Jcb in India

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JCB in India
Question1 What was the strategic rationale underlying JCB’s entry into India in 1979 and China 2005? Given that the 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? Answer 1 From reading the case study it can be stated that the choice for JCB entrance into the Indian market was due to its construction market. JCB believed that the Indian markets were deemed as being favourable for investments and cold benefit then in the long to a greater extent. The Managers also believed that by entering the Indian market than do competitors they would gain an advantage rather than waiting for when this growth of the Indian market came noticeable to other Manufacturers. JCB being the ranked the fifth largest construction equipment manufacturer in the world thought that it should compete in China on the same level with that of its competitors (namely Caterpillar, Komatsu and Vovlo) reason being that the construction industry was increase at a fast rate and these competitors had already started expansion into the Chinese markets.

Question 2 Why do you think JCB chose to enter India via a joint venture, as opposed to some other entry mode?

Cyreen M St Louis Graduate Gateway Seminar in Global Business and International Trade Final Examination April 30, 2012

Answer 2

JCB decided to enter in the Indian market via joint venture with escorts as opposed to any other entry mode for the reason of the high tariff barriers which made direct exports to foreign markets difficult. A tariff is any tax placed on imports or exports (trade tariffs); they serve as a form of protectionist measure. By JCB engaging into a joint venture with Escorts, JCB was able to gain access into the India market while not having to experience any challenges that may arise when one is starting a business that solely owned. Furthermore, it can be assumed that one reason why JCB may have chosen joint venture was so that he can strengthen his relationship with other organization. This will aid in helping the business grow faster and in turn, will increase productivity flow in the generation of higher profits.

Question Why Answer 3 did JCB not simply license its technology to

3 Escorts?

A license is simply the giving of authorization to use patents, trademarks, copyrights designs and any other intellectual property rights to another party or individual. In this case JCB did nt want to engage in licensing its technology to Escorts for the main reason that f they provided Escorts with their ‘know-how’ they could in turn adapt this new technology and use it to compete with them. JCB thought that there technology gave the a sense of competitive advantage in that field and so, if passed on to Escorts, they can adapt and later on be of a major competitor towards JCB.

Cyreen M St Louis Graduate Gateway Seminar in Global Business and International Trade Final Examination April 30, 2012

Question 4 What were the potential disadvantages of JCB’s joint venture with Escorts? Answer 4 By engaging in a joint venture with Escorts, JCB believed that this business strategy will hinder the company’s ability to reach out to other markets and or expand its product offering. JCB was also of the view that the technology that they incorporated into their organization is of high quality and thus, gave them a major advantage to that of other similar manufacturers; they need not want to share this competitive gain with Escorts. In addition, not having distinct control would not allow them to compete in ways they believe are both efficient and effective for the ‘Indian Market’ which they saw as an important investing and a rapidly growing economy.

Question 5 What were the benefits of gaining full control of the Indian joint venture in 2002? Can you think of any drawbacks? Answer 5 In an effort to take total control of the joint...
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