Question No. 1
First, at the time Eli Lilly and Ranbaxy joint forces, Indian regulations limited foreign ownership to a maximum 51 percent. Therefore, a joint venture with a local leading company was an excellent option for Eli Lilly to begin penetrating the Indian Market. Secondly, India was a sensitive market with a lot of incoming competition, lack of intellectual property and low per capita gross domestic product. For that reason, I believe that even if 100% ownership had been allowed, Eli Lilly should have still entered India as a joint venture in order to minimize risk.
Eli Lilly was a recognized brand United States. However, that was not the case in India. Ranbaxy was the leader company within in India, which gave competitive advantage to the Eli Lilly Ranbaxy JV. After reviewing the case, I feel that without the facilitation of the Joint venture, Eli Lilly may not have been as successful operating in the India market. Higher capital investment would have been necessary, which in return would have meant higher risk of loss and a lot more time before reaching the break-even point. The Eli Lilly Ranbaxy joint venture allowed Eli Lilly to acquire brand recognition, establish a corporate culture, facilitated distribution and government procedures, minimized errors, and lessened risk. The case recalled Gulati: “We used Ranbaxy’s name for everything. We were new and it was very difficult for us…” which heavily reflects the advantages of the joint venture with Ranbaxy. Such factors had a great influence in the success of the Eli Lilly’s company in India, which is why I believe that Eli Lilly pursued the right strategy to enter the Indian market.
Question No. 2
First, the biggest achievement that Eli Lilly had in the Joint venture was the successful entry into the Indian market. Before the joint venture, Eli Lilly had direct operations in the Indian market, no distribution channels, and