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Weg now made an extensive line of products. From its beginnings as a maker of small electric motors, the company now also produced large single-phase motors used mainly in industries making durable consumer goods, and three-phase motors used mainly by producers of capital goods. Other business units included high-voltage motors and generators, servos, automation equipment, transformers, and paints and varnishes. Its product range extended to transformers and electrical control panels (see Appendix II for more details).
Weg had started out making products that lacked differentiation from its competitors, at the low end of the value curve. With international expansion, it had gradually moved to products with higher margins and of greater complexity, including “technology packages and services” for electricity generating companies and large energy consumers.
Weg’s main competitors could be divided into two groups. The first included multinationals with diversified businesses, such as General Electric (GE), Siemens, Asea & Brown Boveri
(ABB) and Toshiba. The second consisted of smaller companies with a focus on motors and transformers, including Emerson and Baldor (both from the United States).
GE, Siemens, ABB and Toshiba had annual revenues ranging from US$6 – 14 billion related exclusively to energy infrastructure, and all offered a broader range of products than Weg.
But these huge conglomerates were progressively shifting their focus to more complex products in areas besides energy infrastructure, giving Weg more room. The combined revenues of its main competitors was estimated at US$50 billion.
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Copyright © 2012 INSEAD 11 02/2012-5857
How to move forward?
As Weg’s CEO is reflecting on the company’s 50 years history and thinking of how to move forward, he is trying to answer the following questions:
1. How has Weg’s internationalization been carried out so far and what entry modes has it used? 2. Which were Weg’s key