Analysis of Saint Gobain Company

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Table of Contents

Saint Gobain’s Segments
Saint Gobain’s History
Assessing Saint Gobain’s Current Principle Goals for International Business
How the Company has Adjusted to Challenges of Internalization
Relationship between the Company’s Approach to it’s Cultural Origin
Saint Gobain’s Strategic Programs
Interpretation of the Company’s Strategies using Dunning’s OLI Model
References

Saint Gobain is an industrial investment company comprising of about 1,416 merged Companies (Saint Gobain, 2011). The corporation is a global leader in manufacturing and supply of plastics, glass, ceramics, and cast iron goods. Saint Gobain has both processing and retail companies in over 54 countries in Asia, Europe, Latin America and North America (Saint Gobain, 2011).

Saint Gobain’s Segments

The corporation functions by use of five segments which include: high-performance materials, construction products, building distribution and flat glass and packaging.

The company’s high performance materials segment is made up of abrasives, plastics and ceramics enterprises. Plastics and ceramics segment functions by use of four unlike enterprise lines which include: ceramics, grains and powders, plastics and crystals. Functioning in more than 26 nations, the abrasives company creates coated abrasives, super abrasives and bonded abrasives.

This segment functions through its subsidiaries including Unicorn, Norton, Winte and Flexovit International. The reinforcement company distributes goods for the fortification of high performance through Saint Gobain Technical Fabrics and Saint Gobain Vetrotex, which offer reinforcement goods for manufacture processes and market appliance products.

The construction products segment constitutes industrial mortars, pipes, insulation, exterior goods and gypsum businesses. Insulation tasks involve padding of floors, walls and roofs; metal framings and ceilings; acoustic and thermal insulation; and fire guard services.

The insulation company sells its goods in the shape of rolls, loose wool, panels and shells by use of brands like Ecophon, Api, Isover, Gabelex, Eurocoustic and Plafometal (Saint Gobain, 2011). The pipe business deals with crafting and selling supple iron pipe structures. The gypsum business manufactures plaster, plasterboards and plaster goods as well as ceilings and insulation goods.

The exterior goods business provides solutions to the peripheral of entity homes. It functions through CertainTeed Company. The industrial mortars dealing, through the Weber Company, provide tile adhesives, specialized mortars, siding coatings and insulation structure (Saint Gobain, 2011).

Saint Gobain’s building distribution segment leads in supplying building materials in Europe. It has a network of more than 3,600 openings situated in 20 nations counting France, Germany, Netherlands, and the UK.

The building distribution segment offers services to sectors in construction, home enhancement and refurbishment. The segment functions by use of its subsidiaries which include: Cedeo, La Plateforme du Batiment, Point. P Group, Point.P Spain, Dahl, Graham, KparK, Lapeyre la maison, Telhanorte, Jewson, Raab Karcher, and Aquamondo (Saint Gobain, 2011).

The flat glass segment produces, processes, and sells glass goods. The main activities of this segment include: production of primary flat glass goods, processing and supplying glass to the building industry and automotive industry, and the manufacture of specialty glass like goods for domestic appliances, incombustible glass, nuclear safety glass and glass for electronic goods.

The flat glass segment functions in more than 36 nations. It sells its goods through subsidiaries which include: Saint Gobain Glass Solutions, Saint Gobain Sekurit ,Saint Gobain Glass and Saint Gobain Specialties (Saint Gobain, 2011).

The packaging segment deals with production of jars and glass bottles for the packaging. Saint Gobain’s packaging business runs production services in the US, Latin America, Europe, and China.

Saint Gobain’s History

Since its establishment in 1665, Saint Gobain has been a global leader in the manufacturing and supply industry (Stopford and Latimore, 1972). Saint Gobain industrial company produces a wide range of goods including: abrasives, ceramics, flat glass, plastics, building and packaging, materials like cast iron pipe, mortar, glass insulation and exterior products.

This company is an international leader in almost all segments of its industry (Saint Gobain, 2011). Moreover, Saint Gobain has establishments in over 50 nations universally with personnel of above 200,000.

Assessing Saint Gobain’s Current Principle Goals for International Business

The principle goal of the corporation is to achieve a collective development about 6% per annum on average. Since Bruce (2009) affirms that capacity to innovate is the most vital idea for internalization across intercontinental margins, Saint Gobain’s principle goal is in line with Bruce’s idea of internalization. The corporation expects new goods to account for more than 25% of combined net sales (Saint Gobain, 2011).

Bruce (2009) also reveals that the Multi National Enterprise (MNE) systematizes bundles of activities within enabling it to build up and make use of firm-specific advantages (FSAs) in information and other sorts of transitional products. In the same way, Saint Gobain Corporation has laid down activities that will enable it to achieve its principle goals.

So as to support innovation, the corporation has planned to drastically augment its internal growth by advancing project management methods, reducing project development durations, enhancing collaboration with outside partners, efficiently leveraging technical synergies amid businesses and supporting research in Asia, accelerating efforts to defend industrial goods rights and increasing investments in strategic sectors like power (Saint Gobain, 2011).

A noteworthy raise in capital expenditure, of approximately 10% per annum for a number of years, was officiated five years ago so as to achieve this. At present, the growth achieved in all of these sectors is evident. Specifically, a new organizational arrangement has steadily emerged, bringing with it an authentic transformation in the corporate society.

The company has also planned to increase research. The key objective in the rear of Saint-Gobain’s research plans is to improve the Group’s competitiveness and force internal development.

To attain this, many of its programs center on incessantly improving the existing product variety, in line with the requirements of current markets. A great part of resources will be deployed to consolidate and corroborate the worldwide leadership positions and to overhaul their key rivals in markets that are presently lagging behind.

Furthermore, the corporation has planned to support expansion in rising markets, by providing solutions customized to their definite requirements and targeting novel markets. So as to enable Saint-Gobain realize its goal of winning new markets, seven tactical plans have been drawn. Most of these plans correspond to a selection of projects that provide a sole market.

However, they frequently cover a number of business lines. The company’s research center in located in Shanghai has allowed Saint-Gobain to extend solutions that meet the precise wants of Asian markets. The goods developed for this reason consist of incredibly large, grinding wheels and thin grinding wheels prepared from garnet.

The induction of a group management method (using Sirius) and a project management method (the Stage Gate procedure) has made research efforts to be trailed in a more regimented manner. The formation of nine cross- efficient programs has led to the appearance of covert strengths in main technologies.

Program leaders manage multi-disciplinary technological societies and make sure that research projects profit from synergies amid the businesses.

The four cross-functional research centers improve this dynamic, producing a melting pot of technical solutions. The NOVA teams, Techno-Marketing and the Saint-

Gobain University Network serves to supervise and control innovations from outside the group (Saint Gobain, 2011).

The establishment of cross-functional groups for each state has strengthened bonds with marketing, chiefly in the habitat business, leading to the appearance of an exceptional mock-up for innovation in this sector.

The moment a particular need is recognized locally and validated by marketing, the company swiftly marshals’ capabilities to formulate a suitable fabricate or result. International, cross-business innovation resources allow a timely response, which can then be organized globally by the marketing team and modified, if essential, by the research and development department.

Thus, the corporation systematizes bundles of activities within enabling it to build up and make use of firm-specific advantages (FSAs) in information and other sorts of transitional products (Buckley and Casson, 1981).

How the Company has Adjusted to Challenges of Internalization

Buckley and Casson (1976) affirm that during the occurrence of market collapse, internalization, carrying out activities within the MNE, acts as a supremacy mechanism to exploit and build up FSAs. In line with this, Saint Gobain Corporation has a network of well-built and corresponding trading brands.

The Building Distribution segment targets small and medium-sized enterprises, tradesmen by means of a network of well-built and corresponding trading brands. Entrenched in its home market, each make has an exceptional position to meet the particular needs of each kind of market and customer.

Jointly, they add to the Sector’s general sales efficiency. The Sector organizes most excellent practices in all its host nations, while maintaining an elevated height of receptiveness to the local market. This agile, upbeat organization makes it promising to give a product offer that supplies to a multiplicity of businesses and meets a broad range of prospects in terms of goods, services, styles and trends, chiefly in Europe.

Point.P Matériaux de Construction is the leading distributor of building materials in France. This group mostly targets building experts via a variety of generalist and specialist makes. With a system that covers entire France and offers the new building and reconstruction markets, it offers a complete array of energy competent solutions.

Raab Karcher, in Germany, is the generalist make of Saint-Gobain Building Distribution Deutschland; the primary nation’s building equipment distribution market (Saint Gobain, 2011). Its system is comprises of complementary specialist and generalist brands to meet the requirements of all types of programs, clients and markets This brand also functions in Poland, Netherlands, Czech Republic and Hungary (Saint Gobain, 2011).

The main makes of Saint-Gobain Distribution Nordic is Dahl, n°1 distributor of heating, sanitary ware, plumbing and optima products. They supply the reconstruction, new building, and sustainable markets.

Finally, the Sector is present in Portugal, Spain and Italy via a network that includes specialized and generalist brands in interior fittings, tiles and sanitary solutions. The Building Distribution Sector also has operations.

Success in the building distribution sector stems from both its widespread network and its innovation capabilities. It serves a very important role in helping contractors comprehend and grip new building renovation practices, as trends modify and new markets appear.

These brands are continuously looking for fresh solutions to offer customers a proficient solution, the pertinent expertise and an augmented added worth. This is mirrored in sales concepts, training centers, goods and services, expertise logistics and advice.

Relationship between the Company’s Approach to it’s Cultural Origin

Most of the countries that Saint Gobain operates resemble in their institutional settings. This enables the group to organize the internal market very efficiently as compared to two nations with extremely dissimilar institutional settings.

Foreign Direct Investment (FDI) distribution of this company is only partly regular with the patterns projected. For the case of Saint Gobain, investment is elevated only in some nations with common cultural characteristics and similar geographic areas (Bruce, 2009).

Saint Gobain’s Strategic Programs

Solar energy remains the first research path, with about €30 million in R&D cost, which is almost twenty five percent of the Flat Glass Division’s R&D resources (Saint Gobain, 2011). Saint-Gobain, across the whole photovoltaic value chain, carries out research and development actions in all fields, from mechanism to modules and structures.

Whilst not comparative to sales, research costs in this part are strategic in awaiting tendencies in a fast-developing market. Major progress has been experienced on SolGel anti-reflective goods for Diamant© and Albarino©.These have been healthily acknowledged by customers.

Commercial growth has begun for both Avancis photovoltaic modules and concentrating mirrors. Labor is currently centered on the expansion of lighter, third invention modules that do not need an aluminum structure.

In the field of photovoltaic structures, the multi-rail has been built up and the first fittings have been conceded by the Solar Systems of Saint-Gobain. In the part of lighting, substantial technical growth has been made on a number of projects, chiefly on research into substances for light-emitting diodes (LEDs) (Saint Gobain, 2011). A new cohort of sapphire substrates is anticipated to get into the market in the prospect.

The plan is in its last pilot test stage and should be set for profit-making scale-up before the end of 2011. Considerable development has been made in the natural light-emitting diode (OLED) scheme, with the expansion of silver duct skill that uses two coatings of silver.

Efforts to incorporate lighting solutions into building materials formed by the Group centered on the utilization of LEDs in ceilings (Saint Gobain, 2011). A model combining LEDs into plasterboard was constructed by Castorama and a potential market launch is planned for 2012.

Technical advancement was experienced in the fuel cell project (Saint Gobain, 2011).The impending months will explain whether the ceramic fuel cell expertise built up by Saint-Gobain is profitable. The administration of research programs on active glass was enhanced greatly by the formation of a devoted group, called Quantum Glass (Saint Gobain, 2011).

An accord signed with a United States Company, SAGE, and current technical proceeds marked the commencement of profit-making increase of electro-chromic glass expertise. A plant will be constructed in the United States to create above 370,000 square meters of huge design electro-chromic glass. This mirrors above ten years of research and a collection of more than one hundred rights.

For the high-performance insulation plan, three years of investigative research led to two motivated projects, the growth of first-generation insulating mortars in Spain, planned for mid-2011, and an extra high-performance second invention, projected in early 2012.

A plan to build up a mineral insulation board presenting unequaled show also began in the year 2010 and the second phase is programmed to commence in late 2011 (Saint Gobain, 2011).

New equipment are also being experienced and the promising outcomes obtained evidently show that there is additional latent for technological innovation. Following a study specially made by the Corporate Marketing Department, a sequence of projects has been instigated in the area of exterior wall insulation systems, a precedence center of the habitat innovation plan.

The projects aim at two precise markets. Ventilated walls and external thermal insulation in the program aims at civilizing the energy competence and ecological performance of the mechanized processes.

Major developments have been experienced in technologies built for submerged ignition burners in melting furnaces, subsequent to definite tests in Spain, Renedo and two successful rounds of experiments at the SGR research center in Aubervilliers, France (Saint Gobain, 2011).

Two programs are being carried out to advance procedures in the Insulation Division. One of these procedures relate to the manufacture of rock wool while the other relates to the reprocessing of glass wool dissipate. Industrial tests have established that flameless ignition technology can decrease green house gases production and progress the energy competence of glass furnaces.

Targeting the manufacture of glass bottles by means of biogas, the Biovive scheme has been developed and a number of technologies are being experimented in Germany and France. Progress has been experienced in three projects relating to the manufacture of silicon carbide (Saint Gobain, 2011).

A number of opportunities for civilizing the available Acheson process have been recognized and latent novel processes are being investigated.

After an investigative assessment of Saint-Gobain’s requirements and the technological potentials, the chemistry for building materials plan has been re-categorized as a cross-functional program.

Interpretation of the Company’s Strategies using Dunning’s OLI Model

Dunning’s Insight on Interpretation of OLI Model

A study by Dunning (1981) affirms that internalization theory centers upon the static competence of the MNE. At the same time, Dunning et al (1990) claims that the function of government in nurturing economic development by guiding principles harmonizing MNE and FSAs are required to be spelt out openly.

Though Dunning is right, his examination simply implies that that administration policies should be a critical constituent of the CSAs/LSAs, and influential in FSA growth and exploitation courses, for instance in the shape of patent fortification (Verbeke, 2003). His position is that the relations between MNEs and management evolve in time.

On the same point, he adds that the vertical axis of CSAs/LSAs can really affect the potency of an MNE’s FSAs (Dunning, 1981). The reverse, denotation that the horizontal axis can manipulate the vertical axis, is also right: the existence of a number of firms with well-built FSAs in a particular place can make clustering advantages, potentially profiting outlook new entrants in that place (Dunning and Rugman, 1985).

Second, Dunning et al (1990) asserts that the operation of internalization is vital to dynamic innovation courses, a point previously aired by Buckley and Casson (1976). By breaking up the difference between O and I, the risk arises that intellectual analysis would center solely on internalization to defend existing FSAs.

Though, we are eagerly aware of the reality that any internalization choice needs to take into consideration not only the MNE’s current stock of FSAs, but as well the potential input of internalization to prospect FSA growth, whether in the shape of predictable, transactional or asset-based FSAs. The latter would take in forces resulting from the company’s multi-nationality.

For instance, the capacity to manage efficiently new partners added to the present network or the capability to reconfigure actions in meaning of external conditions (Dunning and Rugman, 1985). His view is thus basically that the FSA-CSA matrix requires to be used in a refined way, with a profound understanding of the likely interactions that may arise between O and I in the horizontal axis (Bruce, 2009).

Saint Gobain’s Strategy Interpretation using OLI Model

Dunning differentiates between ownership factors (O) location factors (L) and Internalization factors (I), in his assorted paradigm (Dunning, 1976). Saint Gobain Corporation functions largely within its home area of the triad, which means that public boundaries are less significant than triad boundaries. Thus it would make logic to substitute CSAs by LSAs.

Additionally, in the area of technological-information associated FSA expansion, clusters often occur at the sub-national stage, meaning once more that the idea of LSAs instead of CSAs is to be ideal. The sense of the axis remains completely the same. The elite capabilities of the company are shown by the horizontal axis, called FSAs (Dunning, 1981).

We perceive little value in differentiating between the O and I features of FSAs. Clearly goods rights (O) require to be established to beat market imperfections, particularly in the pricing and fortification of information. Therefore O and I, in this case, cannot be separated in strategic resolution making.

References

Bruce, R. (2009) Preparing Effective Business Plans. London, Pearson Education Ltd.

Buckley, P.J and Casson, M.J (1976) The future of the multinational enterprise. London, Macmillan.

Buckley, P.J. & Casson, M.J (1981) The optimal timing of a foreign direct investment. Economic Journal, 91, 75-87.

Dunning, J.H. (1976) Trade location of economic activity and the MNE: a search for an eclectic approach. In Beril Ohlin et al., eds., The International Allocation of Economic Activity: Proceedings of a Nobel Symposium held at Stockholm, 395-418. London, Macmillan.

Dunning, J.H (1981) International production and the multinational enterprise. London, Allen and Unwin.

Dunning, J.H, Kogut, B. and B. Michael (1990) Globalization of firms and the competitiveness of nations. Sweden, Lund University Press.

Dunning, J.H. & Rugman, A. (1985) The influence of Hymer’s dissertation on the theory of foreign direct investment. American Economic Review 75(2), 228-232.

Saint Gobain (2011) Annual report 2010. Web.

Stopford, J. and Latimore, W. (1972) Managing the multinational enterprise. New York, Basic Books, Inc.

Verbeke, A. (2003). The evolutionary view of the multinational enterprise and the future of internalization theory. Journal of International Business Studies, 34(6), 498-504.

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