Smart Meter: International Business Harvard Case Solution & Analysis

External and Internal Factors that affect the Decision

The external factors that could impact the decision of the firm includes the nature of the smart metering market in Hungary, the nature of competitiveness, the laws and regulations regarding the outsourcing of the smart metering and smart metering solution. Furthermore, the entry barriers may include investments, capital required, the strength of the consumers to purchase the smart meters, the trend of the market and many others. The internal factors that affect the decision of the company includes the managerial decision taken by the company, the shareholders involved in the decision of making international presence, the consensus of the top management in concluding a decision, strategies that shall be implemented in entering the Hungarian market, and many others.

If these factors are maintained in the right order, then the company would have a strong presence in the Hungarian market and would be able to capture a larger market share as it possesses a stronger product in the smart metering industry. Therefore, the company needs to settle with these external and internal factors which influences its decision. The company requires to focus on the most important issues and factors that can bring positive influence and then it could work accordingly.

Competitive Strategy

The Smart Metering Model shall be implemented by the company while launching the ADDAD-5 product in the Hungarian market. Amongst the many smart metering models, the company shall introduce DSO/Network License Basic Model. In this particular model, the metering device shall be owned by the Network Licensee which would be a local company in Hungary. The local company would also be responsible for the installation and the operations of the smart meters. The Network Licensee would be a monopolistic service provider in a particular area which would be responsible for processing the data and forwarding it to the concerned companies. In order to finance the investment, the Network Licensee should invest from its own resources without the aid of the company launching the product in the Hungarian market. However, the stakeholders or the institutions that interest in the smart metering would contribute towards the investment cost of the meters which include the state, consumers, and the trading company.

The DSO or the Network Licensee is responsible to transfer the data from the consumers to the trading company. The Trading Company would be responsible to invoice the consumers on the usage of the meters and it would also be responsible for providing services to the consumers regarding the gas and electricity problems faced by the consumers. The DSO would earn their profit sharing through invoicing the system utilization fee, whereas, the company that launches the product ADDAD-5 in the Hungarian market would earn profits through royalties, product purchasing, and licensing fees. Exhibit 1 describes the entire structure of the model which would earn the company a competitive advantage in the European market.

Degree of Product Adaptations

There would not be any product adaptations required in the Hungarian market however, it would require few changes in the broader context regarding the changes in the laws and regulations of a country which would be the responsibility of the SM operators. The Ownership of the meter regarding the installation, maintenance, and calibration of the product would be maintained by the Network Licensee. The Network Licensee shall purchase the ADDAD-5 meters from the company and embed it in the Hungarian market. This would require a simple act of changes in the XL/2008 on Natural Gas Provision and Services, and XLV/1991 on measurement statute.

However, in order to maintain the company’s monopoly in the particular area and to derive a strong hold in the market, the company would require a slight change in the act which would include the Act of XL/2008 on natural gas provision and services, whereas, IV/2006 is the law which would be implemented upon the company through parliament. These are the degrees through which the system would adapt itself with the launching of the product.

Managerial, Financial, and Allied Organizational Issues

While considering the allied organizational issues, many problems could be faced by different companies as there are many stakeholders and companies involved that have their interest in the installation of the ADDAD-5 meters. The stakeholders that are involved in the installation of the meters includes the launching company, the DSO/Network Licensee Company, the trading company, the state, and the consumers. If the state does not agree upon installing the latest electronic meter reading machines while rejecting to provide the monopolistic advantage to the DSO network company then the entire model would fail to produce any results. The success of the model is based upon achieving the monopolistic advantage in the particular area so that a feasible Return on Investment (ROI) could be established (Atkearney, 2010)...................................

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