Essay About Stern Government Regulations And Join Venture

Jcb in India
Mallory MoretonMarch 30th, 2017Palich2:30 TTCase: JCB in IndiaI believe JCB decided to expand their business to India because it saw a lot of potential for growth in the company there. The construction market in India was still starting out, so for JCB, there would be a lot less competition then there was in Western Europe. Because there was a demand for construction equipment in India in 1979, the company didn’t want to miss out on the opportunity for growth.Because of their firm size and the nature of the manufacturing industry in general, JCB probably believed it would be in their best interest to start international expansion as exporters. By adopting this plan, JCB gains knowledge about the needs their international clients have and are able to develop an understanding of the economic market in India before putting all their eggs in one basket.At the time of JCB wanting to expand their business into India, the country had stern government regulations that required foreign investors to join ventures with local companies rather than coming into the country on their own. Although it probably would have been easier to go into this new country alone, the company probably thought it was best to start as a join venture and get a feel for the economy in India, then start their own business.By joining the joint venture with Escorts, JCB’s was not able to have full control over technology and run their business the way they wanted to. With this deal, they had a very limited ability to explore and expand in India. Rather than settle for this deal, JCB took advantage of changes in government regulations in 1999 and bought out more shares of Escorts to make them the majority shareholder, and their expansion officially began. In 2002, JCB bought out Escorts entirely.The benefits of JCB localizing significant production in India were that the company was able to make a name for themselves in a culture that didn’t have a lot of existing manufacturing companies. Despite hearty competition from competitors Caterpillar and Komatsu, the company was able to put all of its focus on localization in India and take advantage of the market there. One disadvantage is that the company wasn’t able to truly make a name for themselves in India for several decades-but when they finally did, the advantages certainly outweighed the disadvantages.