The internationalization of a sustainable water managing company

Abstract: This essay looks at the problem with the increasing water shortages in three different economic markets. This is done through the perspective of the sustainable water managing company EcoNova, who specializes in innovative water recycling technology for use in the residential development, commercial, marine, sports, tourism, mining and defence industries. Three countries were selected on a basis developed through the empirical findings, resulting in Brazil, China and Spain, where EcoNova’s systems could be successful. The empirical findings defined a number of criteria necessary for a successful market entry; these are demand and needs, financial capability, growth, competition, and psychic distance.   A PESTEL analysis was employed to retain accurate information regarding the above mentioned criteria. Based on this information, an entry model was formulated with a conclusion that Spain should be entered first, followed by Brazil and lastly China. Here follows highlights from each country’s market potentials. Spanish water and wastewater rules are adjusted to the EU standards, which should simplify any expansion within the EU. It is not as hard for a foreign company in Spain to establish their presence in regards to legislative and cultural issues. Products must be certified to meet EU environmental standards, which is the only significant barrier to foreign investment in Spain. The need for specialized technology equipment for water management is an advantage for EcoNova. Brazil is the largest economy in South America and gives an access to other nations that are members of the free-trade agreement Mercosur. There is a non-official “buy Brazilian” policy, which means that having a partnership with a domestic company is important for foreign companies in the wastewater market. The demand for wastewater equipment is high. There are two solutions available to the income disproportion; simplifying the product to lower the price, or introducing the product to the Brazilian Social Action and Sanitation Program, who provides economic resources to wastewater projects. China has a huge market where water supply pricing policies promote wastewater reclamation. The Chinese government is launching extensive environmental protection projects and encourage foreign investors to seek opportunities. There is also an expanding market for smaller water and wastewater facilities in rural areas. Recycled water can be used even in areas that are connected to a municipal sewage. Legislation requires certain areas to construct water reuse system and there is a demand for small, decentralized systems. Close relationships are vital. The Uppsala model, the network approach, and the rational approach have been used to define and compare EcoNova’s internationalization process. It became clear that no internationalization model really fits to EcoNova’s needs, as focus is on other factors. The findings of this research are that a water managing company base its internationalization on firstly the market needs and financial situation, secondly growth opportunities, thirdly the market competition, and finally the psychic distance. These factors have to be matched to the company’s resources, objectives and orientation, so that the perception is aligned with the reality and subsequently achieve a successful market entry.