entry strategy of company

8/8/2019 entry strategy of company

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GROUP MEMBERS:

Shailey sakhuja: 37Anamika veronica roy: 124

Ankita chaudhary: 125

Jasleen kaur: 136

Jyoti kataria: 137

Shweta badhwar: 240


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1. INTRODUCTION

2. BUSINESS ENVIRONMENT

Economic

Technological

Regulatory Political

Social

Supplier

3. TYPE OF COMPANY

4. ENTRY MODE

5. MANAGEMENT ORIENTATION

6. QUESTIONS


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Product- FULLY AUTOMATIC WASHING

MACHINES ALONG WITH SEMI-AUTOMATIC

MACHINES.

Foreign investment- acquisition & horizontal

merger with MAN CO in Bangalore

Entry Mode- Indirect Export(1.5 yrs) byestablishing a plant in Mangalore special

economic zone located in Bangalore


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It is established in India, U.S. manufacturingCRT tubes, television, grillers.

It wants to manufacture fully automatic washingmachines due to rising demand.

It will incorporate technologies like Silver Nano,Air Wash technology, child lock and CeramicHeater that provide you the most effectivewashing experience.

There are companies that manufacture semi

automatic washing machines. ABC CO. has decided to acquire wit MAN CO.,

which is already manufacturing semi automaticwashing machines,and set up their plant atMSEZ.


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Economic growth surged to 11.2% y/y in Q1 from anupwardly revised 7.3% in Q4,bringing the FY2009-2010growth rate to 7.4%.

Industrial activity has slowed markedly in recentmonths,

rising just 0.5% Q/Q in Q2.

The central bank monetary policy tightening is starting tohave an impact on inflation and economic activity

The central governments budget for 2010-2011 is pavingthe way for the pullout of fiscal stimulus and fiscalconsolidation in the medium-long term after the slippageand stimulus of the last 2 years.


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Rising disposable income & standard of living

While personal consumption weakened further, to 2.6%

y/y, investment activity surged 17.7%, the strongest paceof increase since 2007.

On an industry basis, growth was driven by the strongestincrease in manufacturing activity on record (+16.3%), andsupported by the rapid expansion in the trade, hotel,

transport & communications sector.


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The SEZ office will facilitate registration of the

unit, allocation of land, permission for construction

of building and approval of building plan, power

connection, environmental clearance and waterrequirement.

The SEZ developer will be granted approval for

development of water supply and distribution

system to ensure the provision of adequate water

supply for SEZ units. Implementation of labour

laws within SEZ will be simplified.


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Positive Technical policy

High Growth Rate of Information Technology in

India

Importing branded parts of washing machines

is risky and expensive. So its better to

manufacture own parts.

Incentive for promoting Technology in India


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Indian Govt. has given 100% income tax

exemption for expenses incurred in research of

technology in India.

State financial corporation is uplifting domestic

technology by supporting finance to domestic

Industries


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There will be exemption on payment of stampduty and registration fees on transaction of landas well as financial agreement, deeds etc. Salestax and other state taxes will be exempted on

transactions within SEZ. Inputs made to SEZ unitsfrom DTA units will also be exempted from salestax. Exclusive arrangements will be made withinSEZ for law and order. A committee headed bythe chief secretary has been constituted to reviewpromotion, development and function of SEZs in

the state. The government of India hadannounced a policy for SEZs during March 2000under the Import-Export Policy with a view toaugmenting infrastructure facilities for exportproduction


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Drastic change in lifestyle

Families are nuclear and both parents working

Bachelors studying or working living away from

family


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Incorporate a host of futuristic and innovative

technologies like Silver Nano, Air Wash

technology, and Ceramic Heater.

Not much of time investment needed.

Power back up feature is available

Some good features are available like

child lock

Delay start


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Compact space utilization, compact design, space

availability.

logic machines.


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The merger has cut the extra work of finding

out various suppliers and than wasting days

in negotiation over terms and prices

Existing supplier of our merger firm will be

supplying the basic spare parts.

Other technologically advanced parts will be

imported.


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LAN CO. LTD : Multinational company

Conducts business in more than one country.

Satisfies the needs of customers in different

requirements.

Maintain international standards.


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MAN CO company manufactures semi

automatic washing machines.

After acquisition:

Fully automatic washing machine :

satisfying the needs of new generation.


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HORIZONTAL MERGER- Though it is an

acquisition but at the meeting of Board Of

Directors it is decided that as the 2 companies are

of equal size and it is a friendly takeover theacquisition will be declared as a merger and the

name of new company will be LANMAN CO.


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Reasons for merger (LAN CO.)To reduce the tax liability

Geographical or other diversification

Resource transfer

Vertical Integration


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Gain market share

Economies of scale

Enter new markets

Acquire technology

Utilization of surplus funds

Managerial Effectiveness

Strategic Objective


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16 other competitors at the time of merger:

LG, Samsung, Philips , Daewoo, etc

An official of LAN said on the deal

"The word is out in the world that India and

Indian companies are not just a good bet by

themselves, but also a hedge against China.


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Assets: Rs 50 crores

Share capital : Rs 75 crores

Deal : Rs 1 billion (Mutually agreed)

Profits to be distributed fairly among all theemployees


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Indirect export :

Indirect exporting means selling to anintermediary, who in turn sells your productseither directly to customers or to importingwholesalers.

We will be adopting this method to enter theforeign market.


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Filling orders from domestic buyers who thenexport the product

Seeking out domestic buyers who representforeign customers

Exporting through an Export ManagementCompany (EMC)

Exporting through an Export Trading Company(ETC)

Franchising

Licensing Contract manufacturing

Piggyback marketing

Remarketer


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Independent private firm that acts like anexport department for several non-competing manufacturers and producers.

EMCs can be quite varied; they can be eitherlocal or foreign-owned, and operate oneither a commission or a fee basis.


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Identifying international markets for your product orservice.

Locating customers overseas.

Arranging agent/distributorship relationships.

Preparing, negotiating and handling all communication,documentation and shipping logistics.

Exhibiting at international trade shows.

Traveling overseas to meet with potential customers.

Setting up appropriate distribution channels.


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One of the three legs in the EPG

framework.

Host country orientation.

Reflects host countries goals and objectives.

International business practices local

preferences and techniques are usually found

most appropriate to deal with the local

market conditions.


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Unique local market factors that should berecognized in pricing decision are

1. local costs

2. income levels

3. Competition

4. local marketing strategy.

for the short term, our company might decide topursue a market penetration objective and price

at less than the cost-plus return figure. Another short-term objective would be to

estimate the size of a market at a price thatwould be profitable given local sourcing and acertain scale of output.


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Focus is not in building facilities.

The target market would first be supplied

from existing higher-cost external supply

source. Product price can be changed according to

the approval of the market.

If the market accepts the price and product,

the company can then build a localmanufacturing facility to further develop the

identified market opportunity in a profitable

way.


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QUES) Which method of international

expansion has the company used to date?

ANS) Trade related- Indirect export by

establishing plants in SEZs and thenexporting to foreign countries.

Investment- FDI through Mergers &

acquisitions.


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QUES) Has the company used the mostappropriate development method?

ANS) Yes the company has used the mostappropriate development method keeping inmind the various environmental forces(economic, technological etc.), its assets andalso keeping in mind the acquired companiesstrategies, share capital, business.


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QUES) What other methods might be suitable forthe company?

ANS) Filling orders from domestic buyers whothen export the product.

Seeking out domestic buyers who representforeign customer.

Exporting through an Export Trading Company(ETC):

Export Trading Companies (ETC) are very similarto Export Management Companies. It is morelikely to take title to the product and pay youdirectly.


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Franchising: Franchising requires large expenses to support

foreign marketing such as advertising. Companies withsuccessful domestic operations may opt forfranchising.

Licensing :

A license is a contract to identify what is beinglicensed.

Trademarks

Patents

Designs

Copyrights

Software


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Contract manufacturing :

Agreements with foreign manufacturers to produceyour product, as opposed to exporting your product,are referred to as contract manufacturing.

Piggyback marketing :

This is an arrangement in which one firm distributes asecond firm's product or service. The second companyadds value by offering a more complete solution to theforeign market.

Remarketer :

A remarketer purchases products directly fromthe manufacturer, and repackages the productsaccording to their own specifications


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QUES) Should different methods be usedin different markets?

ANS) Yes different methods should be

used in different markets because thecharacteristics of different environmentalforces in different markets change theentry strategy, entry modes, managementorientation. If we dont consider thedifferences in various markets our plan,entry mode, expansion mode and finallythe product may fail leading to a hugeloss.


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entry strategy of company

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