Compsis was facing headwinds in 2004. Their revenue dropped from $4.2 million to $3.3 million. While the implemented Electronic toll collection system successfully in Australia with the partnership with an American firm Philips. But their venture in India did not see success due to cost constraints.
While Compass gets the majority of their business from Brazil, but they do not want to rely on only Brazil and want to expand. They are looking for opportunities in other Latin American countries, Other emerging markets such as India, Pakistan and of course the biggest market for electronic toll collection that is the USA. But entering into the US market is not that easy for Compsis. While the US market was matured and growing, it was dominated by firms such as MarkIV, TransCore, Raytheon, SIRIT, ACS State, VES Systems, CASETA Technologies, ETC Inc. The customer base in the USA is mainly Quasi-governmental bodies. While the US market has 64 toll agencies in 26 states, the ETC sales process is significantly different than other markets.
In the 1980s- 1990, the public agencies did not have much experience in procuring vendors for ETC. Hence, vendors and major toll authorities came together to form a trade organization called International Bridge, Tunnel and Toll Association (IBTTA). This trade organization organized major conferences, seminars, advocacy initiative and request for proposals (Lehrich, Paredes, Ravikumar,2009).
While with membership in this trade organization made sure that the members would come to know about projects, but the firms had to procure through public RFPs and the projects usually gets awarded after the sealed bid, 2 step sealed bid and competitive negotiation processes.
RFP process is well defined and time-consuming and has defined steps (Lehrich, Paredes, Ravikumar,2009). The evaluation criteria included –
1. quality of employees
2. The ability of the vendor to maintain high-quality human resource during the project life cycle
3. Past performance of the vendor
4. Vendor understands the ask
5. Cost for the project
Usually, there are defined steps before the project is awarded. All these steps make sure the whole process is fair and open to all.
The Diamond model of National advantage -
Demand Condition – this refers to domestic customers. In this case, all car owners who drive on toll roads are potential customers. And the firm that meets the high expectation of domestic customer tends to do better (Ketchen & Short, 2012). For Compsis, Brazilian drivers are the customers. Brazil is still an emerging economy so it would be safe to assume that there is the scope of growth left and the market is not matured yet.
The US ETC market is matured and has many players already. The consumers in this case the drivers are used to sophisticated systems. Compsis will have to deliver their best product. Compsis does not do any business in the USA, so they would like to enter the market with the most matured product which is SICAT. While COMPSIS has experience in implementing ETC in Australia with collaboration with an American firm called Phillips, but in the USA COMPSIS does not have a partner yet as Phillips does not exist anymore.
Factor Conditions- refers to the raw material and other inputs required to produce good and service. These would mean- land, labor, capital market, infrastructure, etc. When a firm has access to all that is necessary tends to do better.
Compsis is ETC solution provider. They have developers to implement the system. Having access to engineers is very critical, Compsis has strong ties with Brazilian universities Instituto Tecnologico de Aeronautica (ITA) and the Universidade do Vale do Paraiba (UNIVAP).
Related and Supporting Industries – is about having industries that are associated with same industry, and those industries being great at what they do (Ketchen & Short, 2012).
In our case Compsis was founded by Brazilian Aeronautics engineers and for they software and hardware they need engineers and other companies to produce hardware. Compsis had to outsource manufacturing of vehicle sensors, high resolution cameras, toll gates, signaling elements, RFID sensors etc. Compsis developed the software and then integrated the hardware with the software and installed the system in toll plazas.
Firm Strategy, Structure, and Rivalry – refers to the local competition the firm faces. The more competition a firm face, the more opportunity it gets become stronger (Ketchen & Short, 2012).
In case of Compsis, it developed SICAT 4 system in 1996, which was enhanced with new features gradually. Compsis added features to it such as Lane level vehicle detection, Plaza supervision, Auditing and overall Financial Supervision.
What I understood from this is, Compsis did not face that hard of a competition that it might face in the USA.
Optimal international business strategy for the firm
With their matured product SICAT and with latest product SICAT XP, Compsis can look into markets where demand is. That might include latin American countries, North America, emerging markets etc. Understanding the market is important, since Compsis has already worked in Australia and India, they have understanding of those markets, they can look into those markets again for new opportunities. But, this is definitly not Compsis’s forte, they have started expanding and long way to go before they understand different geographies, so demand condition driven strategy would not be optimal for them.
Factor condition for Compsis mainly revolves around software developpers, hardware developpers. While the firm has tie ups with universities in Brazil, they do not have any tie ups else where. And they need to look for hardware manufacturer, wherever they go. The factor condition has many unknown factors at this moment, hence this cannot be the optimal strategy.
Compsis completed a project successfully in Australia with partnership with US firm names Phillips, and their endeavor in India, did not go that well. Their strategy to partner up with another vendor might be a good idea but they do not have enough experience in competing against other firms globally (Lehrich,Paredes,Ravikumar,2009).
Compsis is mainly a software firm, they implanted ETC solutions while partnered up with other hardware manufactures to deliver complete solutions in Brazil and Australia. They can partner up with a hardware manufacturer which is reputable and considerable local or have local expertise and try to enter other market, I think related and supporting industries could provide them with optimal result in international market.
Best market entry option for Compsis to implement possible US expansion
The USA is matured ETC market which is not that price sensitive. Hence there are lot of companies competing. Compsis needs to partner up with a technology firm like Philips. So, in collaboration they can implement the ETC system with software and hardware in toll plazas. They have history of success in this model. And this will be probably their best chance to show their competence, experience in RFP, if they find an experienced, reputable hardware manufacturer as partner. Since they are more or less a software development firm and ETC implementation partner, their software team can work from anywhere, but they will need to hire engineers to implement ETC in toll plazas.
References -
Lehrich,J., Paredes,P. J., Ravikumar, R. ( December,2009).Compsis at a Crossroads.
Retrieved on August 7, 2019. Retrieved from https://my.uopeople.edu/pluginfile.php/515770/mod_workshop/instructauthors/U7%20Compsis-at-a-Crossroads-Lehrich.pdf
Ketchen, D., & Short, J. (2012). Strategic Management Evaluation and Execution. Retrieved August 7, 2019,Retrieved from https://my.uopeople.edu/pluginfile.php/515745/mod_page/content/6/strategic-management-evaluation-and-execution compressed.pdf
While Compass gets the majority of their business from Brazil, but they do not want to rely on only Brazil and want to expand. They are looking for opportunities in other Latin American countries, Other emerging markets such as India, Pakistan and of course the biggest market for electronic toll collection that is the USA. But entering into the US market is not that easy for Compsis. While the US market was matured and growing, it was dominated by firms such as MarkIV, TransCore, Raytheon, SIRIT, ACS State, VES Systems, CASETA Technologies, ETC Inc. The customer base in the USA is mainly Quasi-governmental bodies. While the US market has 64 toll agencies in 26 states, the ETC sales process is significantly different than other markets.
In the 1980s- 1990, the public agencies did not have much experience in procuring vendors for ETC. Hence, vendors and major toll authorities came together to form a trade organization called International Bridge, Tunnel and Toll Association (IBTTA). This trade organization organized major conferences, seminars, advocacy initiative and request for proposals (Lehrich, Paredes, Ravikumar,2009).
While with membership in this trade organization made sure that the members would come to know about projects, but the firms had to procure through public RFPs and the projects usually gets awarded after the sealed bid, 2 step sealed bid and competitive negotiation processes.
RFP process is well defined and time-consuming and has defined steps (Lehrich, Paredes, Ravikumar,2009). The evaluation criteria included –
1. quality of employees
2. The ability of the vendor to maintain high-quality human resource during the project life cycle
3. Past performance of the vendor
4. Vendor understands the ask
5. Cost for the project
Usually, there are defined steps before the project is awarded. All these steps make sure the whole process is fair and open to all.
The Diamond model of National advantage -
Demand Condition – this refers to domestic customers. In this case, all car owners who drive on toll roads are potential customers. And the firm that meets the high expectation of domestic customer tends to do better (Ketchen & Short, 2012). For Compsis, Brazilian drivers are the customers. Brazil is still an emerging economy so it would be safe to assume that there is the scope of growth left and the market is not matured yet.
The US ETC market is matured and has many players already. The consumers in this case the drivers are used to sophisticated systems. Compsis will have to deliver their best product. Compsis does not do any business in the USA, so they would like to enter the market with the most matured product which is SICAT. While COMPSIS has experience in implementing ETC in Australia with collaboration with an American firm called Phillips, but in the USA COMPSIS does not have a partner yet as Phillips does not exist anymore.
Factor Conditions- refers to the raw material and other inputs required to produce good and service. These would mean- land, labor, capital market, infrastructure, etc. When a firm has access to all that is necessary tends to do better.
Compsis is ETC solution provider. They have developers to implement the system. Having access to engineers is very critical, Compsis has strong ties with Brazilian universities Instituto Tecnologico de Aeronautica (ITA) and the Universidade do Vale do Paraiba (UNIVAP).
Related and Supporting Industries – is about having industries that are associated with same industry, and those industries being great at what they do (Ketchen & Short, 2012).
In our case Compsis was founded by Brazilian Aeronautics engineers and for they software and hardware they need engineers and other companies to produce hardware. Compsis had to outsource manufacturing of vehicle sensors, high resolution cameras, toll gates, signaling elements, RFID sensors etc. Compsis developed the software and then integrated the hardware with the software and installed the system in toll plazas.
Firm Strategy, Structure, and Rivalry – refers to the local competition the firm faces. The more competition a firm face, the more opportunity it gets become stronger (Ketchen & Short, 2012).
In case of Compsis, it developed SICAT 4 system in 1996, which was enhanced with new features gradually. Compsis added features to it such as Lane level vehicle detection, Plaza supervision, Auditing and overall Financial Supervision.
What I understood from this is, Compsis did not face that hard of a competition that it might face in the USA.
Optimal international business strategy for the firm
With their matured product SICAT and with latest product SICAT XP, Compsis can look into markets where demand is. That might include latin American countries, North America, emerging markets etc. Understanding the market is important, since Compsis has already worked in Australia and India, they have understanding of those markets, they can look into those markets again for new opportunities. But, this is definitly not Compsis’s forte, they have started expanding and long way to go before they understand different geographies, so demand condition driven strategy would not be optimal for them.
Factor condition for Compsis mainly revolves around software developpers, hardware developpers. While the firm has tie ups with universities in Brazil, they do not have any tie ups else where. And they need to look for hardware manufacturer, wherever they go. The factor condition has many unknown factors at this moment, hence this cannot be the optimal strategy.
Compsis completed a project successfully in Australia with partnership with US firm names Phillips, and their endeavor in India, did not go that well. Their strategy to partner up with another vendor might be a good idea but they do not have enough experience in competing against other firms globally (Lehrich,Paredes,Ravikumar,2009).
Compsis is mainly a software firm, they implanted ETC solutions while partnered up with other hardware manufactures to deliver complete solutions in Brazil and Australia. They can partner up with a hardware manufacturer which is reputable and considerable local or have local expertise and try to enter other market, I think related and supporting industries could provide them with optimal result in international market.
Best market entry option for Compsis to implement possible US expansion
The USA is matured ETC market which is not that price sensitive. Hence there are lot of companies competing. Compsis needs to partner up with a technology firm like Philips. So, in collaboration they can implement the ETC system with software and hardware in toll plazas. They have history of success in this model. And this will be probably their best chance to show their competence, experience in RFP, if they find an experienced, reputable hardware manufacturer as partner. Since they are more or less a software development firm and ETC implementation partner, their software team can work from anywhere, but they will need to hire engineers to implement ETC in toll plazas.
References -
Lehrich,J., Paredes,P. J., Ravikumar, R. ( December,2009).Compsis at a Crossroads.
Retrieved on August 7, 2019. Retrieved from https://my.uopeople.edu/pluginfile.php/515770/mod_workshop/instructauthors/U7%20Compsis-at-a-Crossroads-Lehrich.pdf
Ketchen, D., & Short, J. (2012). Strategic Management Evaluation and Execution. Retrieved August 7, 2019,Retrieved from https://my.uopeople.edu/pluginfile.php/515745/mod_page/content/6/strategic-management-evaluation-and-execution compressed.pdf
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