Question

Blast Furnace, Inc., (BFI) provides customized development of automated rich-media applicants, and scalable solutions that allow media and entertainment companies as well as enterprises and government organizations to deploy, manage, and distribute video content on IP-based networks. The company was founded in 1997 and went public in 2004. While providing solutions to a variety of firms and industries in North America, BFI has experienced its fastest growth with the security products that it designs and sells to the U.S. government. This growth is based on its propriety VUE software, which is a complete identification solution for capturing, analyzing, and managing multi-biometric information. Proprietary analysis algorithms aggregate and cross-compare multiple biometrics to increase accuracy and lessen dependence on single identification techniques. Additionally, specialized encoding techniques reduce file size and increase analysis and response times. VUE supports a wide range of applications ranging from ID issuance and verification to gated entry screening for border patrol, airports, government buildings, and corporations. Essentially, VUE is able to sift through massive amounts of digitized multimedia files to create a unified ID dossier of an individual and them identify those individuals rapidly anywhere in the data. Such a capability is of great interest to security organizations, particularly since the World Trade Center bombing, because it allows the user to identify suspects within minutes on a real-time basis anywhere digitized media is being created (like that created by the hidden and visible surveillance cameras in airline terminals, banks, ATMs, and other public locations). Once a suspect is entered into the system, the software is capable of scanning all data sources automatically and without stop. For two years, BFI has had this market to itself but now two new entrants, a Belgian start-up and the subsidiary of a Finnish telecom firm, are staking out positions in large non-U.S. markets like Europe and Asia. BFI’s management fears that if it limits its efforts to North America, then these aggressive competitors may eventually develop strongholds in other markets from which they can launch successful attacks on BFI’s home turf.

1. Criticise the corporate-level strategy implemented by BFI.

2. Justify whether BFI should expand its operations outside of North America.

3. If BFI would like to expand its business, evaluate which country or countries that BFI should enter first?

4. Assume that BFI has chosen international expansion. Determine what are the activities would you recommend BFI to internationalize first in order to increase economy of scope.

5. Recommend FIVE (5) ways on how BFI can grow and improve the performance or quality of their products in order to achieve competitive advantage.

Answer 1

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Justify whether BFI should expand its operations outside of North America.

The best answers will note that BFI does not have to be a global firm, but that its future growth may be stifled if it chooses to focus only on the North American market. A good discussion can be developed around whether or not a patient BFI can eventually take over weaker competitors that spread themselves too thinly, too quickly (i.e., rapid geographic expansion). While BFI may have a product with global potential, students will want to be certain that it also has the managerial and financial capital to undertake a global move. A mid-range recommendation might be for BFI to further entrench itself in the North American market (increase its market penetration), while seeking a partner or acquisition candidate abroad in those markets that offer the greatest potential in terms of growth and customer synergies.