STRATEGIES OF MARKET ENTRY

The entry into a foreign market in general can be tried by exporting commodi-ties (goods or services), capital (share-holding, merging and acquisition) or production (building up own fabrication facilities). For construction firms, exporting their commodities is normally not possible. So exporting capital in order to form cooperative and financial links in one form or the other with local firms has many advantages, and is nowadays widely used in the European construction industry. It includes ownership, and allows influence on the business strategy of partner firms, reduces the risks which may follow from the lack of specific cultural knowledge and local experience, and it can form a part of a long-term business strategy instead of acting from project to project. Construction firms can go one step further. If they can get direct access to a land owner or to a developer, they can avoid the effort, the uncer-tainty, and the short-term orientation of the tendering process. Big construct-ion companies moreover have the possibility to realise this step with their own means: they can buy, participate in or even found real estate companies. And this way obviously was the strategy of CBC to enter the German market (Interview 4/5/94). After 1989 CBC had made some experience in eastern European countries, but they regarded the German construction market, which by construct-ion volume is the biggest in Europe, as important and promising. They plan-ned that their turnover in Germany within five years would be as big as their turnover in construction in France (about 3 bn FF). To meet that goal, they first bought a German engineering firm; another take-over was said to be under way. These type of firms in Germany normally have - despite their engineering capacity - in terms of capital, turnover, and employ-ment the dimension more of a small than a medium enterprise. Their main advantage is the access to architects and clients, with whom they often have long-term stable business relations. So this takeover could open the access to construction orders. Owning an engineering firm located in a foreign country also ensures the ability to meet all the technical norms required in those markets. This point may be seen of special significance in the case of Germany, where the DIN (Deutsche Industrie Norm) is of particular importance for all permission and execution in construction. What CBC did not do, was the other way, often used by construction compa-nies going abroad - cooperation with a local German con-struction firm. In fact according to their own statements, they explicitly avoid doing so. They considered that these firms would be far more competitors than real partners. From their eastern European experience they were sure, that their own strength as a construction firm, in particular in managing sites, was suffi-cient to convince foreign clients: constructing buildings on a fixed price basis, offering short completion dates and keeping or even undercut them, and assuring a good quality of the building. The means they thought was the most important and promising one was to participate in joint ventures for property development. This would help them to avoid tender processes, and to enter directly the construction phase, where they could show their ability and efficiency. This market entry strategy of CBC was, on the one hand, the crucial background to understanding why they formed part of the client joint venture. The new company of CBC Immobi-lière that they had founded, with a local headquarters in Berlin, would open the Berlin and then the whole German construction market to them. What they looked for was not performing projects to get access to clients, but access to the clients side to be enabled to perform projects. On the other hand, this explanation settled the question of the nature of the tender process of the lot 207 project. This process was obviously never thought to be a tender in the true sense of the word, but it was a component of an international business strategy, of which the aim was much more far-reaching than winning a single project. And that was why they formed the joint venture with German partners at the level of the real estate business, because that was their point of market entry and not the construction project itself. Similarly for the facade contractor, the project offered a route for market entry. The Italian steelwork fabricator Permasteelisa was chosen by the Generalübernehmer for the curtain wall parts of the building after a competition to which a limited number of pre-selected companies were admitted. It is important to underline that the participation to the Berlin project had been considered by the company's executives as a crucial element in a strategy of world-wide communication and promotion. In fact, the constant variations which occurred to the detailed design during the execution of the works - imposed by Nouvel - led to a serious growth of costs so that from the strictly economic and financial point of view the interest of the project turned out to be very limited.