Introduction
EPCC Contractor is based in Iraq and specializes in the power, oil, and gas industries. The enterprise intends to become a powerhouse in the sector. Some of the activities the company undertakes in this quest include civil models, obtaining contracts, indigenous manufacture, building, fitting, commissioning aid, and teaching customers as well as workers (ATCO, 2022). An analysis of the strategic challenge facing the company on global expansion and integration of key frameworks is vital in informing a conversation for the management that will steer growth.
Strategic Challenge
There has been a recent surge in the number of energy-producing regions in the world with many requiring the services of EPCC Contractor. The company intends to serve these regions and producers through the installation of infrastructure that ensures the exploration of oil and gas sources, hence diversification. This involves expansion on a global scale and requires the company to stretch its resources, mainly based in Iraq.
The limited resources the company has in terms of manpower such as competent engineers are a major challenge facing the management. There is a concern that expanding to international markets may require the company to send its staff overseas. This action is poised to jeopardize the market power that the company has a comfortable grip upon locally. The management is also concerned that reluctance to take the risk and try international markets guarantees redundancy for the company as growth is limited within the local market. The local market is massively saturated with many firms and the discovery of energy sources, which the company specializes in, has been slow over the last few years. Expansion to global markets such as new sources of gas, oil, and power is risky due to the possible challenge of procuring the necessary materials. EPCC has solidified its position as a leader in the sector through the provision of quality work to all clients. This involves ensuring that the materials used for construction are of the highest possible quality.
The company considers exporting the materials needed for its operations to these countries and carrying out the installation. This move is however hindered by the legal frameworks that govern some of the countries that this firm seeks to venture into. The laws of these countries require the company to carry out its activities using local manpower and resources such as construction equipment. There has been overwhelming difficulty procuring manpower who meet the required standards. Additionally, the quality of the materials within the host countries does not meet the necessary standards. The company is compounded with the dilemma of relying on local materials and manpower in the host countries and risks providing substandard work or exploring additional options. The entity has the perfect opportunity to build a portfolio in developing countries that have minimally explored energy by making initial moves through perfect work. If the company refuses to embrace this alternative of exploring overseas markets, it could opt for diminishing local markets. This is not a choice for the company as focusing on the Iraq market guarantees collapse and the company may run out of business soon.
Core Frameworks
The standardization strategy is a core component of a global strategy that involves providing uniform products to customers everywhere regardless of location. This has been the strategy utilized by EPCC Contractor thus far and has been core in ensuring its success in the Iraq market. The standardization has been successful due to the geographical proximity of all its clients within the country and region. Similar conditions in the landscape and soil composition have also been an added advantage in ensuring all the customers receive uniform quality production. Standardization ensures that a product achieves immense global integration but minimal local responsiveness due to the foreign nature of products elsewhere (Williamson, 2021). Standardization strategy is preferred where firms prefer to centralize most of their activities such as product design, supply chain, marketing costs, and marketing methods. This is a potential strategy that can be considered by EPCC Contractor.
A transnational strategy is a global expansion approach preferred by companies seeking to expand internationally in an area with competition and an urge to meet local needs. A transnational strategy is difficult to achieve due to the increased cost of production likely to be accrued from serving some customers. The advantage of economies of scale achieved in standardization is also eliminated due to the need for varied products. Transitional strategy can involve studying the local market in the countries EPCC Contractor seeks to venture. The company can carry out the desired constructions to meet the standards required by the host customers regardless of their merit in the company’s standards. The materials used by the company if this strategy is adopted may jeopardize the reputation of the company on the global stage massively.
Hypothesis
EPCC Contractor may opt to either adhere to the standardization strategy or the transnational strategy. Each of the two strategies has cost and manpower impacts on the activities of the firm overseas. If the company opts for the standardization strategy, they are poised to venture into foreign territory with familiar frameworks. This involves using the same engineers and manpower to execute the contracts in these countries, and as previously established, this goes against the legal framework of the customers. The firm could make adjustments to the standardization plan which ensures the tweaks made remain within the confines of the law and guarantee the provision of top-quality work. This can involve importing only what they must and relying on the local market to meet the demands required by its quality assurance.
Alternatively, EPCC Contractor can rely on the transnational strategy to meet the needs of its customers. This plan is poised to guarantee maximum global integration and local responsiveness. If executed carefully, this strategy is likely to provide exposure for the company as a flexible entity ready to meet client needs. Errors in the execution of this strategy are likely to result in losses for the company stemming from excessive construction and procurement costs. The execution of the transnational strategy must involve a massive study of the foreign market to determine the needs of the clientele. For EPCC Contractor, the structures constructed for foreign clients do not have to resemble those done in Iraq. These constructions should instead comply with local legislation on material, labor, and process.
Internal Conversations
A conversation on a business plan is inevitable if the company is to succeed in the new market and beat competitors. The plan must entail initial experimentation to ensure the moves made afterward are proven. Experimentation should involve a few resources, both human and equipment to ensure all the company’s funds are not risked in one move. The decisions made regarding the experimentation phase must be bold enough to propel the company to succeed and reserved enough to avoid catastrophic losses. Communication is very crucial when getting this stage underway to avoid confusion that is common in new ventures. The company ought to configure its staff in a manner that ensures an effective flow of command and communication. The consideration of other participants in the industry is also vital in guaranteeing success in the new market. The company must use the quality of work provided by previous firms in the area as a stepping stone to determining the quality required and in turn bettering those standards. An effective plan is the responsibility of the management and staff and must meet all the set objectives.
The determination of positions the company intends to assume in the new territory is vital before entry into the new market. The positions inform many aspects of the business likely to be conducted in the global expansion strategy. The firm must sort the supply chain to meet the new location demands and assure the same efficiency experienced in previous locations such as Iraq. The business model in the new location can either mirror the one in Iraq or get customized for the new location so that it meets the needs of the new customers. Ideally, the firm is best positioned to tweak its Iraq business model and make adjustments that suit the new location to ensure familiarity is guaranteed for management and staff. The installed base of operation must be in a favorable and strategic position in terms of the security of the equipment and materials. The base must also have proximity to the area the new clients need structures constructed to ensure ease of transportation. The management must carry out logistics for all these needs and others to prevent exaggeration of costs or underestimation.
The strengths of the company such as its reputation in the market as an outlet for quality work must be spearheaded in the popularization attempts. Its weaknesses as a novel business in the new location must be masked through the illustration of its success and guarantees from satisfied customers. EPCC Contractor must make considerable projections on the likely developments of its outlets in the new market for growth approximation. Profitability is a vital feature of all ventures and must be assured for EPCC Contractor to ensure continuity. The company can plan for the expansion of its brand to guarantee customer satisfaction. This is an agenda geared towards ensuring the company gains return clients and new referrals. Customer satisfaction is achievable through sufficient interaction of EPCC Contractor staff with locals. Sufficient marketing through local media is a critical strategy for building long-lasting relationships with customers. Employee development is an aspect of setting up business in new locations that cannot be disregarded. A guarantee of specific career upgrades through promotion and sponsored education for the workers is sufficient motivation to seek a challenge in a new area.
Training the company supervisors on client demands, culture, and needs is also vital if the company is to succeed, and a conversation that must be sanctioned internally. The demands and culture can be informed through the study of existing constructions within the same scope of energy infrastructure (Demartini & Taticchi, 2020). The previously established structures can offer the company insights into the expected quality to ensure the performance is overwhelming.
Training and hiring and training the local workforce is an essential move that EPCC Contractor can make in compliance with local regulations. The training of the local workforce is an attempt to ensure that the company does not lose its crucial staff in Iraq. It also ensures that the company hires locals and benefits them as required by law. The training of these locals must be in a language that is familiar to them to ensure understanding is maximized. The standards of the company must be integrated with local demands to guarantee the generation of an effective labor force. The preparation of company staff to ensure they meet required standards as teachers for the locals is an essential undertaking by EPCC Contractor. The release of the staff who meet this specification must be before the entry of the firm into the new market. These timelines must be effectively established to achieve sustainability in delivering the projects. This process can be eased by collaboration with local institutions and companies that may provide sufficient engineers and workforce for the company.
Submitting material specifications to the local manufacturers is vital in attaining compliance with local material specifications. Sometimes locals produce materials that do not meet foreign company specifications and there is a need for the materials to meet standards for quality work. Finding local contractors willing to meet foreign specifications is difficult due to limitations in machinery. The machines within the local manufacturer’s company may deter them from producing desired materials. Providing samples for the locals as a means of ensuring they have bases they can work within is practical. EPCC Contractor must be willing to offer favorable incentives to the local suppliers by guaranteeing continuity in business and building customer loyalty. Local firms cannot make massive shifts in their production process if the new means procured are not for posterity. EPCC Contractor must therefore assure these local companies that it will continually rely on them for materials whenever such construction opportunities arise within the region. This builds lasting business relations and EPCC Contractor can liaise with the local authorities and entrepreneurs to determine the best partners.
Conclusion
In conclusion, EPCC Contractor is an Iraq-based enterprise that seeks to venture into global markets. The company encountered the challenge of local legislation on material and manpower, conditions that may jeopardize quality requirements. The company can either settle on a standardization strategy or a transnational strategy, with each having potential benefits and setbacks. The company must make an informed decision based on internal conversations that revolve around a keen study of the market. Additionally, the company must deliberate on cooperation with local manufacturers, the training of local workers, and cooperation with local authorities.
Reference
ATCO. (2020). EPCC. Web.
Demartini, M., & Taticchi, P. (2020). How Environmental and Social Issues Affect Business Strategy.Corporate Sustainability in Practice, 3–20. Web.
Williamson, P. J. (2021). The Oxford handbook of international business strategy.Journal of International Business Studies. Web.