Business Strategy of Jcb in India

A well thought out strategy brings profits to the company, especially during an international expansion as it has a greater level of risk and huge investment. While expanding internationally companies look into the market potential and the challenges that they would face. Channeling safely through these challenges would mean successful international expansion. The challenges the companies usually face are the government regulations, cultural aspect, operating expenses etc. therefore the top management puts out well-planned strategy to cut through such barriers and establishes a firm base on international grounds, JCB, in this case, came into India by an alliance with Escorts( which made basic construction and agricultural machinery) 40-60 share ratio respectively. The company also feared the risk of IP as it deals with innovative technology. JCB renegotiated the terms with Escorts as the government deregulated its terms which helped JCB regain its control. It started its production locally to cut down on cost and to make its part available everywhere so as to save up on export-import and also cost of labor.

A sound strategy as to how a firm is going to enter a foreign market is the catalyst for its success or failure in that market. In conducting business in a foreign land, a lot of factors must be considered. A careful and thorough assessment and research of its market will always remain the bottleneck of every business plan. Before deciding to enter a market, the firm must understand the country in which they plan to operate and create a decision that would favor their business. In JCB’s case, it is clear that the British firm understood the political and business conditions that India was functioning in, saw India’s potential, conducted their business given the circumstances, and then seized the opportunity of converting a joint-venture into a wholly owned subsidiary as soon as they saw an opening to pursue an acquisition.

However, no strategy is universal or similar. While exporting and licensing it may be profitable for some companies, other company’s find it difficult and costly to operate in such conditions and may opt for joint ventures or establishing their own subsidiaries. The mode of entry and the method by which businesses operate vary on the nature of the business and what a firm is willing to allow and protect. JCB, being a firm that put a lot of importance on their technology, had encountered difficulties in exporting their products to the Indian market due to high costs and the risk of their technology leaking out and was better off building its own firm to decrease if not eliminate the cost of tariffs and to protect their technological know-how.

A marketing mix that is perfectly in sync is as similar as a ball gaining more and more momentum as it continues to roll. A firm that has found the most optimal way to streamline its marketing mix is guaranteed to operate and thrive longer than a company with an unsynchronised system. And the more optimal and efficient the firm becomes with keeping their channels and competencies together, the more it will have the opportunity to venture on other important matters such as expansion, innovation, and product development. And as the company becomes more stable and continuously finding new engines to improve its presence and operations, the longer the firm will run and the higher returns it will accumulate over time. JCB’s marketing mix functions on such efficient conditions as evident on their highly durable and versatile product lines which are being offered in a competitive market price, with its distribution channels efficient transitioning from exports to being locally manufactured and distributed, and maintaining its influence and manage to establish itself as the most well-known brand in India’s construction industry.

A Company for deciding its production related activities puts many alternatives on the table before they choose the best alternatives in response to the market they cater and socio-political culture. Location externalities are also crucial criteria among them, for example, the availability of labour force. Apart from that, technological factor, product factor, and country factors are also vital to this decision. Outsourcing is another way the company gets the work done, but they are not done for tech-filled products as there is a risk of IP. JCB, in this case, has taken its production to India considering its high export cost to India and also the cheap cost of labour in India which has, in turn, made its parts locally available

Finally, a firm’s success needs a human resource management policy which would mesh well with the firm’s strategy and with its control. The human resource policies should change according to the country’s regulations and culture. It must decide how to properly recruit staffs in the firm. Keeping in my mind the sensitivities of the labour union rules. JCB has used polycentric way staffing thereby appointing host national employees in their senior level management. Therefore not hurting the sensitivities of Indian labour unions and also making maximum use of their local knowledge. This would also solve the issue of equal compensation and also performance evaluation since it would not have any issues of nationality bias.