partial case analysis: phase separation solutions (ps2): the china question

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Phase Separation Solutions (PS2)Partial case analysis (debating position)

MANA 695 John Molson School of BusinessOct 2016, Bartosz Petrynski, Ganpathi Ramakrishnan, Varsha Shekhar, Praveen Shanmugam

Slideshare note: this presentation is not an exhaustive analysis.It’s a 5 minute presentation supporting one of the debating positions.

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Canadian business not sustainableWe have to expand geographically to China

StrongrelationshipsExclusive rights

Marketdynamics

Managementcapability Global product

EXPAND TO CHINA

China is an attractive market:• Large potential growth,• Limited domestic competition,• Opportunity for first mover advantage.

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Strategies for SME are limitedOnly Global, Regional and International are feasible

Weak StrongPressures for local responsiveness

Pres

s. fo

r glo

bal i

nteg

ratio

n

Wea

kSt

rong

Globalstrategy

Transnational strategy

Multidomestic strategy

International strategy

Regional strategy

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Strategies for SME are limitedMost suitable of PS2 is Regional Strategy

Weak StrongPressures for local responsiveness

Pres

s. fo

r glo

bal i

nteg

ratio

n

Wea

kSt

rong

Globalstrategy

Transnational strategy

Multidomestic strategy

International strategy

Regional strategy

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PS2 in OLI-FrameworkOwnership, location and internalization advantages

• Operational expertise and efficiency• Patents and exclusivity on Chinese market

Ownership-specific advantages

• Largest market in the world• Government favourableness

Location-specific advantages

• Control over intellectual property• Avoidance of tariffs and other barriers

Internalization advantages

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PS2 in OLI-FrameworkTo pursue horizontal direct investment in form of JV

OLI framework

Categories of advantages

Ownership Location Internalization

Form of

market entry

Licensing

Export

FDI(incl. JV)

Yes No No

Yes Yes No

Yes Yes Yes

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We have three options to pursuePS2 don’t have capacity to invest in two JVs

oror

JV with NIES

1

JV with Nahai

2

JV with NIESand Nahai

3

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We have three options to pursuePS2 don’t have capacity to invest in two JVs

oror

JV with NIES

1

JV with Nahai

2

JV with NIESand Nahai

3PS2 is just a SME• 3 managers• 15 workers • $5M revenue

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We have three options to pursuePS2 don’t have capacity to invest in two JVs

oror

JV with NIES

1

JV with Nahai

2

JV with NIESand Nahai

3PS2 is just a SME• 3 managers• 15 workers • $5M revenue

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Rationale

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JV with NIES: pros and consAttractive in short term, dangerous in long term

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JV with Nahai: pros and consSustainable, safe and profitable in short and long term

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JV with NIES or Nahai?NIES: no strategic value chain alignment

R&D

InputLogistics

Operations

Marketingand sales

OutputLogistics

Service

R&D

InputLogistics

Operations

Marketingand sales

OutputLogistics

Service

PS2 NIES

R&D

InputLogistics

Operations

Marketingand sales

OutputLogistics

Service

JV with NIES

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JV with NIES or Nahai?Nahai: perfect value chain alignment

R&D

InputLogistics

Operations

Marketingand sales

OutputLogistics

Service

PS2 Nahai

R&D

InputLogistics

Operations

Marketingand sales

OutputLogistics

Service

JV with Nahai

R&D

InputLogistics

Operations

Marketingand sales

OutputLogistics

Service

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JV with NIES or Nahai?Nahai: sustainable and growing marker

Now + 10 yearsTime

Size

of m

arke

t

Smal

lLa

rge

7x bigger

16x biggerGrowing supply

Limited supply

No supply

Growing supply

Note: explanatory only

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• First mover advantage

JV with Nahai is recommendedSustainable, safe and profitable in short and long term

• Commercial • Comment

• Large market• Growing supply

• Political risk• Comment

• Competitors with 4 years

• Value chain misalignment

• Synergies• Established

• Limited market• Declining supplyJV with NIES

Strategic partner alignment

Competitive advantageFeasibilitySustainabilityOptions

JV with Nahai

Excellent Satisfactory Poor Very poorGood

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JV with Nahai is recommendedSustainable, safe and profitable in short and long term

Attractive in short term,dangerous in long term

JV with NIES(soil processing)

JV with Nahai(oil sludge processing)

Sustainable, safe and profitable both

in short and long term

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Implementation timeline

Expand oil sludge treatment to petrochemical industries and oilfields across China:• by setting up more fixed facilities in

different areas or• by undertaking turnkey projects

2012

• 3 onsite technical experts

2013 and onwards

• CEO• 3 onsite technical experts• 3 new hires trained in TPS

technology

2011

• CEO’s supervision• 2 onsite technical

experts

Expand the facility to 100,000 tons per year in facility at Zhoushan

Setup a 10,000 tonsper year facility at Zhoushan

Phase 1Phase 2

Phase 3

Timing

Human resources allocation

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THANK YOU

Slideshare note: this presentation is not an exhaustive analysis.It’s a 5 minute presentation supporting one of the debating positions.