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string(369) ‘ larger customers seeing that we joined Australia with an interstate freight operation similar to each of our New Zealand model “The business continues to be difficult to grow and we haven’t made the progress inside the Australian household market we had hoped “You’ve got to have size and network and employ Australians to get the value of the greater companies\. ‘

Mainfreight Group ” Mighty Oaks from small acorns expand A case research of a Fresh Zealand Multinational’s Foreign Industry Entry Strategy Mainfreight ” Mighty Oak trees from little acorns grow. This case research examines the strategies Mainfreight Limited offers exploited the moment entering international markets. That examines Mainfreight’s successes and failures and investigates if its market entry strategies played a significant part in these experiences.

The Mainfreight Group market themselves as a global logistics service provider offering “managed warehousing and international and domestic gets forwarding (Mainfreight, 2013).

Since 2013 Mainfreight Limited is operating in more than 14 countries in 4 continents. Formerly a household freight company, the company today specializes in providing a large variety of solutions common to global logistics suppliers such as home haulage of both complete and component loads, Worldwide Air providers, International Sea Container providers, Contract Storage and Supply Sequence Management as well as other service offerings not frequently associated with global logistics services including “Fashion Services, Canadian Transborder Strategies Services and Entertainment Press Logistics(Linkedin, 2013).

Mainfreight generally focuses on goal areas they will identify they will add more quality to than “simple cartage (Massey School, 2009) Mainfreight attribute their very own success for their unique tradition, stating online that they “have developed a method of doing business, successful with New Zealand, but around the world. Even though this is a bold affirmation, Mainfreight has already established some great accomplishments. Their achievement hasn’t been a major accident and this awesome oak was once a little acorn.

Since its invention in 1978, Mainfreight has grown drastically and is typically cited as one of New Zealand’s most successful companies (Otago Business University, n. m. ). Founded by Bruce Plested with $7, 200 (Mainfreight, 1996) “and a 1969 Bedford truck (Fairfax NZ Media, 2008) Mainfreight’s business quickly expanded. Neil Graham joined Plested more than three decades ago as Joint Managing Overseer and exposed their 1st Christchurch Department.

Growth continuing and Mainfreight soon created “New Zealand’s most considerable [domestic] shipping network (Mainfreight, 2013) by using coastal shipping and delivery to bypass draconian laws and regulations that required “all freight travelling in land for more distance than 150 kilometres being moved by rail.  (Mainfreight, 1996) Mainfreight Creator Bruce Plested “By enough time land transportation deregulation took place in 1985, we were hardened and experienced after 8 years competing against the system plus the giant transportation companies.

With the playing discipline almost levelled we were the fittest players, and the company was growing a profound culture and a perspective of what we should could achieve “By the time land transportation deregulation occurred in 1985, i was hardened and experienced following 8 years competing resistant to the system and the giant travel companies. While using playing field almost levelled we were the fittest players, and our company was innovating a profound culture and a eye-sight of that which we could achieve

Complementary to the company’s particular culture Plested believed that some of the industry’s success could be assigned to its flexibility and responsiveness to change, declaring in Mainfreight’s 1996 prospectus, Revenue surpassed NZD$10 mil for the first time in 1984 and the first Mainfreight International divisions, 50% possessed by the Mainfreight Limited jointly with their managers opened in Christchurch and Auckland likewise opened. Mainfreight, 1996) 1989 saw the opening of Mainfreight’s initial Australian part in Sydney with a view to offering solutions that “would allow consumers to treat Fresh Zealand and Australia as one market (New Zealand Administration Magazine, 2007). Mainfreight International Branches as well opened in Melbourne and Sydney and revenue initially exceeded NZD$50 million. The time between 1990 and mil novecentos e noventa e seis was typified by geographic expansion through Australia and New Zealand.

This growth was primarily via two different programs, via organic growth from the existing operations, and through acquisition of rivals or supporting service providers. Service expansion and differentiation formed the backbone of Mainfreight’s organic development platform through the early 1990’s. Named operations such as Local area Cartage, Wharf Operations and Distribution started to appear alongside the regular Mainfreight and Mainfreight International brands. Revenues ongoing to develop and the New Zealand household and Intercontinental parts of he business continuing to excel. However , a similar could not be said for Mainfreight’s Australian operations which in turn did not break even until year 1994 (Kennedy, 2000). “By using a strong household and intercontinental presence in both New Zealand and Australia we certainly have a good potential for demonstrating to a multinational company that when considering this corner of the globe, we are the folks to use. We do not have the choice of only being able to service New Zealand, the multinational is usually not interested ” that they see Sydney and Fresh Zealand since one With a strong home and worldwide presence in both Fresh Zealand and Australia we now have a good potential for demonstrating into a multinational organization that when considering this nook of the earth, we are the people to use. We do not have the choice of only having the ability to service Fresh Zealand, the multinational is definitely not interested ” they see Quotes and Fresh Zealand because one Inspite of these losses Mainfreight’s determination to the Aussie market was never uncertain.

Executive Chairman Bruce Plested described the perception that the rest of the globe regard Sydney and New Zealand as one market and this multinationals “increasingly engage a global freight firm to provide all of their freighting and warehousing providers throughout the world (Mainfreight, 2002). Plested’s disagreement was that with a existence in both Australia and New Zealand it would show large multinationals that Mainfreight were the logistics provider of choice and specialists from this geography.

He did not truly feel he could achieve this within New Zealand alone. In order to rectify you’re able to send poor Aussie result the business undertook several acquisitions through the early to mid 1990’s that included Mogal Gets, MSAS and Premier VIP stores. (Refer to Stand 1 . one particular for more information in Mainfreight’s purchases during the period between 1980 and 1995). TABLE 1 ) 1 Plested in an interview with Graeme Kennedy in March 2150 reflected within the Australian procedures struggles, “We have battled to break in to the usiness with those bigger customers as we moved into Australia with an interstate freight procedure similar to the New Zealand model “The business continues to be difficult to grow and we don’t have made the progress in the Australian home-based market there were hoped “You’ve got to have size and network and employ Australians to get the value of the larger companies.

You read ‘Mainfreight Case Study’ in category ‘Essay examples’ Without the size and the quantities, the services you may offer happen to be restricted which has a smaller network. They want to discover size and network to give them assurance in the operation We have battled to break into the business with those larger customers seeing that we came into Australia with an interstate freight operation similar to the New Zealand model “The business has become difficult to increase and we have not made the progress in the Australian home market we had hoped “You’ve got to have the size and network and employ Australians to get the admiration of the greater companies. With no size plus the volumes, the services you can give are restricted with a small network. They would like to see size and network to give all of them confidence inside the operation

It absolutely was the purchase in 1994 of Most recognized VIP Stores that finally gave Mainfreight the critical mass of customers required to finally start making profit from all their Australian operation. With success worries to their rear, operating revenues hitting NZD$100 million per year and all 3 divisions of Mainfreight Limited’s business working profitably, the company listed on the New Zealand stock exchange on the fourteenth June mil novecentos e noventa e seis. 35 million shares, about 60% from the company’s granted capital, was made available by simply owners Bruce Plested and Neil Graham to the general public at a cost between $0. 5 and $1. twelve per discuss (Mainfreight, 1996) The listing turned out to be an immediate success with Mainfreight’s share cost increasing 72% in its 1st year as a publically outlined company. Purchases in New Zealand and Australia ongoing throughout 1997/1998. Mainfreight bought 75% of LEP Freightways New Zealand and bought outright LEP International Sydney, Combined Haulage, Senco Haulage and Trade Air Marine Ltd all significant players in the Australasian logistics market. Mainfreight’s international growth extended, purchasing minority shareholdings in ISS and Associates in Hong Kong (37. % of Bolwick Ltd) and China (50% of Mainfreight Share Ltd) a month after beginning its initially Mainfreight International branch outside Australasia, likewise in Hk in Sept. 2010 of 1998. This signified the start of Mainfreight’s push becoming a global person in the logistics scene which will continued with all the purchase of CaroTrans from Illinois Best Corp in 1999. Mainfreight bought 49. 5% with the CaroTrans operation with the leftover shareholding adopted by a real estate investor group that included CaroTrans CEO Greg Howard. Consider table 1 . 2 to find out how Mainfreight Group acquired structured it is investment consist of subsidiaries by 2001.

DESK 1 . a couple of “Mainfreight has generated a network of businesses which it is the owner of throughout Fresh Zealand and Australia and also operates with joint ownership’s, a network throughout the United states of america, in Hk and Shanghai. Beyond these regions, in Europe we all work with Ziegler (our spouse in CaroTrans) and with agents and alliances for most other countries. “Mainfreight has built a network of businesses which it has throughout New Zealand and Australia and also operates with joint ownership’s, a network throughout the United states of america, in Hk and Shanghai in china.

Beyond these regions, in Europe all of us work with Ziegler (our partner in CaroTrans) and with agents and alliances in many other countries. In their 2001 Annual Record Mainfreight defined the selection of businesses they’d acquired over the past 21 years. The period among 2002 and 2007 observed Mainfreight focus on its existing geographies. In New Zealand growth took place through the starting of new Mainfreight domestic transport branches and through the 79. 6% purchase of the Owens Group of businesses in 2003.

The company’s Aussie operations were performing with revenues by Australian Domestic and International segments equalling the New Zealand group’s sales performance initially. Mainfreight bought the spectacular 51. five per cent of CaroTrans in 2004 and opened up additional limbs of over the United States and Australia. Mainfreight International opened further China branches in Ningbo, Shenzen and Guangzhou. Table 1 ) 3 demonstrates Mainfreight Organizations financial functionality by geographical segment intended for the year ending 31st Mar 2007. DESK 1 . three or more Mainfreight UNITED STATES has now exchanged some 18 months under the ownership. During that time period we have discovered a number of weak points in the business which will we are at the same time of responding to. Results are well below each of our expectations and are poor best case scenario.  “Mainfreight Group tradition and operating disciplines have been completely introduced to the united states operations, including a stronger branch management emphasis, the introduction of each of our owner new driver model to get pick up and delivery, and a more demanding approach to both fixed and variable cost management.  more demanding approach to equally fixed and variable cost management Mainfreight USA has now traded a few 18 months below our possession. In that time we certainly have identified a number of shortcomings available which were in the process of addressing. The desired info is well beneath our targets and are poor at best.  “Mainfreight Group culture and operating procedures have been introduced to the USA functions, including a better branch supervision focus, the creation of our owner driver style for pick-up and delivery, and a more rigorous way of both fixed and variable cost management.  more rigorous way of both set and varying cost supervision

Mainfreight’s enlargement did not quit there. Goal Logistics, a public company listed on the American Stock Exchange was acquired “in an all-cash transaction appreciated at about USD $53. 7 million (CW Downer & Co, 2007). This kind of represented Mainfreight’s largest obtain to date. Chris Coppersmith CEO and Chief executive of Target Logistics stayed on while using company and headed the newly formed Mainfreight USA, on the other hand his amount of time in the function was brief. By the end of 2009, Coppersmith was no longer with the company having been changed by 14 year Mainfreight Veteran Ruben Hepworth.

Mainfreight’s 2009 total annual report explain on some of the problems the American operation was facing. During this period Mainfreight acquired the exceptional shares from its Management in Hong Kong and China and disposed of it is 75% shareholding in the two LEP International New Zealand and Down under for AUD $83 mil to community shareholder Agility Logistics Group (Mainfreight, 2007). However these setbacks would not slow down the Mainfreight Group, the organization achieving revenue of NZD $1 Billion the first time in time 2009.

Buoyed by consistent sales growth the business continued with its rapid advancement and advanced into European countries. The Wim Bosman band of companies, “one of the most significant privately? held, integrated transport and logistics providers inside the Netherlands and Belgium with 14 branches across 6 European countries, exceeding 1, 1000 transport devices, more than 275, 000m? of warehouse and cross docking facilities and approximately 1, 414 crew members (Mainfreight, 2011) was purchased downright in 2011 for 110 million Euros. This time around however Mainfreight installed Indicate Newman, among Mainfreight’s first graduates because CEO of the European business.

Mark having spent 21 years old years with Mainfreight, Draw was incredibly familiar with you can actually culture and drive to achieve success. In the company’s 2012 Total annual Report Newman reflects on his first yr in charge of Wim Bosman / Mainfreight Europe. “We have recently completed one particular full 12 months of ownership of the Wim Bosman number of companies. During this period we have been capable of integrate Mainfreight’s financial disciplines and begin the process of aligning the new team members to Mainfreight’s culture. Unfortunately, financial overall performance has not met expectations “We have now finished one complete year of ownership of the Wim Bosman group of firms.

During this period we have been able to integrate Mainfreight’s monetary disciplines and commence the process of aligning our fresh team members to Mainfreight’s lifestyle. Unfortunately, economical performance have not met expectations Despite these continued expansion struggles Mainfreight is still getting awarded accolades, in 2012 earning the “Best Growth Strategy award with the Deloitte / Management Top200 Awards Service. So , what has Mainfreight learnt via these purchases and how has their behaviour changed over time? Label the tables 1 . 5 and 1 . for an update on Mainfreight Groups economic performance by simply geographical section and the group’s structure since 31 03 2012, before answering the Questions in Section two. TABLE 1 . 4 TABLE 1 . five Questions / Discussion 1) Can Mainfreight truly become classified like a “global” logistics provider? Using Collinson and Rugman’s description from Peng’s 2014 textual content of a true global multinational enterprise having “at least 20% of sales in each of the three regions of the Triad comprising Asia, European countries and America but below 50% in just about any one you observe that Mainfreight does not quite fit this criteria. Desk 1 . shows Mainfreight Groupings consolidated product sales by geographic segment this january. Sales in the USA and Europe represented 24% and 23% respectively in the group’s NZD$ 1 . 8billion total sales. Asia on the other hand contributed just 3%. Totally following Rugman’s definition this could suggest that Mainfreight is not really truly a global logistics supplier. If we give new meaning to Rugman’s description to state “at least 20% of revenue in every single of three regions although less than 50% in any one the 54% of sales coming from Australasia would suggest that Mainfreight remains to Australasian centric being considered a true “global logistics provider. ) Has Mainfreight’s mode of entry in foreign marketplaces changed after some time? If so, just how, and why? There have been a few consistent designs as well as a lot of changes to Mainfreight’s market admittance strategies since opening their particular first Mainfreight International Part in 1984. The constant themes have observed Mainfreight continuously pursue Fairness modes since means of access. As a company Mainfreight have been unable to pursue some non-equity modes of entry, as it is not possible to export their very own services to foreign market segments, although Licensing and Franchising agreements might have been pursued in other markets in the event that Mainfreight thus desired.

The key changes in Mainfreight’s approach happened between 2006 and 3 years ago. This was most apparent when Mainfreight acquired 100% of Target Logistics, increased its shareholding to 100% in the two its Hong Kong and Oriental operations and divested the 75% shareholding in LEP New Zealand and Down under. This go on to wholly using their subsidiary’s represented an important change in notify Mainfreight, who have up until now entered fresh markets in Joint Venture, typically sharing costs, risks and profits with the subsidiary’s Mature Management. This kind of previous procedure was evident in the 49. % purchase of CaroTrans from Illinois Best Corp in conjunction with CEO Greg Howard and in the Hong Kong and Chinese operations opened in 1998. Whilst the incorporation of CaroTrans in Mainfreight’s business was seen as a success, the introduction in to the stable of fellow American company Goal Logistics was anything but. Goal CEO Philip Coppersmith stayed on when the business transferred to Mainfreight possession, however the Target business could not adapt to the cultural and financial expectations expected of it by Mainfreight’s Board and Coppersmith was soon replaced by expert Mainfreight Executive John Hepworth.

As of 2012, the American division remains to be struggling, remaining the least rewarding of all geographic segments regarding its size as indicated in the table below. NZD 000’s| | | | | | | NZ| Aus| USA| Asia| Europe| Revenue| 455. 7| 529| 439| 56| 419| EBITDA| 54. 5| 33. 7| 19| 2 . 6| twenty-eight. 1| ROR| 12. 0%| 6. 4%| 4. 3%| 4. 6%| 6. 7%| Despite Mainfreight continually pressing their lifestyle as the top reason for their particular success, it may be that they have overlooked the importance of adapting to certain countries specific norms and ideals.

It certainly wasn’t a brand new concept as Mainfreight had experienced these struggles in the past, Bruce Plested’s interview with Graeme Kennedy in 2150 touched for the cultural variations of the Australian and Fresh Zealand market segments stating “You’ve got to have the size and network and employ Australians to get the respect of the greater companies (Kennedy, 2000) The Wim Bosman acquisition which will also saw Mainfreight Exec Mark Newman promoted in addition has struggled financially.

Is it a coincidence that Mainfreight’s joint ventures flourished whilst the wholly owned or operated subsidiaries battled? The major good thing about joint endeavors is the entry to partners’ know-how, albeit if it pertains to regulative, ordre or intellectual institutions. It appears this is a thing Mainfreight provides overlooked recently as it transferred toward wholly owning the foreign subsidiaries. 3) How come do you think that Mainfreight offers entered the financial markets it has? Mainfreight has utilized some common sense to the markets it has decided to enter.

Quotes is a rational first level of necessitate many New Zealand firms planning to expand international due to the prevalent language, regulatory environments and similar, even though different, social norms. Via an international organizations point of view, these kinds of similarities are compounded. Mainfreight’s chairman Bruce Plested mentioned that multinationals often view both Fresh Zealand and Australia because just one industry making Quotes a logical 1st stepping stone in Mainfreight’s overseas development. Up until 2010 Mainfreight’s development had aimed at extending the newest Zealand section of the company’s global reach.

Statistics New Zealand (2013) declares that “New Zealand depends heavily upon international trade, especially with particularly with Australia, China, the United States, and Japan and unsurprisingly these are generally the countries (excluding Japan) that Mainfreight has widened into. The cultural variations between Fresh Zealand as well as the Chinese and American markets are much more significant than those between New Zealand and Australian markets or perhaps other traditional trading companions such as Britain.

However , the sheer excess weight of imports and export products flowing in to and out of these countries has made all of them obvious candidates for Mainfreight to grow into as it seeks to expand in markets contrasting to the existing business. The purchase of Wim Bosman is interesting in that it is far from a purchase that might traditionally be observed as contrasting to Mainfreight’s New Zealand business in comparison with markets including Japan with whom New Zealand offers significantly more trade.

However , the opening of European marketplaces could be viewed as complimentary to Mainfreight’s US and Oriental operations specifically as these functions continue to grow, evolve and mature. 4) What are a number of the risks associated with the approaches to foreign direct investment and the market segments Mainfreight features chosen to get into? Mainfreight knowledgeable Liability of Foreignness when it first came into the Aussie market place. As outlined during my response to Issue 1, businesses, especially large ones would not give Mainfreight a chance until they were viewed to employ Australians.

This was an inherent disadvantage of being a foreign organization entering a fresh market within a “greenfield capability. Later Mainfreight expansion addressed some of these dangers through the use of Joint Ventures in foreign markets such as China and tiawan, Hong Kong and the getting CaroTrans in the united states. As Mainfreight’s market admittance strategy altered towards wholly owning all their subsidiaries, a few of these risks arose again. Mainfreight’s approach in fully purchasing existing business typically helped to reduce these dangers as Mainfreight was not contending for a bit of the existing business as it was recently with its greenfield entry in to Australia.

Mainfreight has not implemented a consistent approach to renaming businesses it has taken over. For example Target Logistics was renamed as Mainfreight USA, whilst the Wim Bosman acquisition provides retained the company’s original marketing possibly assisting to overcome a few of the cultural negativity foreign businesses experience consist of host countries. As a more compact New Zealand based international in the support industry Mainfreight has was able to mitigate many of risks that may apply to other companies, however money risks and rivalry between competing businesses are areas Mainfreight is still susceptible to.

Regulating risks remain very genuine however likely lesser in geographies including Australia, the EU and New Zealand than these are the United States and China. 5) Relative to smaller logistics providers in Fresh Zealand exactly what the main positive aspects Mainfreight looks forward to from its MNE status? Peng (2014) identifies firms having OLI positive aspects or Ownership, Location and Internalization positive aspects. Using Peng’s framework, in accordance with non-multinationals within the New Zealand logistics industry, Mainfreight provides the following positive aspects.

Ownership Mainfreight benefits in that it has control and ownership of a significant part of the source chain when compared to say a fresh Zealand home transport organization or a New Zealand storage provider. Mainfreight is able to take on these non-multinationals by offering the ease of an all-in-one managed answer to its customers or substitute competing upon price with non-multinationals in their market because Mainfreight might be able to cross subsidise certain areas of its organization.

For example , Mainfreight may sell New Zealand warehousing companies at a loss whether it guarantees means they may succeed a customer’s lucrative freighting business. Position Mainfreight’s advantages over a low multinational from a location perspective are much harder to determine. Like a service sector Mainfreight could find it hard to monetize on All-natural resources, inexpensive efficiencies and innovation, nevertheless there may be some advantages obtained through having a global presence and disclosing Mainfreight’s company to a global audience.

This implies Mainfreight could have a distinct edge over not multinational strategies providers while potential customers (particularly large global ones) may know of Mainfreight’s operations. Internalization Some of the rewards Mainfreight experiences here are similar to the Ownership benefits outlined previously mentioned. By without having to shell out external suppliers margins on different solutions within a user’s supply sequence, Mainfreight can potentially offer even more competitive services and keep profits inhouse. References Collinson, S. and Rugman, A. (2007).

The regional persona of Asian multinational corporations. APJM, Ch. 24. Pp. 429-446. C. W. Downer, Co. (2007, September 18). Target Logistics, Inc., Agrees to be acquired by Mainfreight Limited. Retrieved from http://www. cwdowner. com/index. php? option=com_content, view=article, id=72, Itemid=31 Deloitte. (2012, November 29). Leading 200 Companies Awards Reflect Future Way for NZ Enterprise. Recovered from http://www. deloitte. com/view/en_NZ/nz/news-room/3ee15be7bf94b310VgnVCM2000003356f70aRCRD. htm Fairfax NZ Media. (2008, The fall of 26). Mainfreight’s Plested is the winner Beacon Honor.

Retrieved by http://www. stuff. co. nz/business/735585 Kennedy, Graeme. (2000, Drive 17). Mainfreight develops major logistics operation. Retrieved coming from http://www. sharechat. co. nz/article/69e6e5bb/mainfreight-develops-major-logistics-operation. html Linkedin. (2013, Feb . 28). Mainfreight. Retrieved via http://www. linkedin. com/company/mainfreight? trk=top_nav_home Mainfreight Limited. (1996) Mainfreight Limited Prospectus. Retrieved via http://epublishbyus. com/ebook/ebook? id=10005147#/4 Mainfreight Limited. (1997, July 2). Annual Record 1997. Gathered from

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Published: 04.07.20

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