Impsa: Restructuring to Innovate with Existing Resources
(9 pages of text)
In late 2012, an executive vice-president faced a dilemma at Industrias Metalúrgicas Pescarmona S.A. (IMPSA), an Argentine multinational company that designed and produced cranes, dams, and components for power plants, and had recently begun building hydroelectric and wind power projects. The company’s chief executive officer had tasked the executive vice-president with recommending how IMPSA could be radically restructured to adapt to changes in the world marketplace for renewable energy. However, IMPSA was at the top of its game, and the company had a backlog of orders valued at US$3.3 billion. The executive vice-president knew that the chief executive officer would not accept a minor reorganization but would demand a major restructuring based on the firm’s existing resources, which was a strategy that, in the past, had proven to be successful for the company, particularly in emerging markets. The executive vice-president wondered how IMPSA could build on its existing wind power and hydroelectric dam business without abandoning the resources the firm had developed over the years.
This case is suitable for undergraduate and post-graduate classes in international business. It could be used in classes that discuss core competencies or the structural and operational challenges of multinational corporations operating in emerging markets. Upon completion of this case, students will be able to
- develop their capabilities to analyze how to restructure a multinational corporation in an emerging market;
- understand how the context in which such companies operate shapes the manner in which it should be reorganized, highlighting not only the need for vertical integration but also the way vertical integration can be the basis for the development of new products;
- assess the firm's resources, showing that companies from emerging markets do not need to pursue strategies based on either low-wage industries or radical innovation;
- examine the difficulties that companies in emerging markets face while attempting to focus on their core competencies;
- evaluate the challenges facing multinational corporations operating in emerging markets; and
- examine the manner in which a companies can use resources to combat supplier failure to develop a competitive advantage.
Argentina, Large, 2012
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