Jcb in India - Advantages and Disadvantages

Yuehua Lai

BUS 4385

Analysis of case

Mar. 30, 2017

JCB in India

1. Because India’s population was huge, which means the demand for products was also huge. Besides, JCB had competitive advantages in technologies compared to the competitors in India. Therefore, India was an attractive market.

1. Because exporting can avoid the cost of establishing manufacturing operations in India, and have a good control over the production and quality of products.

1. The articulated rational was that India governments required foreign investor to create joint ventures.

The joint venture strategy benefited JCB a lot. Opening a foreign market is risky and expensive. While, in joint venture strategy, local partner can share the risk and cost. Besides, local partner’s knowledge in culture, language, political systems, and competitive situation can help JCB to overcome the difficulties of surviving in India market, as a foreign business.

1. The risk of joint strategy is losing control of its technology. Besides, since the local partner shares ownership arrangement, conflicts might happen for control. Then JCB would be hard to keeping moving to its long run plan.

JCB was unwilling to transfer its technology and know-how to local venture, so JCB kept purchasing its partner’s equity and transformed the joint venture into a wholly owned subsidiary eventually.

1. The benefits of localizing production are JCB can have all controls in its production and operation activities, and not necessary to share benefits with local partners. Besides, JCB is able to engage in global strategic coordination and realize location and experience economies. It also protected the technology, and lower the manufacturing cost by using of the cheaper labor and material cost in India.

Disadvantages are JCB had to face the high risk and cost alone.

I think the benefits outweigh the disadvantages. All businesses are in risk. JCB have earned huge income because of its strategy used in India.