1) Define the Issues or Future Challenges facing the Firm
The main challenge for the firm is whether they should enter the Indian market, and if so, what should be their mode of entry into the country. Providing that entry into India is necessary to meet the company’s financial goals and appealing enough to sustain long-term growth in the country, the firm faces challenges related to how they should enter the market. The choices of market entry the firm faces are between i) Acquisition; or ii) Joint Venture; or iii) Greenfield Investment. Lincoln Electric needs to carefully take into consideration the impact of cultural and geographic distance between their home country, America, and the host country, India, when deciding on their preferred …show more content…
or ESAB India. According to Anil K. Gupta & Vijay Govindarajan, for a joint venture to be the best mode of entry, the geographic and cultural distance between the home and host country must be high. India displays a high degree of geographic distance relative to the United States, and also when considering the size of the country and lack of developed transportation infrastructures. However, India displays a relatively low degree of distance from the U.S. and Lincoln Electric on cultural distance – due in part to metalworking machinery businesses being less affected by cultural distance, according to Pankaj Ghemawatv pg 150). Moreover, cultural distance between the U.S. and India is nullified by the fact that many people in India speak English, and that the two countries share the same colonizer – the U.K. This means that a joint venture is not an essential mode of entry for Lincoln, especially considering that agreeing to a joint venture with a family run business – Aldor – or an international competitor – ESAB – would mean a loss of complete control over their India …show more content…
Both acquisitions and joint ventures are impractical for the company to enter India because the former would violate Lincoln’s global acquisition policies, while the latter would disable Lincoln from having complete control in their business. For Lincoln’s Greenfield Investment into India to be successful in practice, the company must do two things. The company must immediately invest and build production facilities in Silvassa, to take advantage of the government-created tax free zones. This should allow Lincoln to have their facility up and running in 8 months – similar to ESAB’s Greenfield manufacturing plant. Next, the company should closely analyze and begin to hold ties with the Indian government to see if Indian PM Manmohan Singh will vastly change India’s currently friendly labour laws and institutions. If the government decides to change the country’s discretionary bonus system, then Lincoln must be prepared to adapt their current bonus policy, while not having to sacrifice their pay-for-performance
The main challenge for the firm is whether they should enter the Indian market, and if so, what should be their mode of entry into the country. Providing that entry into India is necessary to meet the company’s financial goals and appealing enough to sustain long-term growth in the country, the firm faces challenges related to how they should enter the market. The choices of market entry the firm faces are between i) Acquisition; or ii) Joint Venture; or iii) Greenfield Investment. Lincoln Electric needs to carefully take into consideration the impact of cultural and geographic distance between their home country, America, and the host country, India, when deciding on their preferred …show more content…
or ESAB India. According to Anil K. Gupta & Vijay Govindarajan, for a joint venture to be the best mode of entry, the geographic and cultural distance between the home and host country must be high. India displays a high degree of geographic distance relative to the United States, and also when considering the size of the country and lack of developed transportation infrastructures. However, India displays a relatively low degree of distance from the U.S. and Lincoln Electric on cultural distance – due in part to metalworking machinery businesses being less affected by cultural distance, according to Pankaj Ghemawatv pg 150). Moreover, cultural distance between the U.S. and India is nullified by the fact that many people in India speak English, and that the two countries share the same colonizer – the U.K. This means that a joint venture is not an essential mode of entry for Lincoln, especially considering that agreeing to a joint venture with a family run business – Aldor – or an international competitor – ESAB – would mean a loss of complete control over their India …show more content…
Both acquisitions and joint ventures are impractical for the company to enter India because the former would violate Lincoln’s global acquisition policies, while the latter would disable Lincoln from having complete control in their business. For Lincoln’s Greenfield Investment into India to be successful in practice, the company must do two things. The company must immediately invest and build production facilities in Silvassa, to take advantage of the government-created tax free zones. This should allow Lincoln to have their facility up and running in 8 months – similar to ESAB’s Greenfield manufacturing plant. Next, the company should closely analyze and begin to hold ties with the Indian government to see if Indian PM Manmohan Singh will vastly change India’s currently friendly labour laws and institutions. If the government decides to change the country’s discretionary bonus system, then Lincoln must be prepared to adapt their current bonus policy, while not having to sacrifice their pay-for-performance