PhaseSeparation Solutions (PS2): The China Question
PhaseSeparation Solutions (PS2): The China Question
Beforeinvesting in the Chinese market, PS2 should investigate on theregulatory problems, economic problems, and potentially limitedmarket problems in China. It should also conduct a rigorous micro andmacro analysis of the market, industry, and the country to avoidmisfortunes. In addition, it should undergo external and internalanalysis in order to develop appropriate strategies for expansion.These analyzes will help the company to detect the opportunities andthe threat in the market, and be of assistance in finding theirsolutions.
Yes,PS2 should get into the Chinese market. Firstly, China has greatopportunities that lime well with PS2’s visions, as well asresources and capabilities. PS2’s vision is to become a worldwidesoil remediation company, as well as an oily sludge service provider.Therefore, entrance to Chinese market supports the ambitions of thecompany. Further, PS2 has sufficient resources and capabilities toengage in any market. They include high-tech (Patent on TPStechnology), business and international expertise, financialresources, experienced management team, mobility and reliability, anda renowned excellent performance. Secondly, China has a large markethence, a great oil sludge and POP marketplace. The China PCB marketis three times bigger than the Canada PCB market. According toVolberda(2011),the China PCB market is approximately seven hundred million dollarstogether with other POPs. Furthermore, the Chinese government hasplans on environmental reforms therefore, there is a possibilitythat the size of the Chinese market will expand dramatically in thefuture. Thirdly, the PS2 offers TPS technology alternative that ismore mobile. In addition, there are contaminated sites in the Chinesemarket, which offers PS2 a competitive advantage compared to otherChinese companies already in operation. Besides, this makes Chinesemarket very attractive to this industry because China has huge oilsludge issues, POP issues, and there is still pollution in thecountry. Lastly, PS2 needs to expand hence, China will offer it anopportunity to learn and improve technologically. China has a stablepolitical environment, measures in cleaning the environment, policiesto environmental protection, and a strong will to deal with POPissues.
Chinahas offered PS2 with two opportunities. The first option and thesecond options are joint ventures Nanjing Institute of EnvironmentalScience (NIES) and Nahai Solid Waste Central Disposal (Nahai)respectively. According to Hittand Ireland(2009),PS2 should conduct an intensive investigation of the two options.Although the two options are very attractive, a good decision isnecessary. PS2 should weigh the two options considering the cost andthe benefits of pursing each opportunity. It should assess eachoption separately.
Thefirst option is a joint venture in the remediation POP-contaminatedsoil with Nanjing Institute of Environmental Science (NIES). It isrecommendable because it this is a pop market, and a 50/50 jointventure with NIES, a state environmental agency. Secondly, Jiangsuprovince is a favorable location, it offers huge potential for theindustry, and there are educated staffs on the site. Further, in thefuture, there will be more projects in China. Some of the strength inthe first option include government support, free advertisingcampaign, availability of experienced support, huge potential market,first mover advantage, and the availability of solution andconsulting services. On the other hand, the weakness of thispartnership includes imitation risk that is, stolen technology.
Thesecond option is also a joint venture in oil recovery from oil sludgewith Zhoushan Nahai Solid Waste Central Disposal (Nahai), a privatecompany. The location of Nahai, Zhejiang province is a favorablelocation with a huge potential. PS2 should also pursue this optionbecause the two CEO have a substantial trust on each other. This willhelp in overcoming cultural differences. Additionally, PS2 will beassociating with an existing company that has a permit, excellentinfrastructure, and fixed facilities. Unfortunately, this option isrisky.
Onthe questions whether to pursue both, PS2 should assess internalcapabilities while focusing on the financials and the costs of thetwo options. Further, PS2 should evaluate the costs and the benefitsof pursing two choices. Based on the analysis, the two options aregreat opportunities, viable, and attractive for PS2. Therefore, PS2should pursue both. However, the first option is a bit safer, butbased on the strengths of the second option it is recommendable topurse both. Furthermore, the Chinese government encourages PS2 topursue both. Besides, PS2 have adequate resources and capabilities topursue both opportunities.
PS2should also purse both opportunities because it is easy to protectthem. Once it enters the China market, PS2 will also have to makeseveral acquisitions to raise its business into a worldwide company.Beamishand Beamish(2006) urges that both opportunities are beneficial for the modelgrowth of PS2. They reason that PS2 is a small growing companyhence, pursing both opportunities will offer it an opportunity toreserve mount capital corporation acquisition. This will also help itrealize its goals, as well as expand its business internationally.Technologically, China is very innovative. Moreover, there is highdemand for TPS technology to remit toxic waste from the environment.The TPS technology will be beneficial to be at the location since itis impossible to transport contaminated sand.
Anequity-based entry refers to a firm investing directly in the abroadmarket. It includes green fields, joint venture, mergers, andacquisition. Conversely, equity is the difference between the valueof the assets and the cost of the liabilities. Here, PS2 shouldconduct an internal assessment of resources and capabilities toestablish its current capacity and equity-based entry, as well ascapabilities to expand in the futures. In addition, PS2 need todetermine the current, as well as future resources and capabilitiesthat need an extension. PS2 should also determine the effect ofcooperative opportunities with Nahai and NIES and their impacts onthe PS2 metrics, corporate resources, and structures.
PS2Company possesses resources and capabilities that pursue anequity-based entry. They include a high-tech (patent on TPStechnology), experienced management team, renowned world-classperformance, business and international expertise, financialresources, mobility, and reliability. PS2 has high-tech, and it hassuccessfully installed Thermal Phase Separation (TPS) Technology infourteen countries. TPS unit indirectly heats the contaminated soil,boiling off the perilous contaminants and consequently capturing themas vapor. Then, it condenses the vapor into a liquid so that thecontaminants do not escape back to the environment. According to Hittet. al. (2009), TPS Technology is the only technology with theability to extract up to ninety percent of the oil from sludge.Additionally, it separates hydrocarbons with 550°C boiling points.TPS Technology is internationally recognized and proven a world-classtechnology due to its effective performance, mobility, reliability,and lack of harmful air emissions. Worldwide, thousand tons ofcontaminated materials have been treated using TPS technology. TheTPS technology has also been used in high-profile projects, forinstance, in the 2000 Olympic Games Site Restoration Project, inSydney, Australia.
Inaddition, PS2 has experienced management team with a globalexperience. Antle, the CEO of the company, holds equity-basedinterest. Additionally, the PS2 management team is not new to theglobal market, and they have a potential to pursue equity-based entryby controlling the company’s resource and capabilities. Therefore,PS2 possesses the requirements for equity-based entry.
Atthis point, PS2 should investigate the two options and calculateownership levels percentage in both opportunities. It should considerthe equal joint control, minority control, and majority control. Inother words, the contract negotiations with the joint venture shouldsuit their terms.
Theownership level is very vital for each option should PS2 shouldhandle all the environmental issues in the Chinese market. China hasa high population hence, PS2 will manage big location. According toVolberda(2011),PS2 should overlook its growth into the public firm, as well as itsdiversification into the waste management in China. It requireshigher ownership level in waste management and acquisition. This isbecause PS2 has a critical technical expertise team and the companypresents development stage. Furthermore, PS2 is a small growingcompany hence, it requires more funds in order to realize itsvision.
Beamish,P. W., & Beamish, P. W. (2006). Casesin Strategic Management.Toronto: McGraw-Hill Ryerson.
Hitt,M., & Ireland, R. (2009). StrategicManagement: Competitiveness And Globalization: Concepts & Cases(8th ed.). Mason, OH: South-Western.
Volberda,H. (2011). StrategicManagement: Competitiveness And Globalization: Concepts And Cases.Australia: South-Western Cengage Learning.