check out this link on BBC
http://news.bbc.co.uk/2/hi/business/8424858.stm
India is the world's second-biggest mobile phone market with more than 400m users.(2009)
Thursday, November 18, 2010
The benefits and drawbacks of international expansion options(Jim Riley)
Selling into international markets is increasingly attractive for businesses. Reasons may be as follows:
• Stronger economic growth in emerging economies such as China, India, Brazil and Russia
• Market saturation and maturity (slow or declining sales) in domestic markets
• Easier to reach international customers using e-commerce
• Greater government support for businesses wishing to expand overseas
The four main methods of investing in international markets are summarized briefly below:
Exporting direct to international customers:
- The domestic business takes orders from international customers and ships them to the customer destination
Selling via overseas agents or distributors:
- A distribution or agency contract is made with one or more intermediaries
- Distributors & agents may buy stock to service local demand
- The customer is owned by the distributor or agent
Opening an operation overseas:
- Involves physically setting up one or more business locations in the target markets
- Initially may just be a sales office – potentially leading onto production facilities (depends on product)
Joint venture or buying a business overseas:
- The business acquires or invests in an existing business that operates in the target market
The four main methods of expanding a business into international markets each have their advantages and drawbacks. Some of the key issues are summarised below:
Exporting direct to international customers
Advantages:
Uses existing systems – e.g. e-commerce
Online promotion makes this cost-effective
Can choose which orders to accept
Direct customer relationship established
Entire profit margin remains with the business
Can choose basis of payment – e.g. terms, currency, delivery options etc
Disadvantages:
Potentially bureaucratic
No direct physical contact with customer
Risk of non-payment
Customer service processes may need to be extended (e.g. after-sales care in foreign languages)
Selling via overseas agents or distributors
Advantages:
Agent of distributor should have specialist market knowledge and existing customers
Fewer transactions to handle
Can be cost effective – commission or distributor margin is a variable cost, not fixed
Disadvantages:
Loss of profit margin
Unlikely to be an exclusive arrangement – question mark over agent and distributor commitment & effort
Harder to manage quality of customer service
Agent / distributor keeps the customer relationship
Opening an operation overseas
Advantages:
Local contact with customers & suppliers
Quickly gain detailed insights into market needs
Direct control over quality and customer service
Avoids tariff barriers
Disadvantages:
Significant cost & investment of management time
Need to understand and comply with local legal and tax issues
Higher risk
Joint venture or buying a business overseas
Advantages:
Popular way of entering emerging markets
Reduced risk – shared with joint venture partner
Buying into existing expertise and market presence
Disadvantages:
Joint ventures often go wrong – difficult to exit too
Risk of buying the wrong business or paying too much for the business
Competitor response may be strong
• Stronger economic growth in emerging economies such as China, India, Brazil and Russia
• Market saturation and maturity (slow or declining sales) in domestic markets
• Easier to reach international customers using e-commerce
• Greater government support for businesses wishing to expand overseas
The four main methods of investing in international markets are summarized briefly below:
Exporting direct to international customers:
- The domestic business takes orders from international customers and ships them to the customer destination
Selling via overseas agents or distributors:
- A distribution or agency contract is made with one or more intermediaries
- Distributors & agents may buy stock to service local demand
- The customer is owned by the distributor or agent
Opening an operation overseas:
- Involves physically setting up one or more business locations in the target markets
- Initially may just be a sales office – potentially leading onto production facilities (depends on product)
Joint venture or buying a business overseas:
- The business acquires or invests in an existing business that operates in the target market
The four main methods of expanding a business into international markets each have their advantages and drawbacks. Some of the key issues are summarised below:
Exporting direct to international customers
Advantages:
Uses existing systems – e.g. e-commerce
Online promotion makes this cost-effective
Can choose which orders to accept
Direct customer relationship established
Entire profit margin remains with the business
Can choose basis of payment – e.g. terms, currency, delivery options etc
Disadvantages:
Potentially bureaucratic
No direct physical contact with customer
Risk of non-payment
Customer service processes may need to be extended (e.g. after-sales care in foreign languages)
Selling via overseas agents or distributors
Advantages:
Agent of distributor should have specialist market knowledge and existing customers
Fewer transactions to handle
Can be cost effective – commission or distributor margin is a variable cost, not fixed
Disadvantages:
Loss of profit margin
Unlikely to be an exclusive arrangement – question mark over agent and distributor commitment & effort
Harder to manage quality of customer service
Agent / distributor keeps the customer relationship
Opening an operation overseas
Advantages:
Local contact with customers & suppliers
Quickly gain detailed insights into market needs
Direct control over quality and customer service
Avoids tariff barriers
Disadvantages:
Significant cost & investment of management time
Need to understand and comply with local legal and tax issues
Higher risk
Joint venture or buying a business overseas
Advantages:
Popular way of entering emerging markets
Reduced risk – shared with joint venture partner
Buying into existing expertise and market presence
Disadvantages:
Joint ventures often go wrong – difficult to exit too
Risk of buying the wrong business or paying too much for the business
Competitor response may be strong
Interesting Facts- Cross Cultural Business
- Of the world’s top 250 retailers, 104 have no international operations at all, according to Deloitte, a consultancy.
- According to The Economist, when Wal-Mart went into Germany in 1997, it assumed that Germans would like to be treated with the same courtesy as Americans but Wal-Mart discovered that many Germans regard shop-assistants who try to help them with suspicion and flee the premises to avoid buying anything from them. To be fair, they got off to a bad start in Germany by appointing a country manager who did not speak German.
- In Brazil they failed to notice that people like to shop as a family group: the aisles of its shops were too narrow to accommodate the standard family party.
- B&Q, a British do-it-yourself retailer, discovered that Chinese people look down their noses at doing things themselves. It became a buy-it-yourself, and get somebody else to do it for you, retailer.
Reading
In Paris, the customer is not always right
The idea of service is taken very seriously in France where any feeling of subservience is strongly resisted, as Emma Jane Kirby discovered.
Paris is in a bad mood.
The sullen, steel-grey sky seems to be permanently snivelling sleet.
The Seine, swollen against its banks, pushes and squeezes its way through the city like an irascible woman in too-tight shoes.
And the January depression has even sucked some of the glitzy dazzle out of the Eiffel Tower, leaving it looking - at least from a distance - like a rather cheap, left-over Christmas decoration.
It may be the city of romance and a mecca for tourists, but right now Paris feels and looks like it just cannot be bothered any more to turn on the charm.
Not that this city is exactly known for its sense of service.
The customer is allegedly always right in London but, in Paris, he or she is little more than an irritant.
Cab 'service'
A couple of months back, I broke my leg in a skiing accident and became completely reliant on Paris's taxi service.
The sullen, steel-grey sky seems to be permanently snivelling sleet.
The Seine, swollen against its banks, pushes and squeezes its way through the city like an irascible woman in too-tight shoes.
And the January depression has even sucked some of the glitzy dazzle out of the Eiffel Tower, leaving it looking - at least from a distance - like a rather cheap, left-over Christmas decoration.
It may be the city of romance and a mecca for tourists, but right now Paris feels and looks like it just cannot be bothered any more to turn on the charm.
Not that this city is exactly known for its sense of service.
The customer is allegedly always right in London but, in Paris, he or she is little more than an irritant.
Cab 'service'
A couple of months back, I broke my leg in a skiing accident and became completely reliant on Paris's taxi service.
“ Under the circumstances, even though I was paying for this ride, I felt unable to ask this clearly sensitive man to turn down his deafening rap music ”
Wobbling precariously on my crutches after a family dinner in a local restaurant, I hailed the first cab in the rank.
He drove up, glanced at my plastered leg and drove straight off again shouting: "I don't take cripples. Your crutches might damage my paintwork!"
Somewhat stupefied, I hailed the next cab in line and politely asked the driver if I could sit up front as it was easier for my leg.
"I'm not arranging my whole damn cab to accommodate you," he snapped. "I've got all my personal things piled on the front seat!"
As he drove off at an angry speed, I got a glance of the front passenger seat and saw it was adorned with one folded newspaper.
The taxi driver who finally chauffeured me home was pleasant enough, although a stark notice on the back of the seat reminded me that it would not be wise to push my luck.
"Do not use your mobile phone in this cab," warned the hand-written sticker, "it annoys your driver."
Under the circumstances, even though I was paying for this ride, I felt unable to ask this clearly sensitive man to turn down his deafening rap music.
'I'm not your slave'
The fact is Parisians employed in any service industry simply do not buy into the Anglo Saxon maxim, "He who pays the piper calls the tune."
He drove up, glanced at my plastered leg and drove straight off again shouting: "I don't take cripples. Your crutches might damage my paintwork!"
Somewhat stupefied, I hailed the next cab in line and politely asked the driver if I could sit up front as it was easier for my leg.
"I'm not arranging my whole damn cab to accommodate you," he snapped. "I've got all my personal things piled on the front seat!"
As he drove off at an angry speed, I got a glance of the front passenger seat and saw it was adorned with one folded newspaper.
The taxi driver who finally chauffeured me home was pleasant enough, although a stark notice on the back of the seat reminded me that it would not be wise to push my luck.
"Do not use your mobile phone in this cab," warned the hand-written sticker, "it annoys your driver."
Under the circumstances, even though I was paying for this ride, I felt unable to ask this clearly sensitive man to turn down his deafening rap music.
'I'm not your slave'
The fact is Parisians employed in any service industry simply do not buy into the Anglo Saxon maxim, "He who pays the piper calls the tune."
“ In France your waiter expects to be addressed formally as Monsieur, in exactly the same way he will address you ”
The revolution of 1789 has burned the notion of equality deep into the French psyche and a proud Parisian finds it abhorrently degrading to act subserviently.
This Sunday, a Parisian friend of mine waited in line at the fruit and vegetable stall of his local market.
When it was his turn to be served, he asked the seller for a kilo of leeks.
"They're at the other end of the stall," snapped the vendor waspishly. "Take a bit of exercise and get them yourself."
There is no mistaking the undertone, "I'm not your slave."
At my doctor's, the two dour receptionists are quite delightful when we meet on the street, sharing jokes and asking kindly after my broken leg.
Back behind their desk, however, they brood and scowl. There is not even a gesture of recognition, let alone a friendly smile.
On the street it is acknowledged that we are equals but, once back in the surgery - in that uncomfortable position of service provider and client - the receptionists become wary of a potential shift of power and are quick to squash any assumptions of superiority.
Blunt honesty
In America, your waiter comes to your restaurant table to tell you his name is Joe. Here, your waiter expects to be addressed formally as Monsieur, in exactly the same way he will address you.
It is made clear from the start that no-one has the upper hand. The strict code of manners in Paris is a deliberate class-leveller.
This Sunday, a Parisian friend of mine waited in line at the fruit and vegetable stall of his local market.
When it was his turn to be served, he asked the seller for a kilo of leeks.
"They're at the other end of the stall," snapped the vendor waspishly. "Take a bit of exercise and get them yourself."
There is no mistaking the undertone, "I'm not your slave."
At my doctor's, the two dour receptionists are quite delightful when we meet on the street, sharing jokes and asking kindly after my broken leg.
Back behind their desk, however, they brood and scowl. There is not even a gesture of recognition, let alone a friendly smile.
On the street it is acknowledged that we are equals but, once back in the surgery - in that uncomfortable position of service provider and client - the receptionists become wary of a potential shift of power and are quick to squash any assumptions of superiority.
Blunt honesty
In America, your waiter comes to your restaurant table to tell you his name is Joe. Here, your waiter expects to be addressed formally as Monsieur, in exactly the same way he will address you.
It is made clear from the start that no-one has the upper hand. The strict code of manners in Paris is a deliberate class-leveller.
“ 'Don't even think about it,' said the shop assistant bluntly, 'not with that big fat leg' ”
Reading :Article by Tom White
Alliances - benefits of scale without the risks?
Tuesday, June 15, 2010
Is there the potential for some firms to enjoy economies of scale and the benefits of size, without risking a potentially disastrous merger? The boss of Renault Nissan thinks so and is continuing to hype his alliance model as the way forward in the car industry. We’ve heard about ‘co-opetition’ before: how would it work out this business?
As the Economist has recently explained, the Renault Nissan alliance “really is like a marriage”. Renault owns 44% of Nissan, which in turn holds 15% of Renault. They purchase most of their parts jointly, and have gradually learned to share engineering expertise, such as Renault’s strength in diesel engines and Nissan’s in petrol ones. The boss argues that it has also made Nissan more daring and Renault more cosmopolitan.
Then in 2002 Nissan launched what has proved to be a successful joint venture in China, now the world’s most important car market. In late 2007 Nissan beat General Motors to become a strategic partner to a big Russian carmaker, taking a 25% stake. Next came Daimler. The alliance will focus on sharing resources in four main areas: car ‘platforms’, small petrol and diesel engines; technology for fully electric and hybrid cars; and bigger diesel engines.
Why are economies of scale so important in car manufacturing? The article highlights three main reasons:
-Under pressure to boost fuel efficiency and cut carbon emissions, carmakers are spending huge sums on R+D.
-There needs to be extra investment in substantial new manufacturing capacity and dealer networks in the emerging markets that are generating nearly all the industry’s growth.
-You can no longer survive as a niche player specialising in small cars or luxury vehicles. To cover overheads, big car manufacturers must cover every segment.
It’s not clear if a web of alliances can deliver all this. Even where full mergers have taken place (as with the disastrous union between Daimler and Chrysler) savings have proved difficult to find because engineers from one side are unwilling to share ideas and resources with the other. After 11 years and much effort, some argue, Renault and Nissan have yet to equal the efficiencies of the various arms of VW Group or Toyota, which are both tightly integrated and centrally managed.
Are other car firms following suit? VW sees the 20% stake it took late last year in Suzuki, which is strong in India and in small cars, as a “critical” step towards surpassing Toyota as the world’s biggest car company. PSA Peugeot Citroën and Mitsubishi are keen to deepen their ties. And although Fiat has in effect taken control of Chrysler despite owning only 20% of the American firm, it is adopting a similar management structure to Renault and Nissan.
Wednesday, November 17, 2010
List of Assignment Topics
1. Highlights of India's foreign trade policy
2.Emerging Trends in India's Exports and Imports
3. WTO's impact on International Business
4.Benefits of cross border mergers and acquisitions
5.Analysis of political and legal problems while doing business abroad
6. Country Risk Analysis
7.Note on EPZ and SEZ
8.Advantages of doing business globally
9.Advantages and Disadvantages of Globalization
10.Advantages and Disadvantages of outsourcing
dear students,
Prof.Sameer Vaidya will be informing you about the assignments allotted.
This is also to inform you all that the IB syllabus (2 papers) has been covered in the class lectures .
best wishes-
Prof Sukalpa Chakrabarti
2.Emerging Trends in India's Exports and Imports
3. WTO's impact on International Business
4.Benefits of cross border mergers and acquisitions
5.Analysis of political and legal problems while doing business abroad
6. Country Risk Analysis
7.Note on EPZ and SEZ
8.Advantages of doing business globally
9.Advantages and Disadvantages of Globalization
10.Advantages and Disadvantages of outsourcing
dear students,
Prof.Sameer Vaidya will be informing you about the assignments allotted.
This is also to inform you all that the IB syllabus (2 papers) has been covered in the class lectures .
best wishes-
Prof Sukalpa Chakrabarti
Friday, October 1, 2010
Economic Environment of IB
"Understanding the economic environments of foreign countries and markets can help managers predict how trends and events in those environments might effect their companies' future performance there." Daniels
Significance of Studying Economic Environment:
The purpose, or reason, for developing an economic analysis of a region or specific country, is directly related to the ability to subsequently make managements decisions about whether to do, or not do certain business things in that country or with that country. A country’s economic policies are a leading indicator of government’s goals and its planned use of economic tools and market reforms.
Company managers study economic environments to :
- Estimate how trends affect their performance.
- Critically analyse developments in international trade, finance and labour markets from an economic and political viewpoint;
- Outline significant events in the different spheres of business and link them to broader patterns of economic and political change;
- Analyze current business case studies from an economic and political viewpoint.
Elements of the Economic Environment
The domestic economic environment in each country is highly integrated with, and influenced by the economic environment in other countries.
Gross national income (GNI): The income generated both by total domestic production as well as the international production activities of national companies
Gross domestic product (GDP): The total value of all goods and services produced within a nation’s borders over one year, no matter whether domestic or foreign-owned companies make the product.
Other features of an economy:
Inflation
Unemployment
Debt
Income distribution
Poverty
Labor costs
Productivity
Balance of payments
Definition of Economic System:
• A mechanism that deals with the production, distribution, and consumption of goods and services
• Types:
Market Economy
Command Economy
Mixed Economy
N.B:Nouriel Roubini's web site contains lectures on macroeconomics and is an excellent source of information for the Asian crisis and connected issues.
http://www.stern.nyu.edu/~nroubini/asia/asiahomepage.html
http://www.stern.nyu.edu/~nroubini/asia/asiahomepage.html
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