Economia

ACTIVITY 4- ENTRY MODES - The Internationalization of Irizar

INTERNATIONAL BUSINESS MANAGEMENT Group I- Course 2012/13
1) Which is the organizational structure of Irizar group? Do you think it is appropriate for the coordination of international activity?

The organizational structure of Irizar group is characterized by a flat hierarchy which is shown in the decentralized decision makingsystem and high participation of employees. Main elements of their organizational structure are the value proposition (workers are strongly motivated and committed to firm’s goals) and high interchange between value chain activities with an excellent communication network within the firm. Another important part of Irizar’s business model are its Core competencies, like their leadership skills andhighly skilled human resources and their distribution networks. The graphic below shows the organizational structure of Irizar with its high interaction between different value chain activities and flat hierarchies - one of the key success factors of the firm.

www.fjotland.com/Irizar%20Case%20MASTER.
If the model is appropriate for the coordination of international activity depends on someimportant factors: On the one hand the flat structure and high interaction between the value chain activities can be difficult to organize in a internationalized firm. A loss of control and chaos could be a consequence. On the other hand in the case of Irizar it has proven to be a success and led to a high commitment and strong motivation of employees. The implementation of a efficient ManagementControl System and Performance Measurement System is required, as well as a strong capacity of managing the network of Irizar. The company managed to create a sustainable competitive advantage. Their organizational model might be complicated for an internationalization process. A key factor is a highly skilled management to hold the network together.

2) Do you think the model of the InternationalProduct Life Cycle is applicable today in the bus manufacturing industry? Do you think Irizar is using it?

The development stage of the bus manufacturing industry differs from country to country. Due to this, the International Product Life Cycle is nowadays applicable to this type of industry. There are inventor’s countries, developed countries and developing countries.
As busses areinternationally available products, the different stages include effects of outsourcing and foreign production. In some emergent markets, for instance in some African countries, there is not so much competition and the market is not saturated. Considering this, bus-manufacturing firms can get their bearings in those markets that show potential and where it will be possible to allocate their products. Thesuccess of the company depends on different factors. One of them is the stage of the product: new, mature or standardized.
When it comes to a product decline in a determined market, the company can head for an other market, where it will have more success.
Since 1993, when Irizar reached a market share above 45% in Spain and entered the growth stage in this sector, it decided to follow amarket-based strategy and to internationalize itself. It took the chance to export the products, even into follower economies. This was a consequence of the rapid growth in the home market as it did not experienced saturation at that time. In foreign markets, like for example in the Chinese one, the opportunities to introduce the existent busses and to grow was much more higher. Since then, Izar is usingthe model of the International Product Life Cycle and this very successfully.

3) Classify market entry choices into deliberate or emergent.
As we can see , most of Irizar’s market entry choices were deliberate ( China, Brazil, Mexico, India). This is due to the unpleasant and hostile situation the company was running through. Internationalization was one of the last choices the company had...