Essay Sample on ABB's Diversification & International Strategy: A Success Story

Introduction

Various core reasons encouraged the company to make investments in the international markets. ABB has a history of success with the diversification of its operations, such as the power products and systems, discrete and process automation, and also in low voltage products. Moreover, the company has significant experience in international strategy operations and management, given that it has operations in almost 100 countries. The company similarly engages in various social responsibility activities that contribute to the growth of the country in which it is operating from such as the power system and grids. Another reason for entry into international markets is the need to increase returns on investment such that the Asia, Middle East, and Africa (AMEA) countries contribute up to 37% of revenue, which translates to $15.3 billion and the need for expanded operations, which spans for close to 100 countries.

Corporate International Strategy

The setting of operations in various countries is referred to as the International corporate strategy, and there are different types such as the multinational, Global, multi-domestic, and transnational strategy. It is my view that ABB is using both the transnational and global strategy, which is referred to as the process in which the company is running its operations based on the localized standard. The company operates in Northern and Central Europe, the Mediterranean, North and South America, India, Middle East, Africa, and North and South Asia. The operations of the ABB is based on the standards of these regions since they differ significantly.

Reason for Acquisition and Joint Ventures Strategy

The ABB company has entered and operated in many regions and countries through various channels such as the acquisition and joint businesses with other partners. Furthermore, through the modes mentioned above, the company was able to expand its market and the customer base. Diversification of operations was achievable and the creation of networking with other firms. Besides, ABB was able to share the risks associated with the business with the other companies and also a way of increasing revenues through higher sales and profits. Lastly, it was able to reduce the cost of labor and operational cost through joint operations and the acquisition of other firms.

Main Economic and Political Risks in Emerging Economies

The international markets present the ABB company with both the opportunities and risks, given that some factors are beyond the control of the company. Some of these risks are economical and political factors. The emerging markets have made the company grapple with changes in the policies affecting businesses as a result of changing governments. Moreover, there are risks of corruption since these countries may have weak systems of accountability. The control of the business is indirect since the location of the business in many countries results in the straining of the management. Also, there are the risks of investment, whether they will thrive or fail under the economic downturns and unpredictability of the emerging markets.

Organizational Complexities of International Strategy

The expansion of the operations in many countries led to below-par performance, especially in the power systems business. Also, the ABB company faces complexities in its investment since they buy companies whose operations are failing, such as Power-One. Accordingly, the ABB faces poor expansion decisions and a reduced revenue collection. Moreover, the global economic recession of 2008 and also poor expansion strategies weakened its performance.