JCB Analysis What Was the

JCB Analysis What was the strategic rational underlying JCB's entry into India in 1979 and China in 2005? Given that capital to fund expansion is limited, does it make more sense for JCB to expand its presence in these markets, as opposed to more developed markets, such as those of Western Europe? JCB realized that the Indian economy in 1979 and the Chinese economy in 2005 were experiencing exceptionally rapid growth that was also fueling capital investment in new building and construction.

As JCB manufactures high-end back-hoe, earth moving and construction equipment, the investments these nations were making in infrastructure projects, combined with the rapid pace of economic growth overall, made each country in each of these years the most attractive globally. These two emerging economies required intensive levels of investment to gain a foothold in and be able to sell successfully into over time.

The more established or developed markets were located in economies not growing as quickly, therefore did not need the level of financial investment that India and China did in order to grow. This approach to defining investments by nations parallels the portfolio-based strategies as mentioned in our textbook (Hill, 2009). 2.

Why do you think JCB chose to enter India via a joint venture, as opposed to some other entry mode? JCB was forced to enter India through a joint venture due to the high tariffs the Indian government places on suppliers headquartered outside their nation. A second factor was the Indian government's requirement that a percentage of any business operating in India also be owned by an Indian company. These two factors were defined by the Indian government and forced the issue of shared ownership for JCB.

Of the many forms of shared ownership, JCB deliberately chose a joint venture to minimize both financial risk and the risk of losing control of its intellectual property. These are specifically the advantages of joint ventures as defined by Hill (2009) and underscore how critical it is to protect intellectual property when entering new markets. 3. Why did JCB not simply license its technology to Escorts? Escorts is potentially a competitor who could scale globally very rapidly, using the technology and intellectual property to compete with JCB.

There is no assurance that the specifics of JCB's machinery would be held in confidence by Escorts and not be used to compete in sales cycles or define next generation products. As a result, JCB is wise to not license their technologies to Escorts. 4. What were the potential disadvantages of JCB's joint venture with Escorts? First, there is the potential for loss of control of the JCB subsidiary in India if the Indian government rules to make ownership of outside firms even more stringent, to control Foreign Direct Investment (FDI).

There is also the potential disadvantage of having Escorts still gain access to confidential data and use it to compete on sales cycles in the short-run and product development in the long run. 5. What were the benefits of gaining full control of the Indian joint venture in 2002? Can you think of any drawbacks? First,.