Vsmpo-avisma Corporation.
Country |
48 countries as partners worldwide |
Year of entry |
From 1963 on |
Industry/ business area |
Metallurgy – non-ferrous metals |
Entry mode |
The company has followed such strategies of internationalization as creation of joint ventures, opening subsidiaries and establishment of strategic partnerships. It exports and virtually doesn’t open its own plants in other countries for a number of reasons, including the specificity of the business (aerospace industry and defense), as well as excessive amount of titanium in Russia. However, some acquisitions also took place. In this manner, in 2005 JSC "Corporation VSMPO-AVISMA" has acquired 100% shares of Swedish Carl.Edblom.Titan AB ("VSMPO titan Scandinavia AB"), which was the owner of 50,1% shares of CJSC "CETAB Nikopol Works"57. |
Motives |
From the very moment of VSMPO-AVISMA’s incorporation in Rostec, the goal of the company was to perfectly integrate into the world’s aerospace industry and to become one of the key suppliers of titan products in the world58. The corporation is planning to invest about USD$800 mln till 2015 in the production of titan due to the sharp rise of the demand for corporation’s production from the biggest international aero industry players59. Moreover, according to the official position of the corporation, among VSMPO-AVISMA’s major strategic tasks there’s such point as “enter world’s markets, especially aviation, space, chemistry, power and ecology ones.”60 As for VSMPO-AVISMA foreign subsidiaries, their opening can be explained by such factors as the growing volume of export, corporation’s will to become closer to customers from different continents (to cut transaction costs and lead times, etc.) as well as remoteness from national boundaries. As for the joint ventures, probably, the most noteworthy example is that of Uniti LLC, a joint venture created by US-based Allegheny Technologies and VSMPO-AVISMA in 200361. JV’s goal was to produce and market a range of industrial commercially pure titanium products. Uniti's target markets included chemical and petroleum processing, power generation, desalination, pulp and paper, construction and architecture, automotive and transportation, consumer and electronics. So, from this example we observe that VSMPO’s joint ventures are not involved in commercial aerospace, military and medical markets. |
Firm specific advantages used on the foreign market |
Government backing, great work experience in the industry, professional management |
First mover or follower |
First mover if compared with other Russian companies of the same industry |
Type of state involvement in the process of internationalization |
The corporation’s blocking interest (25%+1) is in the disposal of the Rostec Public Corporation managed by Mikhail Voevodin. Thus, the corporation is directly connected to the state, supported by it and follows its interest. According to the official position of the corporation, VSMPO-AVISMA has 3 major strategic tasks: a) work for the space and defensive industry of the Russian Federation and the CIS countries; b) support the key economic branches of the Russian economy; c) enter world’s markets, especially aviation, space, chemistry, power and ecology ones.62 Moreover, VSMPO-AVISMA is a key organizer of the Titanium Valley project. This project implies creation of a special economic zone in Sverdlovsk Oblast in the Urals Federal District of Russia, which will focus on creating titanium products for the aircraft, automotive, shipbuilding and medical industries. These goals, and the very focus of the corporation (aerospace industry, defense) clearly reflect and justify direct state interest and participation in the company. |
Evaluation of the success of the internationalization |
Successful; VSMPO-AVISMA has more than 300 companies in 48 countries as partners worldwide. Thus, for the present moment the corporation provides up to 35% of demanded titanium for Boeing Company, 65% of EADS, 90% of Goodrich and 100% of Embraer63. In fact, virtually all titanium consuming aircraft manufacturers use VSMPO’s titanium. |
1 Panibratov, Andrei (2012).Russian Multinationals, From regional supremacy to global lead, Routledge. p 104.
2 ibid.
3 ibid.
4 Norilsk Nickel website (accessed at March 13, 2013); available from: http://www.nornik.ru/en/
5 RIA novosti – online newspapers (accessed at March 13, 2013); available from: http://en.rian.ru/business/20121204/177907245.html
6 RIA novosti – online newspapers (accessed at March 13, 2013); available from: http://en.rian.ru/business/20120820/175327039.html
7 Norilsk Nickel website (accessed at March 13, 2013); available from: http://www.nornik.ru/en/
8 Wikipedia – online encyclopedia; (accessed at March 13, 2013); available from: http://en.wikipedia.org/wiki/Iskander_Makhmudov#cite_ref-3
9 UMMC – corporate website; (accessed at March 13, 2013); available from:www.ugmk.com/en/
10 MK-group – corporate website(accessed at March 13,2013); available from: http://rmk-group.ru/eng/
11 ibid.
12 ARMZ – corporate website (accessed at March 13, 2013); available from: http://www.armz.ru/eng/
13 ibid.
14 ibid.
15 Equities.com – business news website (accessed at March 13, 2013); available from: http://www.equities.com/news/headline-story?dt=2013-01-17&val=936399&cat=material
16 ARMZ – corporate website (accessed at March 13, 2013); available from: http://www.armz.ru/eng/
17 ibid.
18 KUMZ – corporate website (accessed at March 14, 2013); available from: www.kumz.ru
19 Facts and Figures // RUSAL corporate website. http://www.rusal.ru/en/about/facts.aspx. Accessed March 13, 2013.
20 Ibid.
21 Panibratov, A. Russian Multinationals: From regional supremacy to global lead. Routledge, 2012.
22 Facts and Figures // RUSAL corporate website. http://www.rusal.ru/en/about/facts.aspx. Accessed March 13, 2013.
23 Panibratov, A., op. cit.
24 Facts and Figures // RUSAL corporate website. http://www.rusal.ru/en/about/facts.aspx. Accessed March 13, 2013.
25 Panibratov, A., op. cit.
26 Ibidem
27 About Oleg Deripaska// Oleg Deripaska official website. http://deripaska.com/about/. Accessed March 13, 2013.
28 Strategy // RUSAL corporate website. http://www.rusal.ru/en/about/strategy.aspx. Accessed March 13, 2013.
29 Panibratov, A., op. cit.
30 Investment Projects // RUSAL corporate website. http://www.rusal.ru/en/about/invest/. Accessed March 13, 2013.
31 Ibid.
32 The Top 5 Aluminium Metal Manufacturers in the World // METDAQ: Metallurgy & Metalworking. http://www.metdaq.com/en/press-centre/articles/the-top-5-aluminium-metal-manufacturers-in-the-world.html. Accessed March 13, 2013.
33 ВСМПО-АВИСМА // Ростех. http://www.rostec.ru/about/company/145. Accessed March 13, 2013.
34 About the Company // VSMPO-AVISMA corporate website. http://www.vsmpo.ru/en/pages/O_Korporacii. Accessed March 13, 2013.
35 ВСМПО-АВИСМА // Ростех. http://www.rostec.ru/about/company/145. Accessed March 13, 2013.
36 Ibid.
37 About the Company // VSMPO-AVISMA corporate website. http://www.vsmpo.ru/en/pages/O_Korporacii. Accessed March 13, 2013.
38 Ibidem
39 Ibid.
40 Ibid.
41 Колобков, С. «Ростехнологии» сократят долю в «ВСМПО-Ависма» // РБК. http://www.rbcdaily.ru/industry/562949985216406. Accessed March 13, 2013.
42 Panibratov, A. Op. cit.
43 ibid.
44 Norilsk Nickel website (accessed at March 13, 2013); available from: http://www.nornik.ru/en/
45 ibid.
46 Equities.com – business news website (accessed at March 13, 2013); available from: http://www.equities.com/news/headline-story?dt=2013-01-17&val=936399&cat=material
47 ARMZ – corporate website (accessed at March 13, 2013); available from: http://www.armz.ru/eng/
48 ibid.
49 KUMZ – corporate website (accessed at March 14, 2013); available from: www.kumz.ru
50 Strategy // RUSAL corporate website. http://www.rusal.ru/en/about/strategy.aspx. Accessed March 13, 2013.
51 Investment Projects // RUSAL corporate website. http://www.rusal.ru/en/about/invest/. Accessed March 13, 2013.
52 Panibratov, A., op. cit.
53 Panibratov, A., op. cit.
54 Ibidem
55 About Oleg Deripaska// Oleg Deripaska official website. http://deripaska.com/about/. Accessed March 13, 2013.
56 The Top 5 Aluminium Metal Manufacturers in the World // METDAQ: Metallurgy & Metalworking. http://www.metdaq.com/en/press-centre/articles/the-top-5-aluminium-metal-manufacturers-in-the-world.html. Accessed March 13, 2013.
57 Ibid.
58 ВСМПО-АВИСМА // Ростех. http://www.rostec.ru/about/company/145. Accessed March 13, 2013.
59 Ibid.
60 About the Company // VSMPO-AVISMA corporate website. http://www.vsmpo.ru/en/pages/O_Korporacii. Accessed March 13, 2013.
61 Ibid.
62 About the Company // VSMPO-AVISMA corporate website. http://www.vsmpo.ru/en/pages/O_Korporacii. Accessed March 13, 2013.
63 About the Company // VSMPO-AVISMA corporate website. http://www.vsmpo.ru/en/pages/O_Korporacii. Accessed March 13, 2013.
