Professional Documents
Culture Documents
Mr Mehta went to Saudi Arabia for the first time on a business visit in 1998.
He purchased a match box for 1 Riyal. He was surprised at the price of
the match box as 1 Riyal is equal to Rs10 (apprx) & the match box in
India costs Re0.5.
The price of match box was ringering in his mind that night. At one point of
time he got a wonderful idea. The idea included:
Preparing a feasibility report for establishing a match box factory in SA.
Importing necessary m/c from India.
Obtaining necessary permission from govt of SA.
Selecting mkt intermediaries in SA
Finally establishing the factory in Riyadh or Jeddah
Mehta conducted a survey & concluded that the idea was commercially
feasible & financially profitable. He approached a consultant in Jeddah &
finalised the deal for getting permission from the govt.in SA.
Got permission to establish factory in Jeddah; arranged for import of m/c &
equipment from India. Started producing match boxes on a commercial
scale in January 2000.Mehta conducted another mkt survey & fixed price
at Riyal 0.5 in order to hit all competing firms & get as much mkt share as
possible.
He released first batch into mkt in March 2000 & match boxes were sold like
hot cakes; Mehta was very thrilled of the success of the project. But when
second batch was released into mkt, he couldnt sell even a single match
box; the same was the case with subsequent batches. Finally, he had to
close the factory.
Questions
1 What were the reasons for the highly positive
response for the first batch of products?
2 What was the reason for very poor response
for second batch of products?
3 Why did Mehta fail in his project?
Since 1990, Indian mkt has seen the entry of internationally well-known
strategy consultants in large nos. firms like McKinsey, Booz & Allen,
Arthur Andersen & BCG have either set up or expanded existing
capacities.
Frost Sullivan (F&S), a $45 million US marketing consultant, was the
latest to enter India. The co. decided to concentrate on a niche
segment namely collecting & analysing mkt information & providing
key leads that are essential for strategy formulation. The cos list of
clients included not only direct users, but strategy consultants also.
The focus area of co were IT, telecom, semi-conductors &
chemicals.
The scope of service included preparation of research reports-both
syndicated & client based. Internationally, over 50% of cos revenue
came from research (balance divided between consulting &
training). The price for syndicated reports in particular was very high
in the int. mkt. though in India the picture was yet to be rosy. F&Ss
clients included not only MNCs aspiring to enter India but also
Indian cos planning to go overseas in a big way.
The emphasis was, however, on concentrating on Indian cos trying to
strengthen their position in India itself. It had plans to make its
operations the hub of all reports worldwide.
Questions
1. Given the crowded Indian consultancy market
& knowing that growth of Indian industry had
not been particularly attractive, do you think
the segment chosen by F&S as well as its
timing of entry was appropriate?
2. What considerations would have been taken
into account by F&S in deciding in favor of
setting up branch operations to enter India?
American Motor Corporation (AMC) had been USs 4th largest producer of
automotive vehicles. It dropped to 5th position when volks-wagen began
producing cars in US after joining with Renault of France in 1980. AMC
started to drop them. It began producing & selling Renaults designed cars
instead of its own. AMC was also worlds largest producer of 4 wheelers
since its acquisition of jeep from Kaiser in 1870.Joining with Renault didnt
threat the viability of AMCs jeep line as Renault had no 4 wheelers. In fact
Renault became exclusive distributor for jeeps in France & elsewhere.
By 80, worldwide sales of jeep was over 2 lakh pa with of that in US &
Canada representing domestic mkt. Int sales in 1981 including communist
countries was 45000. Until the fall of Shah, Iran was the biggest mkt. Among
4 wheeler, jeep was the largest seller. Its competitors were Toyota, Nissan &
Land Rover. Jeep was the most global of the competitors also with
manufacturing, assembly & on licensing in over 20 countries. In contrast,
Toyota had most of its assembly operations in Indonesia & Venezuela. Most
of the jeeps were produced from Ohio; however, AMC jeep had ltd
manufacturing in few foreign markets with assembly & licensing in many
others. AMC jeep had equity in plants in Australia, Egypt etc. Altogether, 2
assembly plants in Africa, 3 in middle east, 12 in Asia Pacific & 4 in Latin
America. Most of local manufacturing is done to meet local content.
Jeep sales outside US & Canada are responsibility of a firm based in Michigan.
The concern had 185 employees, of which 25 are living in foreign countries,
25 are American expatriates. Jeep has enjoyed universal recognition &
appeal due to its use by US in world war II. In developed countries, jeep is
promoted as recreational vehicle while multipurpose in developing countries.
It can be seen that jeeps are sold in large numbers in world market & in
countries with different economic, ,environmental & use condition.
Questions
Assuming as international business manager, make
appropriate suggestions on the followings
To what degree should jeep vehicles be
adopted for world markets?
Should jeeps have a uniform international
brands in world markets?
Should the jeep warranty be the same in every
market?
What should be the service & promotion
strategy for world markets?
Questions
1. In the light of the above, discuss the
implications of social activist groups for
business
2. With reference to this case, discuss the
failure of governments, Council for Leather
Exports & the leather industry & the
lessons of this case
3. What should the governments, Council for
Leather Exports & the leather industry do
to overcome the problem?
If you dont want the Chinese to get you, get them. Though, one
section is demanding for cover & protectionism due to the lowcost high-quality Chinese imports flooding into India, organised
players in home appliance industry are taking advantage of it.
Instead of lobbying to keep out the Chinese, co.s like Bajaj
Electrical (BE)& Jaipan Industries (JI) are switching over to
Chinese manufacturers to source products for Indian market.
BE is bringing in a range of products-fans, iron, microwave &
toasters-from China into India at a cheaper price & providing
the brand support & after sale service here. Such items are
brought from China at rates which is 35% to 50% cheaper than
Indian makes. CMD of BE says products imported from China
are not only qualitatively better, but also 15% to 20% cheaper
than those manufactured within India.
MD of JI also said Chinese products are proving to be so
competitive that it makes sense to have tie up with them &
market their products under our brand name in India.
These cos moving from local manufacturers to sourcing from
China mainly because of better quality at cheaper price.
Industry circles say that a number of big distributors are
planning to bring in Chinese products, which could play
complete havoc with the Indian market.
QUESTIONS
1. How do you define the strategy If you fail
to compete with your close competitor
marry it? Comment in the context of
competition between India & China
2. Explain the limitations of Indian
manufacturers in competing with the
Chinese manufacturers.
Issues
Understand the significance of cultural, economic,
regulatory and ecological issues while establishing
business in a foreign country
Questions
1. Critically analyse Daburs strategy of
going global?
2. Being a manufacturer of herbal &
ayurvedic products, do you think Dabur
will succeed abroad, especially in Europe
& American markets?