International Business Report on the Term Paper
- Length: 9 pages
- Sources: 10
- Subject: History - Asian
- Type: Term Paper
- Paper: #1879006
Excerpt from Term Paper :
The main advantage of this association is that you will get to control the production process and both collaborators will have the right to question and manage everything. It will require high negotiation skills, primary high investments, but the market is full of potential. By joint venture we will have the possibility to interfere in the recruitment process, deciding who the best people for the jobs are. For India, there will also be an important gain. Not only do we stimulate intern, national production but we also give new job opportunities to citizens. Moreover, due to the fact that India has highly trained people in the technological domain, we might improve our product's characteristics or even come up with new ways of reducing the costs. Moreover, the assembling parts will be less expensive as their transportation costs will be lower.
When choosing a country for expansion, one has to pay attention to a number of important factors such as:
the distance among the home country and the host country;
country's import tariffs and barriers;
the perception of the host country about the home country;
the economic, social and political background of both countries;
the availability of the labor force;
the overall production cost of the manufactured goods (rents, licenses, wages, utilities, raw materials, transportation costs, display costs etc.) the availability of the host country market to receive, sustain and display our products
When choosing the entry mode of a country, you have to be very well documented, to research the entire field and find the most advantageous situation that best fits your requirements. Costs, tariffs, legal barriers, the amount of control you exercise, all these, are factors that should be taken into consideration when deciding whether we want to export, to sign a license agreement or to form a joint venture.
After you have decided what type of entry mode best suits the company's product one must be careful to the way that entry mode is implemented. That is, for a joint venture, you must make sure that:
the selected town of your headquarters in the host country has an available market, there is no current legislation against the activity domain of your company, you have all authorizations required before you start investing,
The commodities you produce in the home country have the specific standards of safety and quality,
People you employ have the legal status to work in the home country. For this, one must also be very well informed on the rights and duties of an employee and employer, of the labor force movements present in the host country and on their influence on governmental activities.
After stating all the above, India seems to be the best solution for our company. Not only that it is the "fatherland" of all new technological developments, but it also has an impressive labor force. This is partly due to its population, partly due to the fact that it is a fast expanding country and people might have difficulties in keeping up with the latest requirements or technologies). However, in only 60 years since its independence, not only did India know how to preserve it but, even more importantly, managed to become one of the leading economies of the world from being just a part of an Empire. It seems like the British spirit of hard working and entrepreneur has entered the Indian market as well.
Moreover, in comparison with China, India has a fairly good external reputation. Its debts are not large, it sustains the World Economy, has recently implemented new policies and that makes India even more attractive in the eyes of the foreign investors.
Furthermore, India is well-known for its technological brains. That is, in the last decade India has managed such a performance that it is the center of software production, its people constantly coming up with ideas to improve the quality and performance of our products. This is one of the things that should be at the base of our decision, because our product needs to be reinvented and improved at a continuous rate to keep up with the increasing competition. This is also the main reason for which China would not be the most fortunate choice.
Another advantage of our products being so competitive is the initial low production cost. This is actually its strongest point. Due to technological development, hard work and unremitting research we have managed to obtain the same level products as our competitors but with only half of the production cost. An additional, yet unexpected advantage is that everybody in India speaks English. Therefore, money otherwise spend with translators, with trainings or other language- correlated issues. This will help us maintain lower productivity costs than if we were to produce our commodity in China. Furthermore, if we have a joint venture in India, the production costs will continue to decrease do to the fact that most of the parts assembling the product will have lower transportation costs. Thus, we will be able to continue to reduce the production cost of our commodities.
Needless to say, this is a great advantage that should be fructified as much as possible: either we will sell our revolutionary high technology product at the same price as our competitors, and thus making high immediate profit/unit but maintaining the same level of sales. or, another mean of increasing our revenues, although it is based on a longer period of time plan, is to sell the product below the price offered by our competitors on the market. This will instantly increase our level of sales, maybe even taking it to the roof, but the profit per unit will be lower than in the first situation. Overall, the second solution is more advantageous on a longer time scale as we are thinking of increasing the company's revenues, boosting up our sales figures, thus enlarging the quota we have obtained so far on the market, and, even more, increasing our customers' satisfaction by helping them save some of their money.
All in all, it is a clear fact that advantages of forming a joint venture in India surpass any other form of international entry mode. This is not only due to the technological boost of India as a country, but also because of its policies in what concerns the economical, social, political domain. All these reforms have been materialized especially in the efforts made by the government in order to draw the attention of foreign investors, and thus to increase the economical and social status of the country. Our company will help the development of the country and at the same time will provide citizens with many employment opportunities.
Therefore, when our company moves to India, it will not only be beneficial for us, for the reasons stated above, but also for the country in itself, and for its citizens.
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