International Investments the Global Carmaker Work Investing

International Investments

The global carmaker work investing automobile assembly facility Chennai, India a local partner. Explain potential reasons investment. Will company exercise a great deal control operation? Why ? Over areas company exercise control, areas cede control partner? If required resources http://hbswk

Automotive company: Investing in Chennai, India

While the automotive market of the developed world could be described as supersaturated, the market for cars in the developing world is growing. Establishing our company as a multinational firm could be an important cushion against potential economic downturns in the future. Our company, like so many automobile companies, was hard-hit by the economic recession. "On average, establishments with multinational ownership performed better than local competitors, but there was considerable differentiation in the role of foreign direct investment" (Alfaro & Chen 2010). Although all sectors of the global economy felt repercussions from the crisis, not all nations were equally hard-it and some areas of the world rebounded more swiftly than others. International diversification of one's assets can prove to be a considerable strength for a firm.

Our company could gain a valuable first-move advantage by making incursions into the Indian market. A local partnership with an Indian company has the advantage of providing us with information about the market, including government regulations within the nation that might be difficult for a foreigner to decipher. However, "achieving a balance between the needs of different partners is crucial to the ultimate success of the venture once one moves into implementation and management" (Park 2008). Before embarking upon the venture, the two companies involved must come to a clear understanding of the advantages for both firms and the expectations both have for the relationship. Multinational ventures mean greater bureaucratic complexity, and when there are multiple managers in charge of a project, the leadership chain of command must be established early on, to avoid confusion. There must also be acknowledgement that the collaboration is a new entity, and neither firm can simply proceed as usual -- collaboration creates a new entity, given that it is a merging of two firm's cultures (Park 2008).

"Managers need to be aware of possible conflicts in marketing styles, extent of financial risk that can be borne, ethical standards in pursuing business objectives in alien cultures, and a host of other dimensions" (Park 2008). For example, India has very different ethical standards in terms of what constitutes 'bribery' of government officials -- in many developing world nations, what we consider bribery is simply seen as part of the costs of doing business. However, with an Indian firm there are certain commonalities that are likely to generate synergies between our two organizations. The language barrier is likely to be less onerous than might be in the case of a firm from another nation, given the large English-speaking population in India. There is also a high level of technical literacy in Indian. One reason that India is so popular for outsourcing is that there are many qualified workers with high-level skills who are willing to work for a fraction of the price of a U.S. worker. India has also not been beset by the types of labor relations difficulties common in Europe, where unionization is strong and workers are often limited in terms of the hours they will work.