Mini case study: Ariane Systems
Ariane Systems is a French firm that offers self check-in/check-out software and products for the international hotelling and hospitality community. Its products are electronic kiosks that act as 24-hour receptionists. The firm was founded in 1998. Since then, it has become Europe’s leading provider in the sector with its products being utilized by 24 of the top 50 hotel chains in Europe.
Ariane currently operates in 12 countries. It has subsidiaries in France, Germany, Spain, the UK and also the USA. In addition, it has offices in Denmark, Dubai and a Marine Division in France. The firm uses distributors in Benelux and South Africa and is just starting to operate in Italy, Poland and Singapore through distributors. The firm began internationalizing in 2004 when it entered Germany. This was fol- lowed by the UK and Spain in 2006. Later that same year, Ariane entered the Nordic countries. In 2010, it entered the USA and the Middle East. The proximity of France to Germany, the UK, Spain and the Benelux countries has aided Ariane in entering these markets. Not only are they short distances to travel, but the culture of these countries is familiar, making it easier to understand local practices and to serve the market. European integration, in particular the develop- ment of the Single Market, and the single currency, has helped this process further by removing exchange rate risk in the case of euro-zone countries, and by lowering tariff and regulatory barriers to market entry. Thus, Europeanization has been key in enabling Ariane to develop its overseas capabilities in neighbouring markets. From this European base, it has been able to go global and expand into three other continents: North America, Africa and Asia. The extent to which Europeanization aided the firm in internationalizing is illustrated by the revenues of the firm. In 2010, at the point at which Ariane started to expand beyond Europe and after only six years of serving European markets, nearly half the revenues of the firm were from outside of its national home market (45 per cent).
When Ariane was considering its strategy for expanding within Europe, it saw a strong potential in having a base in the UK. This was not only because the firm believed that the UK offered a large market, but also because the UK held potential as a springboard into non-EU markets. Ariane entered the UK in 2006, installing six trial kiosks, in three cities, in several well-known budget and busi- ness hotels, with the aim of educating and initiating the UK hotelier market to its product. This enabled the firm to raise its profile and enabled users to become familiar with its innovative new service. In doing so, it built its presence in the market backed up by customer support. The latter is an important ele- ment of their offer, for which the company seeks a local base in each market through which to provide such services. Locally based support is thought to help to build trust with customers, giving them a sense that the firm will readily be able to offer support when needed. As it developed its operations in 2007, Ariane continued this strategy, implementing further installations on both a trial and permanent basis.
Ariane’s next strategic plan was to expand to the Middle East, South Africa and Australia. Carine LeBrun, Managing Director, stated: ‘It’s very easy to initiate and build relationships in the UK and extend that to other key markets. We’re certain we can expand quicker, develop greater awareness and build better business relation- ships from the UK than from France. Decision makers are more likely to travel to conferences and networking opportunities here.’ One such conference, Hostec (Europe’s largest technology event), was held in Birmingham and enabled the firm to showcase its kiosks to international audiences. The firm has also benefited from networking and development opportunities through UK Trade & Investment and the UK government’s international business development organization, which regularly provide advice and information.
Source: Hannah Chaplin, Economics and Evaluation Team, UK Trade & Investment, London
Mini case study questions
1. As a French firm, Ariane uses the UK as a home base. What are the strengths and threats of Ariane’s strategy of expanding within Europe before going global?
2. Why might Ariane have focused on old ‘EU Member States’ before globalizing?