International relations and global governance

International Markets

The introduction of the CAD system for weaving in Pakistan from Singapore could assume three modes of business entry into the new market. The first option would be to export to Pakistan from the manufacturing plant in Singapore. This would meet challenges like the importation taxes and duties that will be leveled against the products. There would be again the problem of promotion and marketing the product in general as they would be viewed as foreign items by the locals hence those who are very particular about homegrown products will reject these as importations. There would also be the bulky cost of transportation since the importation will be in bulk as well hence may push the prices of these products up. This importation would however cut on the cost of setting up a new manufacturing firm in Pakistan and would not demand new expertise as the Singapore firm already has them.

The second option would be to license a Pakistani firm to manufacture and market the computer system in Pakistan and elsewhere. This is also referred to as franchising. This would have various challenges as well as the licensed company can end up using the technology to their own advantage hence Ms. Chang making massive losses on the brilliant technology they invented. The other challenge is that the management of the products will be largely controlled by the franchiser which may differ from the management style that the mother company in Singapore would have liked to see being used. The advantages are that the mother company shall have been spared the pains of setting up a new manufacturing firm. There would also be no hefty taxes that are faced by the mother company unlike the importation scenario.

The third option would be to set up a wholly owned subsidiary in Pakistan. This would come amidst vast challenges like the cost of setting up may be too exorbitant to be supported by the market size that exists there. The setting up of a firm could also prove expensive and time consuming such that the return on investment may take time to be realized, to the worst is that the technology may be copied and executed by another firm before they are fully functional hence denying the chance to enjoy the profits in an autonomous manner. The positives of having such an arrangement are that it would see the mother company expand its operations to Pakistan and cover the surrounding countries as well. It would be saved from the taxation will also be overcome and it would make management autonomous hence more effective than if the mother company has to do the management in the franchises in Pakistan.

The best option that Ms. Chang could go by in order to immediately start the investment in Pakistan is to license a Pakistani firm to manufacture and market the computer system in Pakistan. This is bearing several factors that would make it more viable for the Singapore Company to enter the Pakistan market more easily than the other two options.

Pakistan is a member of the WTO and as well as signatory to the Trade Related Aspects of Intellectual Property Rights ("TRIPs"). Meaning there is proper patent protection in Pakistan (Khursheed Khan & Associates, 2011). All that Ms. Chang would do is to apply for the patent protection and then franchise a local company to manufacture the CAD system with full assurance that the product will be right protected and the business will still have the same business profits as it is in Singapore.

As a matter of fact, the machine, being so sophisticated will require importation of skills and manpower from the Singapore mother company since they are the ones who are familiar with its operations and can set it up within the licensed company in Pakistan. This makes it easier to have control over the operations of the machine and the levels of output as the technicians will have to be always around to supervise the smooth operation of the system.

Even though the levels of manufacturing in Singapore is above the levels of manufacturing in Pakistan, it still remains to be slightly lower than the surrounding neighbors like Taiwan and South Korea hence the export economy of that region is dominated by non-Singaporean transnational corporations (TNCs) (Gary Dean, 2000). This further emphasizes that the option of exporting from Singapore would be a short-term success since once the technology catches up in the region, there is a likelihood that that the export giants would take over the markets.

The other factor that would make the licensing a better option is the demand that Pakistan has for carpets from the world in general. Indeed, there are several unfinished carpets from other countries like Afghanistan that are transported to Pakistan for final finishes before being exported to other countries. This is due to the expertise that there is on carpet making in Pakistan. The carpets produced in Pakistan are mainly for the export markets particularly to the Western countries which bring in almost 300 million dollars annually catering for an average of 3.4% total export share (All Things Pakistan, 2010).