Operating in China: An International Business Opportunity for Inmarsat

This document analyses the opportunity for Inmarsat to extend its production and warehouse operations to China. It uses various frameworks and concepts to understand the internalisation process in detail. The analysis starts with the history of Inmarsat, its growth by acquisitions & the impact on company’s operations specifically on the supply chain. Then the analysis of the external environment, which include industry related developments and the market opportunities for growth. The section, internal firm environment analyses the FSAs and CSAs for the host country, China.

28.09.2021
International Business
Opera
ting in
China

Word count: 5388

Contents
1Executive Summary...................................................................................................................................3
2Introduction...............................................................................................................................................4
2.1About Inmarsat...................................................................................................................................4
2.2About my role.....................................................................................................................................5
3Analysis and Evaluation.............................................................................................................................7
3.1Growth history & Acquisitions ...........................................................................................................7
3.2Inmarsat’s External Environment........................................................................................................8
3.3Internal Firm Environment and Internalisation Analysis...................................................................10
3.4Integrated summary and solution options........................................................................................20
3.5Recommendation and implications..................................................................................................22
4References...............................................................................................................................................23
5Appendix..................................................................................................................................................26

1 Executive Summary
Option A: Focusing on a current International Business opportunity in China to create
additional production and warehouse operations. The corporate strategy of company states that
Inmarsat needs an effective operating model to enable Inmarsat in order to create sustainable
advantages in markets and increase cost efficiency. This document uses the following
frameworks and concepts to understand the internalisation process in detail.
 Firm Specific Resources and Capabilities Model,
 The Porter’s Diamond model,
 VRIOT Framework,
 The Cage Model,
 The FSA-CSA matrix,
 The OLI Framework.
The three-layered structure by Collinson et al. (2017), shown in Figure 1, helps to
understand how to make international business decisions. This document uses a similar approach
to perform the analysis and to make recommendations. The analysis starts with the history of
Inmarsat, its growth by acquisitions & the impact on company’s operations specifically on the
supply chain. Then the analysis of the external environment, which include industry related
developments and the market opportunities for growth. The section, internal firm environment
analyses the FSAs and CSAs for the host country, China.
Figure 1 The multiple interacting levels and lenses of international business studies

This internal analysis data presents the current stock holding levels. It also keeping in-
house operations comes with cost & risk, which became apparent during the global pandemic. It
is analysed that in last 5 years, the value of inventory was increased by 33%, compared to an
increase of revenue by only 13%. It is also found that in next 5 years, expected capacity will be
circa 13 times more than today, on the basis of long-term business plan.
A new production and warehousing location needs to reduce risk of cultural, economic,
and technological consequences of a volatile market and fast pace is considered. China has the
advantage of being one of the cost efficient countries to have a manufacturing plant and with
their good infrastructure distribute all around the world easily. However, there are challenges
opening a manufacturing plant in China. The Cage framework identifies the cultural,
administrative, geographical and economical distances. Inmarsat has the advantage of being
familiar with the culture and geographical dimensions through the existing Singapore plant.
However, there are other risks operating in China, especially the Chinese government program to
be more independent country to foreign investments might be a concern. The mode of entry can
be used as risk mitigation. Acquisitions are very familiar in Inmarsat history. Partnership is less
risky compare to opening and owning a manufacturing plant or acquiring company. It is
important to note that completely outsourcing might be the future strategy for Inmarsat and
introduce global value chain. Having presence in China can support the long-term efficiency
seeking goals and plans.
2 Introduction
2.1 About Inmarsat
It is found that Inmarsat is the world leading mobile satellite company. They are
operating as a public company for 15 years till 5th of December 2019. it is found that they are
took over for $3.4 billion UD dollars. Inmarsat is found in 1979 that provide satellite
communications at sea in International Maritime Organisation. At initial time, they are aiming to
protect lives at sea. But after sometime, they are expanded connectivity in many areas. It is found
that their customers involves airlines, the military, shipping fleet operators, mining, aid agencies,
agricultural technology and logistics (Inmarsat Corporate Website, 2021). Inmarsat provides
services many location in over all the world. For example, a customer wants to be online. For
that purpose they need to give signal through their terminal satellites which is 35000 km from
earth. It is found that signal goes down in ground station for processing and then delivered with

the help of data centre. The whole journey is expected to be less than one second (Inmarsat
Corporate Website, 2021).
Inmarsat employs over 1800 employees which are based in 39 offices around the world.
55 Nationalities are represented in the workforce. The main offices are in Canada , UK, The
Netherlands, Norway and Singapore. It aims to launch 7 more satellites by 2023 that supports
5G. This will assists in increasing connectivity by high-speed broadband, and also enhancing
global safety in all over the world (Inmarsat Corporate Website, 2021). It is the Multinational
Enterprise and their HQ is situated in London, UK. Inmarsat is involved in international trading
since 1979. Currently, it can trade is commercial services and goods globally. They has 63
entities around globe (Appendix A) (Inmarsat Annual Report, 2020).
They operates in Satellite Telecommunication sector. It usually has small profit margins
& relies heavily on high value fixed-asset investments such as satellites. They made a loss in last
two years. One reason is the Covid-19 pandemic impacted on Aviation sector negatively. Also,
investments in technologies and new satellites were required and also found that the market is
becoming more competitive. As a result, one of the strategic priorities of Inmarsat is to transform
the operating environment for the purpose of making a profitable business. It is including the
supply chain operations, IT support systems, aligning global locations with their growth potential
and delivering best-in-class service delivery and support. They moved in in-house IT support
operations to a managed partner situated in India. Now they are focusing on assessment that
which areas are appropriate for outsourcing purpose which could be beneficial for Inmarsat
(Inmarsat Annual Report, 2020).
2.2 About my role
My role is delivering system solutions to the internal customers using our ERP
(Enterprise Resource Planning) system, SAP. The nature of my role is gathering business
requirements, analysing them and designing the best possible solutions. I work closely with the
key stakeholders and it is important to understand their future business goals. My area of
expertise is procuring to pay and supply chain value chains. I work closely together with the
Supply Chain work stream. I have received various complaints in the last year from the supply
chain business process owners that the processes and systems are not providing the best fit and as
a result there is a high level of inefficiency. Improving the processes and systems is one answer
to increase the efficiencies but the overall company strategy wants to look at the operating
models and make a strategic decision what the best fit will be for the company.

In this assignment, the focus will be analysing the existing supply chain and production
operations and the opportunity to extending operations to China. The following section will
analyse this option using the aforementioned International Business module framework and
concepts.
3 Analysis and Evaluation
3.1 Growth history & Acquisitions
It is important to understand why Inmarsat have come to a point where the supply chain
operations have become an issue and it requires a strategic solution. Inmarsat provides global
services all around the world. The main business areas are Maritime, Aviation, Government and
Enterprise. Below table shows that circa 40% of the total revenue is generated in Maritime and
Government. The Aviation business unit was severely affected by the Covid-19 pandemic and
the revenue decreased by 39.4% in 2020. The operating cost ratio is 46% of the revenue,
compared to 54% depreciation and amortisation. Although the operating cost ratio is not so high,
the high investment on capital (new satellites and technologies) affects the company’s
profitability negatively (Inmarsat Annual Report, 2020).
The nature of the sector requires continues investments in new assets and technologies. A
better operating model and operations may decrease the operating cost ratio. However, focusing
purely finding a better operating model might not be enough. It is important to question other
areas, for example, how can we decrease the capital investment? Can the internal research and
development teams focus on innovation and new technology in-house? What are the firm-
specific advantages that can be utilised more and that can turn into a competitive advantage?
Over the last two decades, Inmarsat’s growth has been fuelled by acquisitions in different
regions in the world. Through those acquisitions, not only Inmarsat’s revenue increased, but also
the number of employees and locations. The acquisitions have helped Inmarsat to grow quickly
in terms of operations and capabilities, however, they also were a cause of operations not being
the best fit for the company in terms of processes and people. To create competitive advantages
at a company level, Inmarsat must use a strategy of simplifying the processes and creating
efficient operations (Based on the interview with Senior Director Market Access).
When we look at the company’s performance in Table 2, it shows that Inmarsat increased
its revenue and created new market areas and a larger customer network. The acquired
companies were selected in different regions of the world to enable a wide operation network.
Henley Business School notes (2021) explains that companies look for either efficiency-
enhancing internalisation or resource seeking internalisation. There is no evidence on how
Inmarsat has decided the four main acquisitions. However, today the inefficiencies in its

operations indicates that the aim of the acquisitions might increase its resource advantages. The
increase in customers, employees, warehouses and diversity in resources had provided
international advantages for Inmarsat.
Table 1 Regional Revenue & Acquisitions by year
3.2 Inmarsat’s External Environment
Collinson et al. (2017) explain that MNEs (Multinational Enterprises) makes decisions
based on three factors: the internal firm environment advantages (FSAs), the external industry
environment and the external macro environment. Before looking into the FSAs, we will look at
the external industry and external macro environment first. This will help us to understand why
some of the strategic decisions have been made and why Inmarsat is seeking for efficiency
increases in its operations. When we look at the outside environment of the company, Inmarsat
operates in a market where the growth opportunity is significant. Below is the (expected) overall
market value in 5 years and Inmarsat’s position in 2020. Figure 1 indicates that the market will
grow by 55% in 5 years. This means for Inmarsat to remain competitive, the operations capacity
needs to increase with at least 55%. The market growth is one of the external forces to seek
efficiency increases.
Figure 2 Mobile Satellite Telecommunications market size
Other external factors are country based taxation and security regulations in the
telecommunication sector. This has great impact on the internalisation process. The company has
to open circa 60 holding companies in these locations to be able to provide services.

Another factor to further understand the external industry environment is knowing
Inmarsat’s competitors. Globally, technological advancements enabled companies to invest in
niche markets like the satellite sector. An example is the company Starlink, which is owned by
Elon Musk (Crist, 2021). The new competitors entered the market in the last two decades and
some of the biggest investors have seen the market opportunity in this sector.
The new players can become existential threat for company. An example is Leo (low
earth orbit) satellite investment by Starlink. It is found that Interactive Satellite Today (2021)
expresses strategic alignment discussions with Geo (Geostationary earth orbit) and Leo satellite
providers. It also highlights risk of Leo constellations replacing Geo. It is identified that Leo uses
low earth orbit satellites. The advantage is that these are cheaper and smaller in order to produce
compared to Geo satellites. However, it was stated in Interactive Satellite Today (2021), Geo
satellites have 60 years of experience and stability. Whereas Leo satellites are a new
development in the last years. The market is volatile.
After looking at the external environment, we will next look into the internal resources
and capabilities and their advantages for the company. To stay in competition and to get a bigger
pie in the growth chart, Inmarsat needs to find ways of efficiency enhancing in the internalisation
processes. The following section will provide deeper analysis by using IB frameworks, models
and concepts to understand the internationalisation opportunity in China for Inmarsat’s
operations.
3.3 Internal Firm Environment and Internalisation Analysis
Collinson et al. (2017) suggests that in order to make a valuable international business
decision, the managers have to be aware of the company’s specific advantages in the
environment that they operate in. To identify the FSAs (Firm Specific Advantages) I will explore
Inmarsat’s resources and capabilities based on the interview with Director of Market Access and
Supplier Relationship Management. The VRIO(T) framework will then help to analyse how the
identified resources and capabilities are sustainable for the company.
Figure 3 Inmarsat Resources and Capabilities
Resources
Tangible 14 Geo satellites and ground stations
Circa 2000 employee all around the world. 55 different nationalities,
high diversity

Intangible Well-known in the sector with its expertise and branding
Good customer and supplier relationship due to its good and long
reputation
Invest in people through create a high performance culture programs and
initiatives
Capabilities
R&D and
innovation
Continuous investment in R&D and innovation activities
Introduced new product ‘Orchestra’ to get advantage in the new
completion with Leo and 5G
Operational In some areas Six Sigma is used to create efficiency
IT support operations outsourced to gain cost efficiency
Supply Chain operations are in the scope of process improvements and
simplifications
Marketing New marketing team joined and branding activities prioritised
Sales and
distribution
Good established sales team
Continuously improve based on customer satisfaction surveys
Distributions model is efficient but with the growth strategy how
sustainable, it will be
Corporate
Management
Recently a new Chief Strategy Officer appointed to make the strategy
one of the focus areas
Diverse leadership style
Dynamic Improves the ability of adjustment with the internal and external
changes
Figure 3 identifies resources and capabilities for Inmarsat and arguably, Inmarsat has a
diverse culture and value in R&D activities. Having operated many years in a niche market
creates the advantage of a good reputation. In recent years, like all areas of technology, satellite
technology has evolved. The market changes, new competitors and technology advancements
push Inmarsat to be more agile and efficient in all capabilities. However, on what basis Inmarsat
can choose it is strategic resources and capabilities? As Collinson et al. (2017) emphasise that
not all resources and capabilities have the same strategic importance. To be able to identify
which resource and capability has a competitive advantage for Inmarsat, the VRIO(T)
framework is used (Figure 4).

The VRIO(T) analysis shows that Inmarsat’s R&D and innovation & market access
capabilities are sustained advantages. Due to the long term period in this sector, it is found that
Inmarsat has the advantage of highly skilful people, wider market access capabilities and
innovation capabilities. The recent example to this is new product innovation that known as
‘Orchestra’. The product aims to integrate Inmarsat products and the competitor’s product.
Creativeness, innovation and R&D investments will create the higher advantage as compare to
its competitors. (Inmarsat Corporate Website, 2021). This is the reason that Market Access and
R&D/Innovation are clearly ‘Sustained advantage’ and ‘critical’ for Inmarsat in the international
business arena.
Figure 4 Inmarsat VRIO(T) framework analysis
Criterion Technical
skills
Organisationa
l Culture
R&D and
innovation
Market
Capabilitie
s
Operational
capabilities
Value creating Yes Yes Yes Yes Yes/
Partially
Rare Yes No Yes Yes No
Inimitable No No Yes Yes No/Partially
Organisation Yes Partially Yes Yes Yes/
Partially
    
Competitive
implications
Temporary
advantage
Parity Sustained
advantage
Sustained
advantage
Temporary
advantage
Transferable
(location / non-
location bound)
Yes-NLB Partially-LB Yes-NLB - Yes-LB
   
IB implication Important Useful Critical Critical Useful
It is found that company's resources and capabilities are found to be transferable on a
non-location bound basis. It is related to the multiple offices in different regions. They can
transfer capabilities and skills without location boundaries. When it comes to operation
capabilities they has temporary advantage based on the result of VRIO(T) framework. To assess
Inmarsat’s efficiency-enhancing internalisation process, it is also important to look at the country

specific advantages for China. Porter’s diamond model based on the four country related
determinants and two external variables (Collinson et al.,2017). Figure 5 shows these factors for
China.
Figure 5 Porter's determinants and competitiveness
Country –specific
determinants
Local factor
conditions
 Aging population
 Increase in labour cost
 The knowledge relies on importing key
technological advancements
Home or regional
demand
 Economic growth is on the rise
(Coface,2021).
World Investment Report, 2021 the
foreign direct investment, FDI growth
increased by 5.7% in 2019-2020.
 Good infrastructure for transportation
Related and
supporting industries
 Increase in becoming global value chains
Firm strategy,
industry structure
and firm rivalry
 China is competing in the space sector
and investing in this sector
External variables The role of chance  Covid related outbreak
 US-China relations
The role of
government
 Complex regulations and legislations
The Porter diamond helps to look at country specific advantages from multiple angles.
All these factors are relatively dynamic and one decision or a chance factor can have greater
impact on others. For example, the Covid-19 outbreak has started in China but the whole world
economy was affected by it. China has some advantages to offer for Inmarsat. For example,
using their existing infrastructure for supply chain operations, as China is already providing
services and products in the satellite industry. Also, relatively weak on external variables and
local factor conditions. In order to get overall view of the company’s competitiveness the FSA-
CSA matrix is used, Figure 6.

In Figure 6 below, Inmarsat is in quadrant 4 and this means country specific advantages
have less importance compared to firm specific advantages. Inmarsat has strong FSAs in R&D
and market capabilities. And, these advantages are non-location bound which means those can
easily transfer internationally.
Figure 6: The FSA-CSA Matrix for Inmarsat
The FSA-CSA matrix helps to understand the strategic options. Collinson et al. (2017)
suggests that quadrant 4 firms look for efficiency seeking strategies, low cost and price
competition strategies.
They has laid out its operations based on strategic vendor’s location to customer
installations. In Appendix D, it shows how vendor and customer locations have been mapped
with the Inmarsat operations web in Houston (Americas), Rotterdam (EMEA) and Singapore
(APAC). Strategically, this alignment is really very helpful for Inmarsat to deliver customer
orders 80% on time. This has been a competitive advantage but it may not be sustainable in long
term with the growth expectation. There is a need to expand the operations in order to support
growth and seek efficiencies in operations continuously. It is clear ‘Why’ to internationalise but
‘where’ and ‘how’ the internationalisation should be done, will need to be further analysed.
China has been chosen to due to it is well-known advantages in low labour costs,
investments in infrastructures, transportation web all around the world, and support of the
government of the satellite industry.

We are going to look at the distance between the UK and China, using the CAGE model.
First of all, we are going to look at the cultural distance between the UK and China. According
to the Hofstede analysis (Appendix C), in the areas of masculinity and uncertainty avoidance, the
countries score similarly. This can potentially be used when entering the market and finding
common grounds.
However, in all other areas the scores differ substantially. There are major differences
between how the two countries score. This needs to be taken into account when making the
decision to expand to China. However, Inmarsat’s existing operations in Singapore gives the
advantage of being familiar with far east Asian cultural. Initially, the managers and colleagues in
Singapore could be asked to help to set up the operations. Furthermore, there is a difference in
language which needs to be considered.
Secondly, we are looking at the administrative distance. The UK can be classified as a
common-law country, whereas China's legal system is largely a civil law system, reflecting the
influence of Continental European legal systems, especially the German civil law system in the
19th and early 20th centuries.
There has been a relationship of some sort between the UK and China since the 17th
century. On one hand, there have been wars between the two countries, most notably the Opium
wars. On the other hand, they have fought together against a common enemy, Japan, during the
second World War. Recently, the relationship between China and the UK has deteriorated due to
issues related to Hong Kong, a former colony of the UK, and the treatment of Uighur muslims in
China. The UK and China are currently not part of a trading bloc. However, both countries have
expressed an interest in joining the Trans-Pacific Partnership, which currently consists of Japan,
Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and
Peru. This is one of the opportunities that the UK have identified after leaving the European
Union. (Wikipedia, 2021) The Corruption Perception index, 2020 for China is ranking 78 out of
180 countries compare to the UK and Singapore this can be a concern.
Thirdly, we are going to look at the geographical distance between the two countries.
According to Wikipedia, the distance between the UK and China is 4831 miles. Of course, the
exact distance would depend on where exactly Inmarsat would choose to open an office in
China. For example, if Inmarsat would open an office in Beijing, a distance of 5055 miles would
apply (namely the distance between the location of the HQ in London and Beijing).
Generally, there are good flight connections between London and China and a direct
flight on average would take between 10 and 11 hours.

From a shipping perspective, it would require 23 to 25 days on the water to ship goods
from a port in South China (for example, Shenzhen) to a UK port (for example, Felixstowe) or
vice versa.
There is a time difference of 7 hours between the UK and China. There are not land or
sea borders between the UK and China. However, the geographical distance might not cause
negative outcome. Inmarsat usually dispatch to customer locations through the warehouse
locations. Therefore, most customer orders will not come to the UK, they will directly dispatch
from China.
Lastly, we are going to consider the economic distance between the two countries. There
are over 200 million skilled workers on the Chinese mainland by far, among whom more than 50
million are highly-skilled workers, according to China's Ministry of Human Resources and
Social Security (MHRSS). However, the country's highly-skilled workers account for only 28
percent of its total skilled workers. Having this large base of skilled workers available, could be
really beneficial in setting up a manufacturing site.
With regards to infrastructure, China ranks 37th on the Ranking of countries according to
their quality of infrastructure in 2019 (source: Statista). In comparison, the UK ranks 11th in the
same list. A note has to be made here that China has been heavily investing in their infrastructure
in the last few years, much more than many other countries. When looking at GDP per capita,
China comes to 10,261.68 USD (2019). In comparison, UK had 42,330.12 USD in the same
year.
The global trend in consumption, new technology developments, sales/revenue
ambitions, complex network challenges between supplier-assembly-customer locations are
leading Inmarsat to look out for options. The Global Value Chain Development Report 2019
highlights that more than two thirds of world trade are happening through Global Value Chains
(GVCs).
On another perspective, company’s value chains (Porter’s value chain) are integrated. But
with the help of globalisations, there have been many advantages to outsource. Some of the
operations in order to gain market access, economical and growth opportunities (Henley
Business School notes, 2021). Inmarsat is seeing the growth opportunity in the market and
strategically the operations need to follow though the expected growth in the next 5 years.
Currently, Inmarsat is a vertically integrated company, and keeps its core functions (distribution
and manufacturing) in-house. GVCs could be the future for the company’s operations. China is
on the growth path of being global value chain in the next 5 years (Coface, 2021).
It is becoming very challenging for company to find the right balance of value-added
internal structure that supports their global strategy. Inmarsat continuously is looking at

optimisations, simplifications in order to create cost-efficiencies. In 2021, with the uncertainty in
the world economic arena, the focus of the leadership shifted to find the best operating model for
Inmarsat. Recently, the IT operations have been moved to a managed service in offshore from in-
house. Internationalisation in China for supply chain operations will give the advantage to
consider different types of operating models, outsourcing for example and creating a global value
chain. Entering China can be the strategic goal approach.
The CAGE model shows there are concerns in each type of distance, however there are
also possible advantages in the long run for the business. Already having operations in Singapore
reduces the cultural and geographical distances with China to at least some extent. The possible
new trading flow can create economic advantages between the UK and China. Finally, in the
long run, being in China can open up other economical options such as using their global value
chains.
The OLI framework will be used to analyse the entry mode options with the outcome of
VRIOT and FSAs analysis. Inmarsat has strong FSAs and these are non-location bound. In
conjunction with non-location sustained advantages as a host county China has some location
advantages from the CAGE model. Cost efficiencies in operations, good infrastructure and
possible trading flow with China and UK. The analysis lead to OA and LA questions answers to
yes. The advantage from internalising production needs to be explored about specific rules
around licensing of satellite terminals. Liability of foreignness concept has been analysed
through FSAs, CSAs and CAGE framework. Liability of foreignness is an inherent disadvantage
foreign organisations experience in host countries because of their exogenous nature (Zaheer,
1995). (Henley Business School notes, 2021) The level of Liability of foreignness (LOF) is
effecting the OLI framework questions and eventually the internalisation decision. Inmarsat
shows good level of LOF based on the FSAs, CSAs and CAGE models. Entry strategies is critical
and this has a direct impact on the success of the internalisation process. Following section will
focus on those options.

Figure 7 The OLI Framework for Inmarsat internationalisation in China

3.4 Integrated summary and solution options
The business is broadly built on a footprint of two internal warehouses and production
centres in APAC, EMEA, one internal service centre in the US, and three externally operated
warehouses in each of these three regions. The head quarter is based in the UK. In the last 5
years, the inventory value increased 33% compared to the increase of 13% in revenue. In the
next 5 years, the capacity needs to be circa 13 times more than today, based on the long-term
business plan. There is a need to increase the efficiencies in the operations. Internationalisation
to China could create efficient ways of operating for Inmarsat.
Inmarsat has strong FSAs in R&D and market capabilities. These are sustained
advantages for the company. VROIT analysis shows that these are also non-location bound, so
they can easily be transferred to another country. Operations capabilities and technically skilled
people are temporary advantages. Inmarsat’s expansion through rapid acquisitions meant that
operational efficiency has not been the highest priority for the company in the last five years.
The priority was integrating the acquired company culturally, administratively and
geographically. The economic impact of Covid, new entrants and breakthrough products in the
sector, speedy growth in connectivity forces Inmarsat to find ways to seek efficiency in its
operations especially. The existing operation locations, Singapore and The Netherlands are
providing good supply chain operations. In order to strengthen the FSAs, operation capabilities
and technically skilled resources, China could be considered to internationalise.
When we looked at the CAGE analysis, it showed that China and the UK have cultural,
administrative and geographical distances, however, having a Singapore plant gives Inmarsat the
advantage of being familiar with some aspects of Chinese culture. The geographical distance is
again similar to our Singapore office. Already the time-zone differences are overcome by
introducing flexible working hours for employees who are engaging with people in different time
zones. However, the language is a concern. Most companies that internationalise in China use
Chinese as a language. Inmarsat will need to consider these aspects of internationalisation. In
terms of administrative differences, the possible trade union between the UK and China can
create an advantage for Inmarsat to internationalise in China. With the new trading agreement,
some of the administrative differences and difficulties can be overcome. China offers highly
skilled and low-cost labour; this can help to strengthen Inmarsat technically skilled resource
FSAs. Good infrastructure for transportation can support Inmarsat’s global customer locations.
Another economical distance to note is China’s industrial policy program, ‘Made in China 2025’
(Merics, 2021). This program aims to push China’s dominance in global value chains. Having an
assembly and warehousing location in China could be the first step for efficiency improvement

and in the mid-term Inmarsat might extend its efficiency seeking to use China’s global value
chains. There is a possibility that this program might have a disadvantage to the
internationalisation process. China is trying to reduce their dependence of foreign technology
and R&D imports. Therefore, using China only for operations purposes might not fit China’s
goal to be more independent. The possible options to enter China could be acquiring an existing
company that already has an assembly line. It is unclear at this stage how easy it is to acquire a
company in China. But partnership is one of the ways to enter in the market. It does not offer the
ownership advantage however it could be a good starting point to get to know environment and
look for possible opportunities to extend. Another option could be to build a new plant from the
ground up. The disadvantage of this option is the lack of knowledge on the Chinese process to
open a new plant. To choose a region in China could be challenging due to its geographical
structure. Administrative aspects are also concerning, the law around opening a plant as a foreign
company require expertise. The advantage of opening a new plant is not clear.

3.5 Recommendation and implications
 To increase efficiencies in operations, finding a partnership to internationalise in China is
the recommended way.
 The climate of the satellite mobile telecommunication market is found to be very volatile.
It is also found that new competitors are entering in the market with technologically
advanced products, such as LEO by Starlink. On the other hand, the future of addressable
market size provides enough space or room for growth of Inmarsat. When we looked at
FSAs, it is very clear that innovation and R&D are operation capabilities and sustained
advantage are considered as temporary advantage. Invest in the existing supply chain
network in order to support a tenfold increase in revenue is a clear target. Operation
capabilities are a weak FSA and China as a host country has a good advantage in offering
low-cost manufacturing facilities. However, how to enter China requires further analysis.
China has the strategy to do their own R&D and manufacturing and be less dependent on
foreign investment. Therefore, a partnership with a satellite terminal manufacturer and
using the warehouses of theirs could be a safe option to internationalise in China.
 The global factory model can be the future model for Inmarsat once the operation
efficiency established in China. It is important to note that the outcome of this analysis
subject to change in time. To carry out a new analysis is required to make a strategic
decision on adopting global value chains.

4 References
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factory. International Business Review, 18 (3), 224–35
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5 Appendix
Appendix A: Inmarsat companies by country and their principal activities
Country by
Principal
Activities
Associat
e
Dorman
t
Employme
nt
company
Finance
compan
y
Holding
compan
y
Operati
ng
compan
y
Satellite
leasing
Satellite
telecommunicatio
ns
Gr
and
Tot
al
England and Wales 1 2 1 6 7 1 1 19
United States 1 1 1 6 9
Japan 1 1 1 3
Canada 1 1 2
The Netherlands 1 1 2
Australia 1 1
Bosnia and
Herzegovina 1 1
Brazil 1 1
China 1 1
Columbia 1 1
Cyprus 1 1
Ecuador 1 1
Germany 1 1
Greece 1 1
Hong Kong 1 1
Iceland 1 1
India 1 1
Indonesia 1 1
Jersey 1 1
Luxembourg 1 1
Luxembourg 1 1
Macedonia 1 1
New Zealand 1 1
Norway 1 1
Peru 1 1
Romania 1 1
Russian Federation 1 1
Serbia 1 1
Singapore 1 1
South Africa 1 1
Spain 1 1
Switzerland 1 1
United Arab 1 1

Emirates
Grand Total 2 4 1 3 11 39 1 2 63

B: Hofstede analysis Netherlands, Singapore and UK.
The supply chain operations are mainly managed in The Netherlands and Singapore and the head quarter
is based in the UK. In the Hofstede analysis shows that Power distance dimension is quite high for
Singapore and this means that employees are expected to be told what to do. Therefore, if there is
decision made to relocate the operations or outsource completely Singapore employees may help to
support the transition. Whereas The Netherlands has a more non-hierarchical mind-set. That means before
moving ahead with the outsourcing/relocation the operations, it might be useful to consult the employees
in the Netherlands.
Another dimension might have an impact on the outsourcing/relocation decision could be the uncertainty
avoidance dimension. This dimension is high for the Netherlands, this means rules are important and
unknown is not a desirable place to be in. In order to get a good and supportive outcome of the new
operating model from the Netherlands it might be good to share the plan appropriately and answering
some of the queries, they might have. On the contrary, Singapore can accept the unknown comfortably.
The challenge will be how to manage culturally quite different two locations. They have different
expectations in involvement to the changes ahead. Having one approach might not make employees
happy but, having two different approaches might come across not transparent from one country to
another. They may think HQ is playing different games and not transparent. The solution options need to
be evaluated carefully by all three countries’ senior managers.

Appendix C: Hofstede Cultural Analysis between China and UK
The Power distance dimension shows that China culturally values to have hierarchy and power distributed
unequally. Ranking is important for China compare to the UK. Collectivism is high for China and that
means things are done as ‘we’ rather than ‘I’. Being part of a group is highly important in China whereas
in the UK, it is more individual. Indulgence is another dimension that has big difference. The UK has a
culture in which leisure time has importance. In China, indulgence are not considered so the society is
seen as restrained.

Appendix D: Inmarsat Vendor Atlas