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GROUP MEMBERS:

Shailey sakhuja: 37
Anamika 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) by


establishing a plant in Mangalore special
economic zone located in Bangalore

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 It is established in India, U.S. manufacturing
CRT tubes, television, grillers.
 It wants to manufacture fully automatic washing
machines due to rising demand.
 It will incorporate technologies like Silver Nano,
Air Wash technology, child lock and Ceramic
Heater that provide you the most effective
washing experience.
 There are companies that manufacture semi
automatic washing machines.
 ABC CO. has decided to acquire wit MAN CO.,
which is already manufacturing semi automatic
washing machines,and set up their plant at
MSEZ.

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 Economic growth surged to 11.2% y/y in Q1 from an
upwardly revised 7.3% in Q4,bringing the FY2009-2010
growth 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 to


have an impact on inflation and economic activity

 The central government’s budget for 2010-2011 is paving


the way for the pullout of fiscal stimulus and fiscal
consolidation in the medium-long term after the slippage
and 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 pace
of increase since 2007.

 On an industry basis, growth was driven by the strongest


increase in manufacturing activity on record (+16.3%), and
supported 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 water
requirement.

 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 stamp
duty and registration fees on transaction of land
as well as financial agreement, deeds etc. Sales
tax and other state taxes will be exempted on
transactions within SEZ. Inputs made to SEZ units
from DTA units will also be exempted from sales
tax. Exclusive arrangements will be made within
SEZ for law and order. A committee headed by
the chief secretary has been constituted to review
promotion, development and function of SEZs in
the state. The government of India had
announced a policy for SEZs during March 2000
under the Import-Export Policy with a view to
augmenting infrastructure facilities for export
production

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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 the
acquisition 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 the


employees

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 Indirect export :

 Indirect exporting means selling to an


intermediary, who in turn sells your products
either directly to customers or to importing
wholesalers.

 We will be adopting this method to enter the


foreign market.

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 Filling orders from domestic buyers who then
export the product
 Seeking out domestic buyers who represent
foreign customers
 Exporting through an Export Management
Company (EMC)
 Exporting through an Export Trading Company
(ETC)
 Franchising
 Licensing
 Contract manufacturing
 Piggyback marketing
 Remarketer

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 Independentprivate firm that acts like an
export department for several non-
competing manufacturers and producers.

 EMCs can be quite varied; they can be either


local or foreign-owned, and operate on
either a commission or a fee basis.

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 Identifying international markets for your product or
service.
 
 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 be
recognized in pricing decision are
1. local costs
2. income levels
3. Competition
4. local marketing strategy.
 for the short term, our company might decide to
pursue 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 that
would be profitable given local sourcing and a
certain 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 local
manufacturing 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 SEZ’s and then
exporting to foreign countries.
 Investment- FDI through Mergers &
acquisitions.

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 QUES) Has the company used the most
appropriate development method?
 ANS) Yes the company has used the most
appropriate development method keeping in
mind the various environmental forces
(economic, technological etc.), its assets and
also keeping in mind the acquired companies
strategies, share capital, business.

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 QUES) What other methods might be suitable for
the company?
 ANS) Filling orders from domestic buyers who
then export the product.
 Seeking out domestic buyers who represent
foreign customer.
 Exporting through an Export Trading Company
(ETC):
 Export Trading Companies (ETC) are very similar
to Export Management Companies. It is more
likely to take title to the product and pay you
directly.

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Franchising:
 Franchising requires large expenses to support foreign
marketing such as advertising. Companies with
successful domestic operations may opt for franchising.

Licensing :
 A license is a contract to identify what is being
licensed.

 Trademarks
 Patents
 Designs
 Copyrights
 Software

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Contract manufacturing :
 Agreements with foreign manufacturers to produce
your product, as opposed to exporting your product,
are referred to as contract manufacturing.

Piggyback marketing :
 This is an arrangement in which one firm distributes a
second firm's product or service. The second company
adds value by offering a more complete solution to the
foreign market.

Remarketer :
 A remarketer purchases products directly from
the manufacturer, and repackages the products
according to their own specifications

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 QUES) Should different methods be used
in different markets?
 ANS) Yes different methods should be
used in different markets because the
characteristics of different environmental
forces in different markets change the
entry strategy, entry modes, management
orientation. If we don’t consider the
differences in various markets our plan,
entry mode, expansion mode and finally
the product may fail leading to a huge
loss.
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