Questions and Answers on JCB on India Market - Paper Example

1. Why do you think that India was an attractive market for JCB?

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Critically, basing our argument on economic growth and available resources to be exploited, JCB as smallest companies in the global market was able to find a great deal in the Indian market. Focusing on the total sales that were being produced by JCB globally, out of a total of sixty-nine thousand one hundred machines sold in one hundred and fifty countries globally, JCB holds an upper hand and was able to gain broad market by the sale of a third of output in the Indian market. Through a total number of transactions identified by JCB in India, we realize that out of the total that was sold in India, JCB still speculated high demand in the Indian market since the country showed the future prediction of infrastructural development. Ideally, JCB made use of most advanced technology components and being that India demonstrated a significant potential for technological development, India showed the best and the largest market for JCB as a result of the large population that was existing in India.

2. Historically, JCB entered foreign markets through exports. Why do you think JCB generally favored exports?

Historically, JCB as a company was able to enter into the foreign markets through the use of exports; I believe that the JCB adopted this strategy as a result of the size of the market and the nature of products they were offering. Most countries are daily improving their infrastructures more so the undeveloped countries. Since they are not able to manufacture their machines, JCB took a greater advantage and played an upper hand when it comes to exporting their machines. Additionally, I felt that it will be a good idea when it comes to JCB having to start their global expansion as exporters and with time turn to a better means of providing service to the foreign market. Ideally, with Komatsu and Caterpillar taking control of the international market, it was one of the best ideas to avoid the cost of allowing the establishment of JCB in its country and get exposure through having the experience of different economies (Hamari). Through developing a foothold providing export to a foreign country, the greatest advantage in place is the fact that a firm gains the benefit of having to manufacture their product in the companys head quarters plant and offering exports to various national markets.

3. In India, JCB decided to enter via a joint venture. What was the articulated rational for this? In what other ways might the joint venture strategy have benefited JCB?

Through JCB strategy of entering India with a joint venture plan in 1979 with Escorts was a result of the decision to come up with a joint venture arrangement which was stimulated by the high tariff barriers. Through the high tariff barriers in place, JCB made an original game plan of having to export its product to the foreign countries. Dwelling on the fact that JCB was one of the was a primarily an exporter, with the company having little experience when it comes to international market operation. The joint venture agreement was able to offer the company a better means of providing service to the Indian Market without having to experience the risk when in it comes to establishing a wholly owned operation, considering the risk that was involved and different states regulation that were in place.

4. What were the risks associated with the joint-venture strategy? How did JCB deal with these risks?

Out of the many risks that are associated with the strategy of a joint venture, JCB was able to deal with one major risk which was the financial agreement in the business. When it comes to sharing the outcome stake, the fact remained that Escort which was the partner in India was able to go with the larger stake as compared to JCB. As one of the risks in the joint venture, it is recognized that one partner enjoyed a more significant stake in the venture than the other partner. The idea is to possess the largest ownership in the venture, in this case, the partner who is in the position of owning the more significant portion of the deal, tend to take control of most of the decisions and even technology (Lang). Through the agreement involved, JCB worked for a while with Escort and since they were on the receiving end of a lower ownership. JCB found it difficult when it comes to sharing their success secrets with Escorts; this was resulted by fear which was caused by little control over the partnership about the majority stake. Later JCB as a consequence of the Indian regulation gained control by possessing twenty percent of the stake that belongs to Escorts. In this case, Escorts was on the receiving end, and JCB brought damage to them when the company was able to purchase the remaining stake making the joint venture just to turn out to be subsidiary.

5. What are the benefits to JCB of localizing significant production in India? What are the disadvantages? Do the benefits outweigh the disadvantages?

Dwelling on the fact that the joint venture between Escorts and JCB was a success, JCB chose on buying out its partner, JCB as a company in a venture was able to take advantage of an outside force which was the government regulation to take possession of the majority shares (Hwang). The main advantage was that JCB was able to have been taking control of their technologies to invest without fearing in India and hence creating more jobs and even contributing to the GDP through localization. On the other hand, the main disadvantage is that, due to changing government regulation, there is no confidence considering the future risk, making the advantages to be associated with a higher profit.

Work cited

Hamari, Juho, Mimmi Sjoklint, and Antti Ukkonen. "The sharing economy: Why people participate in collaborative consumption." Journal of the Association for Information Science and

Hwang, Jiyoung, et al. "Share more, drive less: Millennials value perception and behavioral intent in using collaborative consumption services." Journal of Consumer Marketing 34.2 (2017): 132-146.Technology (2015).

Lang, Gunnar. Macro Attractiveness and Micro Decisions in the Mutual Fund Industry: An Empirical Analysis. Springer Science & Business Media, 2013. Print.