Activplant Corporation is a software company that specializes in monitoring the performance of manufacturing intelligence systems. The company is headquartered in London, Ontario, Canada, and currently, it is the leader in North America regarding the analysis of the work of plant automation systems. Activplant is focused on possibilities for expansion to the European market to address clients’ needs and increase sales. The purpose of this report is to evaluate the expansion options and provide Activplant with recommendations regarding the solution to choose to increase profitability.
Issue Identification
Activplant is interested in expanding the business to Europe to serve current European clients’ needs and increase the customer base. However, the problem is in selecting the most appropriate and cost-efficient approach to selling products and providing services in this market. On the one hand, Activplant can resolve this issue by developing the partnership strategy, allowing partners in Europe to be fully responsible for sales and support for clients.
On the other hand, Activplant can create a European-based team that will control sales and services in this region. Additionally, Activplant can continue providing services to European-based clients from Canada without planning the active expansion to Europe in the nearest future.
Analysis
The first option to consider for Activplant is the development of the partnership strategy to provide European-based partners with more responsibilities regarding the selling process and the service delivery. Activplant will be required to rely more on ATS and Systema’s approaches to selling the company’s software and provide them with exclusivity agreements. Furthermore, the responsibilities of integration and channel partners will also be extended with risks of providing inappropriate services because of the lack of expertise regarding Activplant’s software and the lack of the company’s control. Moreover, intensive training for partners will be necessary to guarantee they conduct a selling process and the service delivery effectively.
Benefits of this solution are in comparably low costs associated with the reliance on existing partners, and risks are the lack of partners’ knowledge and motivation to address Activplant’s expectations regarding the quality of services.
Another option to pay attention to is the opening of the European office with fulltime staff working in the region to organize sales and services. Benefits of this solution are associated with the possibility of the full control over all operations. Customers attracted with the help of direct sales will receive the required training and support at all stages of cooperating with Activplant, and this aspect will improve brand loyalty. The company will become oriented toward the wide expansion in Europe using its own personnel.
However, risks are associated with high project costs that will be dependent on Activplant’s resources, and forecasts regarding the profitability of such a decision are unclear. One more solution to consider is the avoidance of the direct expansion to Europe with the focus on providing wider support for European clients. Despite minimizing risks and receiving some profits associated with satisfying clients’ needs, threats are related to preventing the company’s growth.
Solutions and Recommendations
Referring to the analysis of available options for solving the issue faced by Activplant, it is possible to state that the development of partnership in Europe is the most efficient decision at the current stage. The reason is that Activplant’s base of clients in Europe is not large enough to guarantee that the company will cover the costs associated with opening the office with fulltime staff. Additionally, the speed with which Activplant in Europe can gain new clients in comparison to the work of their partners is also not appropriate to address all costs.
Even when opening the office in Europe, Activplant will not receive all the benefits connected with addressing their European customers directly. Therefore, this variant is not currently appropriate for Activplant, but it can be considered in the future because the company is recommended to expand to Europe.
The recommendation for Activplant is based on the idea that the company should focus on improving its cooperation with partners to add value to its operations. This solution is based on involving partners more actively into selling Activplant’s products through providing them with exclusivity agreements to increase their motivation to propose this particular product to potential clients. Services and support should also be provided by responsible partners.
However, they will need more training from Activplant to resolve the issue regarding partners’ expertise and skills in offering support for Activplant’s clients. The effectiveness of this decision depends on the work of the partnership and project managers responsible for operations with European clients. If they effectively control the cooperation with partners in Europe, it is possible to gain more customers.
Conclusion
Activplant is recommended to attract European clients through developing its partnership strategy. Although the opening of the European office can provide Activplant with opportunities to organize direct sales and the service delivery, this decision is costly. Currently, the improvement of the cooperation with partners based on the active control from Activplant’s managers can be discussed as the more appropriate decision with reference to available financial and human resources.