Internationalization strategies and foreign subsidiary management: a case study of SITI B&T Group S.p.A.

In the past decades the world market landscape has drastically changed dynamics and operations across all industries. This shift includes the ceramic sector, which in the past few years has grown immensely in countries that are not the ones that immediately come to mind when thinking about the traditional ceramic industry, like Eastern Asian countries. This profound change in the ceramic industry brought with it the ceramic machinery sector. This environment of growing globalization of markets and rising in international competitive pressure makes internationalization an obligation for firms, rather than an individual strategic choice. Not only is it important to internationalize, but it matters how the company is present in foreign markets. Most firms start their internationalization process following an incremental path, beginning with a low involvement entry in a small number of countries, with indirect export via different kinds of external intermediaries. As the firm becomes more experienced it moves to include forms of direct export and eventually, if it sees potential in the market and grows enough familiarity with the country, builds a more stable entry strategy. Often the firms’ choice for a stronger presence falls on commercial foreign subsidiaries, that allow them to have a higher level of control on foreign operations; this is the case of SITI B&T Group S.p.A. The firm operates in the ceramic machinery sector and is active in the Italian Sassuolo district, where it has its roots. The company’s strategy is built on standardization, cost reduction, and vertical integration as it is a full liner supplier. These manufacturing firms provide their customers in the ceramic industry with complete plants from raw materials preparation to end of line activities. While having its origin in the Sassuolo district, the group has grown worldwide. Its internationalization strategy has the goal of offering the best possible assistance to its foreign customers by being close to them. This is why the firm has a widespread presence all over the world through commercial foreign subsidiaries, ensuring faster interventions and substitution of spare parts while maintaining a high quality of its assistance with its own technicians. The primary objective of this thesis is to analyse how SITI B&T Group manages its foreign commercial subsidiaries, studying everything from their establishment, staffing policies, operations, degree of autonomy, and control mechanisms within the overall structure of the group. This analysis was conducted utilizing semi-structed interviews to four of the subsidiaries’ General Managers and to the Corporate Control Manager and comparing the responses to the theoretical background. The results highlighted a centralized system, in which the headquarters allow a level of autonomy to the subsidiary, but always within the well-defined boundaries established by them. Control is for the majority formal and is strictly managed at the top via consistent monthly and quarterly reporting and budget planning. Seen these results, this study concludes that SITI B&T Group has a strict structure with mainly top-down relationships with its subsidiaries, that retain a level of decisional discretion rather than complete autonomy.