IMD-3-225 © 2011
Nie, Winter; Ryans, Adrian
Senior management at ABB needed to decide whether ABB should enter the mid-tier marketplace itself, and, if so, whether to do it by acquiring a local competitor or by growing into the market section organically. ABB was decisive to enter the section by organic growth setting up a new corporation, Winmation, which applied a different business model in relation to the traditional ABB model. The case describes the launch strategy as well as the initial results.
Learning objectives: Participants are given an opportunity to create a more profound comprehension of the real nature of several low cost rivals based in China by the case. Contrary to the opinion of several Western executives, these corporations can have considerably lower costs than the worldwide market leaders, their goods are good enough to satisfy the requirements many customers, and despite very low prices these businesses can be quite rewarding. Participants also have a likelihood to contemplate the advantages and disadvantages of entering the mid-grade marketplace organically or by acquisition. Ultimately, they are able to discuss some of the issues as it entered the market segment that is enough that is good, a big, classy European firm.
Subjects: Low cost competition; Responding to low cost competition; Good enough competitors; Mid-tier competitors; New business model Settings: China ; Process automation ; $30 billion ; 2010
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