Industries in Portugal Research
Document Type:Research Paper
Subject Area:Management
Understandably, these sectors are comprised of different industries. They range from manufacturing to agricultural processing and service industries. The collective efforts of each industry combined leads to the general performance of the economy. Portugal, like the case, is in many countries, is not an exception in multi-sector development. For sustained economic growth, it is critical for us to consider the future of players in these industries. It was called Siderurgia Nacional which was an integrated iron and steel mill set up across Tagus River. Given the growing demand then, it snowballed, producing over a million tons of pig iron by the year 1972. The company formed the basis of not just investment in massive iron and steel industries but also set them on track the performance in the sector. With the challenges of unfavorable geographical factors of poor raw materials location and availability of hydro-electric power, at some point, the company had to stop its operations to acquire coke from the United States.
However, over the period, the industry invested in the required power supply to support the heavy industrial work (Chilcote 188). The big three originated from the founding company Siderurgia Nacional which is the National Steelworks (SN). The medium enterprises in the industry have had a significant contribution to the industry. Further, they have encouraged competition among the different player raising not only the quality of products produced but also tapping modern technology into the industry ("Representativeness of the European Social Partner Organisations: Steel Industry – Portugal | Eurofound"). Given the background information and dynamics in the industry, it is important to note the critical reasons for the industry’s growth for the next seven years. First, there is immense competition among the players of in the industry. Therefore, technology serves as a critical factor in the industry’s growth ("Portugal: Crude Steel Production 2009-2016 | Statistic").
Total production of crude steel in Portugal from 2009 to 2016 (in thousand metric tons) Also, increasing demand for steel products in the country and globally serves as an opportunity for growth in the industry. Steel is a desired product across the world for the manufacture of several products. It serves as a raw material in producing cookery among many other products. Therefore, for the industry, steel production is more of a raw material production for secondary production or manufacturing. Internationally, Steel organizations have a network that helps the players in the industry from different countries to not only learn from each other but also collectively solve emerging issues in the industry. Also, global steel industry statistics provide the metrics for the country’s steel industry to compare and benchmark. The local government support and favorable policies make steel industry and manufacturing industry in general to flourish.
Regulation on mining of iron and steel milling offers the necessary state security and protection to all players thus providing a growth opportunity. A stable policy environment and global support, assures the strong industry growth in the next seven years ("Global Steel Industry Market 2015-2019 | Market Research Reports - Industry Analysis Size & Trends - Technavio"). Economically, the sector is vital as it not only contributes much to the national earning of the country but also supports most, if not all, industries in the economy. The sector is characterized by numerous changes occurring within short periods of time. Moreover, innovation and technological advancement is a critical requirement for the players to survive in the industry. Government regulations and policy stability are also essential in ensuring fair play in the industry. Therefore, in analyzing this industry, it is significant for us to consider its interrelation with other sectors as well as the revolutionary nature of the industry.
Also, the government has been struggling in setting the relevant regulation as well as growing the economy to offset the growing deficit within the period. Operators in the industry have also been struggling revenue since the economic situation has been wanting. However, for the last two years, signs of improvement have been realized in the industry. There is not only visible indication of an industry set to take off but also an opportunity for the country to enjoy high-end telecommunication services ("Telecommunications: Turnover 2008-2015 | Portugal"). Since the mobile sector is the largest in the industry, it implies that significant income is drawn from the industry. Also, enormous investments in network enhancement have the effect of attracting foreign investors who not only bring in foreign investments in the country but also help in raising revenue for the industry.
Increased internet speed and a secure network are the basis for a growing telecommunication industry. Secondly, the planned cable technology upgrade to link the country to Brazil is a significant opportunity for growth in the industry. Portugal Telecom projects to replace its copper network with a new cable to connect Portugal with Brazil by the year 2020. Such a development is a gateway to not just foreign investments but also an opportunity for trade expansion. If the ESA Telecom would come together to work on a common goal with the telecommunication organizations, the future of the industry will be even brighter. Such alliances will see the industry realize strong technological investment projects which are essential to the industry’s growth. Robust technical facilities are required to achieve growth in the industry. This is because the sector is pure technological and its improvement trickles down to the whole industry.
For this to come to effect, the regulatory body should ensure the process is efficiently carried out for the good of the industry ("Survey of the Telecommunications Industry in Portugal | ESA's ARTES Programmes"). All the factors mentioned above are crucial for any industry to realize notable improvement. Such conditions are already available in the Portuguese telecommunication industry; hence, it is evident that it is in its growth lane ("Portugal Telecommunications Report"). Part B Entry of Foreign Multinationals in Portugal and Their Performance to Date Introduction Portugal, just like most other countries in the world, has been a target for business for foreign multinational companies. While these companies have an aim of doing business in the country, they choose a different mode of entries. Also, it is essential to understand that the multinational firms enter the country as foreign investments with interest in specific areas of concern.
Determinants of Entry Modes The following are some of the determinants that multinational firms consider before joining any country for a business venture. Firm’s capability: the ability of a multinational company regarding financial resources, assets, and competitive advantage played a significant role in determining the entry behavior into a new market. If the firm has extensive links with the market it seeks to enter, it will join as a wholly owned subsidiary to maintain its competitiveness. Moreover, if the firm’s competitiveness is based on its capabilities, a joint venture is advised. This helps the firm complement the partner as they share knowledge of the market. This is necessary to avoid a spillover of technology to the domestic firms. Also, the companies seek to protect their technology which is a valuable intangible asset.
The case is usually the same for highly technology-intensive firms, not necessarily in the telecommunication or technology industry. Unique technology is an asset by itself and by establishing an independent entity the business gain competitive advantage over their rival domestic firms (Chung 192). The necessity of control: if a foreign multinational’s activities require close monitoring and high levels of control, the company will go direct investment or the wholly owned subsidiary mode than a joint venture. These firms operate and compete with the local firms to offer best of services and products to the Portuguese market. These firms are distributed all over the sectors in the economy. Since their establishment, most of them have been doing well given their international experience and large asset base. In the service industry, Deloitte serves as the best example of a multinational whose entry was as a wholly owned subsidiary.
The company, which has a global reputation with its headquarters in New York, United States, has been in existence in the country for years. In most cases, multinationals invest both in equity and operation, expanding the local firm’s operations hence its profitability. In Portugal, multinational companies have found their way in the country. Consequently, partnerships between the domestic companies and foreign multinational companies are evident in the Portuguese market. This has seen tremendous growth in such companies and up to date, the companies’ performances are undoubted. An example of these companies is McKinsey & Company which offers consultancy services in Portuguese market and beyond borders ("Portugal"). H. PORTUGAL'S NEW IRON AND STEEL INDUSTRY. Geography, vol. 48, no. 2, Apr. Res. J. Finance Econ, vol. 1, no. 28, 2009, pp. Journal of Development Economics, vol. 77, no. 1, 2005, pp.
Global Steel Industry Market 2015-2019 | Market Research Reports - Industry Analysis Size & Trends - Technavio. Market Research Reports - Industry Analysis Size & Trends - Technavio, 2015, www. The. Small Bus. Econ, vol. 11, no. 1, 1998, pp. Encyclopedia of the Nations - Information About Countries of the World, United Nations, and World Leaders, www. nationsencyclopedia. com/economies/Europe/Portugal-INDUSTRY. html. Portugal Telecommunications Report. mckinsey. com/pt/en. Representativeness of the European Social Partner Organisations: Steel Industry – Portugal | Eurofound. Eurofound |, www. eurofound. 2007, artes. esa. int/projects/survey-telecommunications-industry-portugal. Telecommunications: Turnover 2008-2015 | Portugal. Statista, www.
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