip ́s Internationalisation Driver ́s, Porters Five Forces, selected Market entry models and predefined International Strategies are chosen. Building up on these, an additional survey is designed to make empirical researches on the research topic. With obtaining quantitative data, management and expert’s insights are gained. Based on the research objectives the evaluation shows that with this survey it was possible to identify, discuss and analyse the strategic position, the strategic choices and the conditions for further growth of Germany´s Electrical Installation System companies. This dissertation delivers the following outcome.

Strategic Position

The first main recognition gained in this dissertation is that innovation projects such as the project Industry 4.0 from the German Federal Government, is not considered in the strategies of German Electrical Installation companies. This is a disadvantage because other nations working intensively on this topic. This is seen most critical for the future of the German Electric Industry.

The recommendation is to rework the current strategies and to include innovation projects such as the project Industry 4.0.

Strategic Choices

The next important outcome of the elaboration is that the globalisation affects the strategies of German Electrical Installation companies and the companies under research have no really internationalisation strategy although they are international active. The survey shows that the essential inputs of the respondents lead to a preferred internationalisation strategy. The simple export.

This result with respect to the respondents which have a strategy leads not only to advantages but also it leads to disadvantages.

The advantages are one the one hand cost aspects. There are no operational facilities needed in the host country and by using the Internet they are able to gain access into the international market. But on the other hand this strategy does not allow the firm to benefit from the location advantages of the host nation and limits the opportunities to gain knowledge of the local market and respectively of the customers.

Further Growth

As third point, the further growth is considered in this work. The result with respect to the condition for further growth was that the current conditions for further growth is high assessed on the foreign markets. The main markets of the investigated companies lies in the European, Chines and Russian market. But due to these facts the findings indicate that the Europe, China and Russian buildings investments are retrogressive. This result will take an important change for the strategies of German Electrical Installation System companies. In sum the survey points that the German Electrical Installation System companies must change the country main focus. It is recommended that markets with a high building investment such like Turkey should be considered because the Turkish building industry is continuing to grow.

Overall, it is recommended that the strategies of German Electrical Installation System companies must be adapted for the further globalisation and to achieve further growth. With using the strategies, the competitive advantage of the German Electric Industries can be guaranteed. For future, this will have a crucial meaning. As the elaborations show, it is now the time to be prepared for future challenges and risks and to react on these accordingly.

Keywords Dissertation - German Electrical Industry - German Electrical Installation System - Globalisation - Internationalisation - International-Trade & Competition - International Strategy - Strategy

Acknowledgements

I take this opportunity to express my sincere gratitude to the following personalities without whose help and support the successful completion of my dissertation work would have been remained a dream.

Therefore it is my biggest pleasure to express my gratitude to them in this acknowledgement.

First of all, I want to give special thanks to my supervisor Dr. Heinz Willand for his continuously support, comments and truthful and illuminating views on a number of issues related to the dissertation.

I also want to thank all participants in my survey who spend their time in responding my questionnaire and to complete this research.

I like to thank additionally the New University of Buckinghamshire and the AFUM which gave me the chance to finish my MBA lessons.

I would also express my gratitude to my loved family- to my grandfather Rosario who taught me to give my best in what I do and his wise advices.

To my beloved Mum and Dad – Angelo and Christel, for their love, care and the enabling of this great degree course.

Especially thanks to my classmate Mahmut, I found a new friend, thanks for your support and time we spent together.

Definition

Globalisation: Globalisation is a process that will reinforce the worldwide relationships at many levels. This results in a global complexity in areas such as economy, politics, culture and the environment (Gabler, 2014).

Internationalisation: Internationalisation covers the full field of business activities which depend on at least one foreign market. It should be seen as a preliminary step to globalisation (Ahlert, 2004).

Difference between Globalisation and Internationalisation

Overall, it can be said that in the literature of research the internationalisation will be largely seen as a preliminary step and as a partial aspect of globalisation. Primary the internationalisation relates to the corporate strategy for the development of new markets. Above a certain stage of development, companies begin to act globally (GIG, 2014). The Globalisation encompasses more than just the network of interacting economic subjects. The Globalisation affects all major areas of social life. The consequence is the creation of a worldwide community with similar values and lifestyles. Scientists, politicians and committed people lead violent discussions about the far-reaching implications and effects and its forms in the future of globalisation (Al- Rodhan, 2006).

As result it can be said that the internationalisation will be become global.

1 Introduction

The German electrical industry is one of the most important industrial sectors in Germany (Statista, 2013). According to German (Zentralverband der Elektro Industrie - Central union of the electro industry) ZVEI, Germany is one of the largest electric producers in the world (ZVEI, 2011). The product range of German electrical companies includes innovative (cross-sectional) technologies and is widely spread. The portfolio is divided in capital goods, intermediate goods and consumer goods. According to DeStatis (2014) the German electrical industry consist of more than 15 market segments. In this case this thesis is limited to the market segment of the German Electrical Installation System. Chapter 5.1.1 describes the investigated area and gives an overview of the characteristics of the German Electrical Installation System market.

Germany is undergoing a change, in everyday life, in the economy and in society world. The usage of electronics continues to rise. In the shortest time they are able to generate completely new complex and highly efficient systems. In 2013 the export value amounted €158 billion (ZVEI, 2014). Thus, the electronic industry is one of the largest exporting sectors in Germany.

According to the ZVEI (2014) the most important electrical export countries are the USA, China and France with strong global activities. With this knowledge, the researcher raises the questions:

Does globalisation impact the strategies of Germany´s Electrical Installation System companies? And how favourable are the current conditions for further growth?

As mentioned above the German electrical market is the largest single market in the European Union but it has stagnated in recent years. By contrast in the last years an increase of globalised activities can be observed. The amounts of exports could be further expanded in the last years (ZVEI, 2014). With increasing globalisation, the theme strategy has gained worldwide increased importance for business decisions (Abdelal, Rawi, Tedlow, Richard, 2003).

In 2012 the McKinsey Global Institute has researched that the largest companies in Western Europe mainly grow outside their home markets. Also the International Monetary Fund (2014) confirms this theory and gives further an overview that the fastest-growing economies will be into the emerging markets. The first review of the literature indicated that the globalisation is a new term in the business science that has only existed since three decades. Levitt proposed the existence of a globalisation of markets with competitive price and product standardisation and that it would become the new marketing norms (Levitt, 1983). Nelson (2009, p.3) has the opinion, that the globalisation will bring not only new opportunities but also new challenges. Moreover, Al-Rodhan (2006, p. 2, p.3) points out that globalisation is a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities. It involves economic integration; the transfer of policies across borders; the transmission of knowledge; cultural stability; the reproduction, relations, and discourses of power. It is a global process. In sum globalisation is an intensive process. It has one main driving force. The global oriented business strategy. The target of any business strategy is the sustained strengthening of competitiveness and the creation of value for a successful business and benchmark (Mirow, 2005).

These business strategies are an important element of corporate strategy. They constitute the cornerstone for successful business and competitive advantage. A competitive advantage can be achieved for example through cost leadership or through innovation and competition in time (Porter, 2013). In summary it should be found out if these points, which are described above, meets the investigated research area. In the business research the area of strategies is a widely evaluated field.

A great deal of these current researches studies takes the focus on the investigation of motives of globalisation. These motive- studies serve as a first approach to the question of what factors determine the success of globalisation.

According to Johnson, Whittington, Scholes (2008) one of the main drivers has been the reduced labour cost which could be obtained by establishing activities away from the domestic market. Other drivers are the adaptation of consumption habits, reduction of transaction costs or the global approximation of norms and standards and the balancing locational factor costs. Summarized, the globalisation can be also seen as an opportunity for companies. Companies can expand into a new market or create new business opportunities or improve the economies of scale. For the market of German Electrical Installation Systems companies (GEISC) there are no or only a few research evaluations existing. And on the other hand as described above an increased globalisation has been an important factor also for these companies in the recent years. This is the reason why the researcher decided to investigate this business area to find a clear recommendation for this specific branch through a survey.

The analyses and discussions of the results of this survey will demonstrate that these strategies of the GEISC are influenced by the globalisation. The results will give a recommendation which strategic direction they should choose and in which countries they might seek to do business and what factors are to be considered. By these analyses other circumstances will be defined, which will be implemented into the recommendation and will be the basis for further future research. The survey not only collected information from the informants about their international activities and the strategic alignment, which is needed to identify the dissertation questions. The questionnaire also investigated some essential supplementary information about general information, such as the company size, volume of sales, type of company, which support this thesis. For the survey, managers from various levels of the higher top management and from different German electrical installation system companies were contacted by the researcher in order to receive additional information of practical relevance. This was done to increase the clarity on the research subject and its main thesis questions. The data analyses of the informants’ responses are structured in accordance to the conceptual framework (Figure 1)

with its three main components the strategic position, the strategic choices and further growth. Furthermore, the informants’ inputs in combination with the presented findings of the literature and databases will help to achieve the aims of the thesis. This will lead to recommendations for a strategic alignment of the GEISC to answer the thesis questions in chapter 1.2.

1.1 Management Issues

,,The essence of strategy is choosing to perform activities differently than rivals do"- Michael E. Porter (1996).

Through a changing environment, as mentioned in the previous sub-chapter, the basic motivation of this thesis is to identify the impact of the globalisation to the GEISC and how it influences their strategies. For the management the designing of strategies is an increasingly complex issue with many factors. According to Schwenk and Schrader (1993), strategic designing and the achievement of business success have a tight positive correlation. But what issues are affected the most by the globalisation?

The management issue can be divided into:

− Strategic position
− Strategic choices
− Further Growth

Following issues are important for the management. It is important to know the strategic position. What is the strategic position of German Electrical Installation System companies by the growing globalisation? What are the main issues that should be considered by the management of German Electrical Installation companies into their strategies? Are there political, technical or social issues with a high impact on their strategies? Does the globalisation affect the strategic choices and is there a new market for further growth? These issues and difficulties create a huge barrier for managers from the GEISC and their management to create a new or adjust the existing strategy. These above mentioned problems are what the researcher wants to investigate.

The research purpose and aims of this thesis are discussed in the next chapter.

1.2 Thesis aims

The aim of this thesis is to research and to capture the globalisation trend among the German Electrical Installation System branch, by specifically focusing on the largest GEISC.

Derived from the purpose above and based on the following research design, the following main questions need to be addressed within the framework of this thesis:

Strategic Position (SP):

- Which are the main external environmental factors on the strategy of Germany´s Electrical Installation Systems companies?
- Which influences have competitors or suppliers in connection with globalisation on their strategy?
- Which are the globalised markets where GEISC´s are noticeable active?
- Can new markets be identified?

Strategic Choices (SC):

- Do GEISC´s have an internationalisation strategy?
- What are the pursued globalisation strategies by the GEISC?

Further Growth (FG):

- How favourable are the conditions for further growth?

It is obvious from the detailed discussion in the previous literature research, that there is only a limited amount of academic literature covering this specific investigation area. Therefore, it is essential to know how globalisation impacts the strategies of GEISC. The survey questions are developed in accordance to the review of the theory and are structured to the theme of this thesis. The literature about combinations of strategic position and strategic choices as tools to achieve the thesis question are limited. Nevertheless, the contemporary theory provided the basis for defining thematic frameworks. These frameworks analyse how the globalisation impacts the strategy of GEISC.

First the analysis of the macro-environment should give a recommendation for, what strategic position the GEISC have. Second is the evaluation of the strategic choices of the GEISC. All these important aims described in the chapter above lead to the development of the research design for this thesis, which is described in the next sub-chapter.

1.3 Research design

The designed conceptual framework (figure 1) consists of three major components. These components are the strategic position, the strategic choices and the further growth.

The SP should consider the impact of the external environment on the strategy and should identify the strategic position of GEISC. The questions raised by this component are an important part of the analysis in this thesis and for the valuation of future strategies. The constituents of strategic position are from the following frameworks, which are: Political, Economical, Social, Technological, Environmental, Legal (PESTEL), Yip ́s International Drivers, Porter ́s Five Forces. In chapter 3 the frameworks will be explained more in detail. The SC includes the understanding of the basic of the strategy or future strategy (Johnson, Whittington, Scholes, 2008). This is another important component for this thesis. It helps to identify the strategic direction of GEISC.

Which is to stay in advantage. For example, the right choice of strategy forms for their markets and products that are available for the companies. The constituents of SC are from the following frameworks: Market Entry modes and the International strategies framework.

The component of further growth considers the theme around the condition for further growth. The synergy of all these components will directly tangent the research questions described in the chapter above. For example, by identifying the factors how the globalisation influences the strategy of the investigated companies, it will obtain a recommendation for the GEISC to gain a better business performance by adaption of strategies in the future. The conceptual framework of the research design (Figure 1) will be used as a guideline for this thesis. The purpose of this research design is to provide the theoretical background and the methodology, which will be described in the next chapters. The next sub chapter describes the structure of this thesis.

1.4 Thesis Structure

The following figure visualise the structure of this thesis. This thesis is structured into five steps.

Step 1 Define : Chapter 1 defines the research and business reason. Furthermore it describes the management issues, thesis aims and the research design. Chapter 2 gives an overview about the review of current thinking. Lastly it includes an ethical reflection of this thesis.

Step 2 Measure : Chapter 3 covers the theoretical frameworks and theories of this thesis. Chapter 4 discusses the methodological approaches of this thesis. Further it describes the research method and discusses ethical issues. A critical review ends this chapter. Chapter 5 describes the data collection process of this thesis.

Step 3 Analyse : Chapter 6 describes the data analysis of this thesis. It gives a detailed report of the empirical results of this thesis. Further it analyse the researched secondary data gets analysed.

Step 4 Findings : Chapter 7 summarise the findings of the thesis and will discuss and interpret the survey results.

Step 5 Conclusion : Chapter 8 contains the major findings and the conclusions of this thesis. The next chapter elaborates and discusses the review of current thinking.

2 Review of current thinking

This chapter will examine the review of current thinking and will encompass the wide field of strategies and gives newer perspectives to this research topic.

The following figure displays the relevant investigation areas of the review of current thinking. It will help the researcher to narrow down the research of the literature will help to elaborate the framework for the further thesis.

Abbildung in dieser Leseprobe nicht enthalten

It begins with the literature research of all relevant data and conditions regarding to the investigated companies and market. For the further thesis it is essential to understand the industry, the domestic and foreign markets. This data will give an overview of the current situation of the investigated companies.

The ZVEI is a valid database in which the German Electrical Industry and further the market of GEISC is extensively described and benchmarked. Also they have a valid online database, which gives a good overview for this topic. For example for the further thesis it is necessary to identify the market share of the foreign or domestic market.

Additionally, the German online portal for statistics, Statista or the German Federal Ministry of Economics and Technology are also valid databases and give a clear view of the market shares and an overview of the current economical situation in Germany. So we can see in sum, these findings provide needful information for the further data collection and analysis. The sources are valid.

The second part of review of current thinking elaborates the widely field of strategy and globalisation. To elaborate this wide field a clear research of the current thinking has to be made. There are many academic journals, books and research papers, which investigate the theme of international strategies.

Onkelinx and Sleuwaegen (2010) identified a strategy for the internationalisation of small & medium- sized companies. In this investigation they describe and elaborate extensively the strategy finding process.

Furthermore they describe that companies need to be careful with the market entry mode, the timing, scope and pace at which they deploy their international activities. Additionally they also find strong evidence of differences in initial commitment and export growth performance. Finally it can be said that the research finding tangents to this thesis and is needful to narrow down this investigation. But there are also limitations in this thesis. First, this thesis is focused on quantitative measurements and ignores the qualitative dimensions related to management and organisations. And second the thesis is based on small and medium sized companies.

Another study has revealed that extensive margins as a result of increasing global activities have an impact on the strategy. Mayer and Ottaviano (2007) have found out that an extensive margin is important in the creation of new trade for several countries in Europe and therefore for their strategy. In sum, this research finding is unsuitable for the further thesis.

The “Journal of the OECD Centre for Entrepreneurship” (2013) has evaluated limitations and drivers for companies that want to internationalise their business. This Journal has identified limitations such as finance and physical resources. In sum the journal highlights leading barriers due to internationalisation.

The main barriers are e.g. limited information to locate markets and inadequate knowledge in international markets. In sum, this research finding tangents to this thesis and is needful for the further elaboration.

A second research journal has the following output. Reason and Mughan (2002) found out that internationalisation strategies of business operations relies heavily on the larger firm experience, which does not necessarily represent an easily transferable model for the small firms. They suggest that small firms are often opportunistic and it is the international orientation of the decision maker, often the owner- manager, which is the key to the international activity of the firm. Furthermore, they suggest that this orientation has its roots within the internal culture of the enterprises, which is reinforced by the external cultural environment. This result is intellectual approach for the further investigation. It will help for the evaluation of this thesis.

The further research in the review of current thinking lies on the focus regarding to the research design discussed in chapter 1.3. The focus lies on the theory for the strategic position and the strategic choices.

Johnson, Whittington and Scholes (2008) suggested for the elaboration of the strategic position the PESTEL, the 5 Forces framework from Michael E. Porter and the Internationalisation Driver´s from G.Yip (2003). These frameworks illustrate and identify the external environment and cover a wide range of influences on the business environment. For the elaboration of the strategic choices Johnson, Whittington and Scholes (2008) suggested the frameworks of market entry modes and Michael E. Porters four international strategies.

This includes e.g. joint ventures, licensing and foreign direct investment. Further the forms of international strategies.

In sum, this source is valid and provides a good and stable base of the theories for this thesis. In the further strategic management literature there are identified three other main categories of international strategies (Thoumrungroje & Tansuhaj, 2005).

− Generic Strategies, based on Porter's study (1980),
− Marketing Standardisation vs. Adaptation (Albaum, Tse 2001),
− Diversification vs. Concentration Strategy (Aulakh, 2000),

Micheal E. Porter (1985) has a clear idea with the framework of Generic Competitive Strategies. He suggested that there are two basic types of competitive advantage that influence the five competitive forces (5 Forces framework) that determine the profitability. He describes the generic strategies as follows: cost leadership, differentiation and focus. Finally, the generic strategy framework is a different way to elaborate the part of the strategic choices. But for this thesis and the research question it is no helpful. After reviewing the current thinking on the theoretical level, the further text elaborates ethical aspects of this thesis.

2.1.1 Ethical reflection

The following chapter describes the ethical aspects of this thesis. In international business, there are many ethical factors that should be considered.

For this thesis the following main ethical issues are evaluated:

- Ethical employment issues
- Corruption issues
- Pollution issues

Ethical employment issues

Ethical employment issues are e.g. wages and the working environment. This wages and the working environment in overseas locations are often inferior to those in Germany. If firms hire workers there, they are faced with issue of what pay levels and what working conditions are acceptable. Applying German standards is usually not realistic and often simply disrupts the established market. An effective approach is to develop company standards, which protect workers while fitting into the local economy. The standards have to guarantee a living wage, protect the safety of the workers and establish a reasonable number of hours for the workweek (Gutmann, 2000).

Corruption

The corruption is another main factor in international business. Smaller gifts, of a size that would not normally influence a major decision, are considered ethical in some societies and may be legal under local and German laws. It found that large sums are routinely required to do any business in a country; the decision to enter that market should be re-evaluated (Markgraf, 2014).

Pollution

Furthermore the third main ethical issue is the pollution. Because not all foreign countries have environmental legislation, that makes it illegal to pollute. Companies may discharge harmful materials into the environment and avoid costly anti- pollution measures. For example an ethical approach to the expansion into such markets is to limit the environmental footprint beyond what is required by local laws. An ethically operating company ensures that its operations do not have harmful effects on the surrounding population.

Since the company has the knowledge and expertise to operate within German environmental regulations, it is ethical to apply similar standards in your new locations (Markgraf, 2014).

Summarizing these mentioned points, there are great ethical issues in international business. This point is sensitive. If markets in foreign countries offer a higher profit potential than the domestic market, it makes sense to expand internationally. But it should consider preparing the expansion and research target markets careful with the ethical issues of the foreign country.

These issues will be helpful for the thesis and will be implement in the further investigation. Summarizing all points above, the groundwork is taken for this thesis. The next chapter explains the researched theoretical frameworks and methods that are used in this thesis.

3 Theoretical framework

This chapter presents appropriate theories discussed in the chapter 2 above. The models and concepts of business research are conducted in areas closely related to the theme of the thesis. Because of the fact that the business research area of globalisation in a strategic context is a widely evaluated field. The following different theories, models and concepts will provide the theoretical framework of this thesis. It covers the research design (figure 1) and will help to fulfil the thesis aims. At the end of this chapter an evaluation of the used theories will complete the chapter. Beginning with the theories for the part of strategic position.

3.1 PESTEL

The PESTEL method is a method to identify the external environment. It covers a wide range of influences on the business environment. These factors will gain a success or failure for strategies (Johnson, Whittington, Scholes, 2008).

To identify these influence factors how they are changing as a result of the globalisation to the GEISC is important for this thesis. The aim by using this framework is to identify the strategic position of the GEISC. It should identify what are the main factors with a high impact on the strategy.

It helps also for the market selection and it helps to decide which countries to enter. It should be considered that not all countries are equally attractive.

In sum, it helps to reveals changes from different point of views (Johnson, Scholes, Whittington, 2011). The next figure visualises and describes the PESTEL factors.

Erforderliche Parameter fehlen oder sind falsch.

Abbildung in dieser Leseprobe nicht enthalten

3.2 Yip ́s Internationalisation Driver ́s

Due to the complexity of the globalisation, the framework of Yip´s international drivers should support this thesis. It should help to identify the strength and direction of trends of the markets of the GEISC. In the literature there are widely researches with pressures increasing globalisation. For example barriers to international trade or migration are much lower than they were a few years ago. In the other hand the international regulation and governance have improved, so that investing and trading overseas is less risky. The next figure gives a short overview of the Yip’s framework of ‘drivers of internationalisation’.

Abbildung in dieser Leseprobe nicht enthalten

Yip’s (2003) framework of ‘drivers of internationalisation’ provides a basis for such a diagnosis. The key insight from Yip’s driver’s framework is that the internationalisation potential of industries is variable. There are many different factors that can support or inhibit it. The drivers are:

- Market drivers: There are three critical factors that influence this driver. First, the presence of similar customer needs and tastes. Second, the presence of global customers and third the transferable marketing promotes market globalisation.
- Cost drivers: The costs can be reduced by operating international. For example it makes sense to locate the manufacturer of clothing in China where the labour costs are still considerably cheaper, but to keep the design activities in cities such as New York or London, where fashion expertise is concentrated.
- Government drivers: This driver can facilitate and inhibit internationalisation. The elements of this driver are tariff barriers, technical standards, subsidies to local firms, ownership restrictions, local content requirements, controls over technology transfer, intellectual property (patenting) regimes and currency and capital flow controls.
- Competitive drivers: This driver has two elements. First, interdependence between country operations increases the pressure for global coordination and the second element relates directly to the competitor strategy. The following figure displays the International Drivers framework.

But there are also limitations using this framework. According Johnson, Whittington and Scholes, (2008) it should be recognized that, this framework refers to the need for a global strategy. All parts of the business should be carefully co-ordinated.

3.3 Porter ́s Five Forces

The Five Forces framework (Porter, 2008) is an industry structure analysis. It is a device for strategy analysis in business planning. The five forces constitute an industry’s ‘structure’ (Johnson, Scholes, Whittington, 2008: p.60). The basic idea is to determine the attractiveness of the market mainly due to the market structure. This market structure in turn impact the strategic behaviour of the company. Thus, the success of a company depends therefore at least indirectly by the market structure (Porter, 2013). This framework supports the further thesis and helps to identify the market structure of GEISC and how the globalisation has an impact on it. Michael E. Porter (1980) describes the Five Forces as follows:

- The Bargaining power of buyers
- Threat of substitutes
- Bargaining power of suppliers
- Threat of potential entrants
- Competitive rivalry

In the literature there are some limitations of Porter ́s Five Forces.

According to Henry (2011), the Porter ́s Five Forces has also limitations. The following points briefly describe some significant criticism, which are no more discussed in detail.

- The Five Forces framework assumes a zero-sum game. Competitors can only succeed at the expense of other players in the industry. For example in the automotive industry Toyota and Honda works with their suppliers together to ensure that parts are available. In practice there are also collaborations.
- The Five Forces framework is a static analysis that assumes relatively stable markets.

After reviewing the theory, which supports the strategic position of the research design (figure 1), the further text elaborates the theory for the part of strategic choices.

3.4 Market entry modes

The market entry modes are often selected according to stages of organisational development. Global activity brings organisations into new and often unknown territory.

According to Johnson, Whittington and Scholes (2011) there are four market entry modes: Exporting, Joint Ventures and Alliances, Licensing and Foreign Direct Investment.

This framework helps to identify which is the pursued market entry form of the GEISC as result of the globalisation.

These forms of market entry have advantages and disadvantages with a direct impact to the company. According to Johnson, Whittington and Scholes (2011) the further text explain first the advantages and than the disadvantages.

Advantages:

- Exporting: By using the Internet, small firms can gain access to inter-national markets.
- Joint Ventures and Alliances: Investment risk shared with partner.
- Licensing: Limits economic and financial exposure.
- Foreign Direct Investment: Full control of resources and capabilities.

Disadvantages:

- Exporting: Limits opportunities to gain knowledge of local markets and competitors.
- Joint Ventures and Alliances: Loss of competitive advantage trough limitations.
- Licensing: Difficulty of identifying appropriate partner and agreeing contractual terms.
- Foreign Direct Investment: Acquisition may lead to problems of integration and coordination.

Fore more details about advantages and disadvantages this be found in appendix A (table 3).

3.4.1 The International Strategies

The International Strategies framework gives an overview of international strategies. There are four international strategies. These strategies are based on choices about the international configuration of the various activities of organisations. This framework helps to identify which is the pursued international strategy of the GEISC.

Michael E. Porter (1986) developed a matrix how international strategies could be evaluated. Figure 6 points the characteristic of Porter´s international strategy evaluation matrix.

Abbildung in dieser Leseprobe nicht enthalten

Porter evaluates the internationalisation strategies on the horizontal axis with the configuration of activities and on the vertical axis with coordination of activities.

The four strategies are:

- Simple export: involves a concentration of activities in one country. Marketing of the exported product is very loosely coordinated overseas, handled by independent sales agents in different markets (Johnson, Whittington, Scholes, 2008).
- Multi domestic: is similarly loosely coordinated internationally, but involves dispersion overseas of various activities, including manufacturing and sometimes product development. Goods and services are produced locally in each national market (Johnson, Whittington, Scholes, 2008).
- Complex export: involves the location of most activities in a single country, but builds on more coordinated marketing. The coordination demands are considerably more complex than in the simple export strategy (Johnson, Whittington, Scholes, 2008).
- Global strategy: The most mature international strategy, with highly coordinated activities dispersed geographically around the world (Johnson, Whittington, Scholes, 2008).

In practice, there are limitations. Managerial coordination and geographical concentration are matters of degree rather than sharp distinctions. Companies may often oscillate within and between the four strategies. Their choices, moreover, will be influenced by changes in the internationalisation drivers introduced earlier (Johnson, Whittington, Scholes, 2008).

3.5 The Theories – a summary

Summarising all information gained from this chapter, the following evaluation can be made.

Abbildung in dieser Leseprobe nicht enthalten

Figure 7 Theory evaluation matrix

These theoretical frameworks are used as a guideline for the further structure of this thesis. The following figure shows how they support the research design.

The literature research and the explaining of the usage of theoretical frameworks is closed here. The next chapter explains the methodology used in this thesis.

4 Methodology

The methodological approaches of this thesis are described in this chapter. The target is to elaborate an appropriate research method with which the thesis aims can be achieve. In conjunction with the motivation for the chosen research process and structure, the research strategy will be discussed. Last, the weaknesses of the research method are addressed in a critical review.

4.1 Research method

The aim of this dissertation is to answer the thesis question:

Does globalisation impact the strategies of GEISC and how favourable are the conditions for further growth? The flow chart in figure 9 gives an overview of the research process and its structure.

Abbildung in dieser Leseprobe nicht enthalten

Figure 9 Research process

According to Saunders, Lewis and Thornhill (2009) the choice of mono or multiple methods is increasingly advocated within business and management researches. It is important to know that there are two different types of methods. The mono methods and the multiple methods. The multiple methods are divided into the mixed- method research and the mixed- model research. The following text explains shortly the differences between those methods. The mixed-model research combines quantitative and qualitative data collection techniques and analysis procedures as well as combining quantitative and qualitative approaches (Saunders, Lewis, Thornhill, 2009). The qualitative data must to be quantities. This means that the data are converted into numerical codes. By this way, the researched data can be analysed statistically.

Tashakkori and Teddlie (2003) argue that multiple applied methods help to gain better insights in order to answer the thesis questions and furthermore it also helps for a better evaluation. Also Saunders, Lewis and Thornhill (2009) have the opinion that the mixed methods approach is a general term to use both quantitative and qualitative data collections. Hussey and Hussey (1997) distinguish that a survey can be both, qualitative with only a few informants or quantitative, with a large number of informants.

The terms quantitative and qualitative are used widely in business and management research. For this thesis it is used a single data collection technique and corresponding analysis procedures. The researcher chooses a mono method approach as research method. Based on these facts, that the survey of this thesis is qualified as a quantitative research method.

To collect primary data for this thesis it is used a survey. A very suitable method to conduct a survey is an e-mail questionnaire and an online questionnaire, since it provides primarily raw data. According to Saunders, Lewis and Thornhill (2009) there are five main types of questionnaires: Internet- or intranet-mediated, postal, delivery and collection, telephone and interview schedule. They have of the opinion that an appropriate way to sending these questionnaire is by the electronically administration. Hewson (2003) underscores this type of data collection.

Internet- and intranet-mediated questionnaires are usually administered in one of two ways: via email or via a website. Kotler (2001) has the opinion that a survey is a valuable research instrument. Primary data can be collected in surveys. These are the best-suited ways for descriptive research. The decision to use an “e-mailed or online survey as the appropriate data collection” method for a research has of course to be decided upfront to avoid potential drawbacks (Kuckartz, 2009). For this type of data collection there are advantages and disadvantages. The advantages of these survey questionnaires are the lower costs, geographic coverage compared with the ability of larger samples. On the other hand there are also disadvantages. One of the main reasons is the low response rate. Other stumbling block are the literacy and the language (Bourque, Fielder 2003). The response rate is an important point. Fowler (2009) has of the opinion, that the best way to minimize survey nonresponse is to use more than one mode to collect data. Additionally he suggests telephone follow- ups. This will increase the survey response rate. Saunders, Thornhill and Lewis (2009) suggest that questionnaires must be introduced carefully to the respondent. For self-administered questionnaires it should take the form of a covering letter. To achieve an acceptable response rate it is necessary to remind the participants. Mangione (1998) suggests that in order to achieve a high response rate it should be done three times during a period of maximal three month after the questionnaire was sent to the informants. He expected that the direct contact to the prospective informants will deliver an acceptable rate.

After discussing the research strategy the following text specifies some important rules for the structure of the survey questionnaire. According to the fact discussed above, the email and respectively the online questionnaire is a very widely used method to conduct a survey. Here it is important to observe some rules during the creation of the questionnaire. It begins with the sequence of questions. This is important. The questions should have a logical flow and they should be structured to the appropriate literature. This point will be discussed later in the further text. Also the survey should be started with easy questions. During the survey the level of difficulty of the questions should be increased.

[...]

Excerpt out of 118 pages

Details

Title
The impact of globalisation on Germany ́s Electrical Installation System companies
Subtitle
How favorable are the current conditions for further growth?
College
Buckinghamshire New University
Grade
2,0
Author
Year
2015
Pages
118
Catalog Number
V935817
ISBN (eBook)
9783346266354
Language
English
Tags
PESTEL, Survey, Strategical Management, mixed-method research
Quote paper
Adriano Denaro (Author), 2015, The impact of globalisation on Germany ́s Electrical Installation System companies, Munich, GRIN Verlag, https://www.grin.com/document/935817

Comments

  • No comments yet.
Read the ebook
Title: The impact of globalisation on Germany ́s Electrical Installation System companies



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free