In 1994, Lenzing AG, the world's largest rayon manufacturer, is deciding whether to expand production in South Pacific Viscose, its Indonesian subsidiary. Indonesia is a booming market for rayon, but management still has some concerns about the expansion. First, for the plant to remain successful, Lenzing's downstream customers--textile producers--must also remain in Indonesia. Second, despite being located in an area of tropical forests, the Indonesian plant has no local access to wood pulp, its most critical input. Finally, with the expansion, Lenzing would be increasing its exposure in a country that remains politically and economically uncertain.
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Case Analysis of Lenzing AG: Expanding in Indonesia
Lenzing AG: Expanding in Indonesia is a Harvard Business (HBR) Case Study on Global Business , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Lenzing AG: Expanding in Indonesia is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Lenzing AG: Expanding in Indonesia case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Lenzing AG: Expanding in Indonesia will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.
Case Study Solutions Background Work
Lenzing AG: Expanding in Indonesia
case study solution
is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Global Business, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Lenzing AG: Expanding in Indonesia, is to not only build a competitive position of the organization but also to sustain it over a period of time.
Strategic Management Tools Used in Case Study Solution
The Lenzing AG: Expanding in Indonesia case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.
Texas Business School Approach to Global Business Solutions
In the Texas Business School, Lenzing AG: Expanding in Indonesia case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.
We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Lenzing AG: Expanding in Indonesia
Step 1 – Problem Identification of Lenzing AG: Expanding in Indonesia - Harvard Business School Case Study
The first step to solve HBR Lenzing AG: Expanding in Indonesia case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Lenzing Rayon is facing right now. Even though the problem statement is essentially – “Global Business” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Lenzing Rayon, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.
Step 2 – External Environment Analysis
Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Lenzing AG: Expanding in Indonesia.
The external environment analysis of Lenzing AG: Expanding in Indonesia will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.
What is PESTEL Analysis? Briefly Explained
PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Lenzing AG: Expanding in Indonesia case study. PESTEL analysis of " Lenzing AG: Expanding in Indonesia" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.
How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?
As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Lenzing AG: Expanding in Indonesia macro-environment and how it impacts the businesses of the firm.
How to do PESTEL Analysis for Lenzing AG: Expanding in Indonesia
To do comprehensive PESTEL analysis of case study – Lenzing AG: Expanding in Indonesia , we have researched numerous components under the six factors of PESTEL analysis.
Political Factors that Impact Lenzing AG: Expanding in Indonesia
Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.
Policy Making Impact on Lenzing AG: Expanding in Indonesia
Government policies have significant impact on the business environment of any country. The firm in “ Lenzing AG: Expanding in Indonesia ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.
Data safety laws – The countries in which Lenzing Rayon is operating, firms are required to store customer data within the premises of the country. Lenzing Rayon needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.
Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Lenzing AG: Expanding in Indonesia has numerous instances where the competition regulations aspects can be scrutinized.
Import restrictions on products – Before entering the new market, Lenzing Rayon in case study Lenzing AG: Expanding in Indonesia" should look into the import restrictions that may be present in the prospective market.
Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Lenzing Rayon in case study “ Lenzing AG: Expanding in Indonesia ” should look into these export restrictions policies.
Foreign Direct Investment Policies – Government policies favors local companies over international policies, Lenzing Rayon in case study “ Lenzing AG: Expanding in Indonesia ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.
Taxation & Regulation Impact on Lenzing AG: Expanding in Indonesia
Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.
Tariffs – Chekout how much tariffs the firm needs to pay in the “ Lenzing AG: Expanding in Indonesia ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Lenzing Rayon can compete against other competitors.
Government Scheme & Subsidies Impact on Lenzing AG: Expanding in Indonesia
Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Lenzing AG: Expanding in Indonesia case study have to assess whether their business can benefit from such government assistance and subsidies.
Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.
Political System & Stability, and its Impact on Lenzing AG: Expanding in Indonesia
Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.
Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.
Corruption level – Lenzing Rayon needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.
Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.
Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.
Economic Factors that Impact Lenzing AG: Expanding in Indonesia
Social Factors that Impact Lenzing AG: Expanding in Indonesia
Technological Factors that Impact Lenzing AG: Expanding in Indonesia
Environmental Factors that Impact Lenzing AG: Expanding in Indonesia
Legal Factors that Impact Lenzing AG: Expanding in Indonesia
Step 3 – Industry Specific Analysis
What is Porter Five Forces Analysis
PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Lenzing AG: Expanding in Indonesia case study. PESTEL analysis of " Lenzing AG: Expanding in Indonesia" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.
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