Roca Case Study

Topics: Corporation, Parent company, Holding company Pages: 7 (2514 words) Published: May 14, 2013
Roca Case Study

Roca Radiadores S.A. is an entirely Spanish-owned company which has achieved extraordinary international expansion.To answer the question what motivated Roca to start internationalization we need to pay attention to the history and further expansion of Roca. Roca began its activities in 1915 as Compañía Roca Radiadores S.A, a company that exclusively made cast iron radiators for domestic heating at its factory in Gavà, near Barcelona. Over the course of about 60 years, Roca established its first foreign subsidiary in France because by that time, all the possibilities of further expansion in the Spanish market were extremely limited. Roca’s capital is wholly owned by the family group arising from its founders. The shareholders currently comprise over 50 members of the Roca family. The total turnover has been increasing steadily, reaching now over 800 million euro, with profits over 35 million euro per year. Roca has a stable financial statement. Roca makes decisions very slowly, evaluating the risks involved. It hardly uses bank loans, thus financing its growth mainly on reserves. Roca sells its products in over 70 countries in the six continents. Roca began increasing its international commitments as exports volumes rose. It was extremely difficult to start up exports in different countries. It faced technical barriers, varying national customs in different countries, trading limits, social differences in different countries, but there were several factors which motivated Roca to start its expansion and thus gain from internationalization: 1.All the possibilities of further expansion in the Spanish market were extremely limited. So, it explains desire to grow 2.Stable financial statement (Its growth is based mainly on reserves, not on loans) 3.Higher profitability after entering the international market 4.Obtain prestige in the domestic market

5.There is no information in the case study about competitors, but clearly there are always competitors and this fact must be taken into consideration in discussing Roca’s internationalization process. Assuming that there are competitors, Roca was motivated to internationalize its sales and operations because internationalization would help it reach greater economies of scale in order to be more competitive. Furthermore, Roca would want to move against other competitors in foreign markets Roca has successfully overcome through all the initial stages of internationalization process such as exports or licences and production capacity and now it is on the final fourth stage as a global and multinational company. Roca went beyond the limits of the domestic market in 1974, when it opened the first subsidiary of the ROCA FRANCE in France. Since then, the company has opened a number of subsidiaries in over 70 countries, not only Western Europe, but also the countries of Latin America, Eastern Europe, the Far East, and emerging countries. Since then Roca has became one of the largest exporters of Catalonia. Also, in order to reduce costs Roca inaugurated mostly export-oriented factories for the production of Roca goods; producing in countries such as Settat, Morocco where they entered into a number of external agreements. Roca is always careful when entering into a new country, choosing only those where there is strong demand for their products. With the development of the internationalization process Roca has established the Department of Expansion, which is responsible for gathering information about foreign markets, competition situation, consumers, as well as the economic situation in the country of concern. Also Roca always takes into account the features of each country, like differences in water pressure, type of waste pipes employed, national customs, etc. and making modifications to production processes in each country. Roca is one of the world's largest manufacturers of sanitary and heating division, air conditioning and ceramics, and so its organizational...
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