The Strategy of International Business and Entering Foreign Markets You Decide
Scenario
Scenario Summary
Peter Lawford recently left General Electric after serving as the Vice President of the International Division for 20 years and started his own International Consulting Company, Maddock, Inc., located in Portland, Oregon.
Maddock- first important client is Governor, Inc., an independent designer, manufacturer, and service provider of energy control and optimization solutions for commercial and military aircraft, turbines, reciprocating engines, and electrical power system equipment. Leading original equipment manufacturers use Governor, Inc.- products and services in aerospace, power and process industries, and transportation. The international headquarters for Governor, Inc. is Fort Collins, Colorado.
The CEO of Governor, Inc., Ben Carr, recently phoned Peter offering him a sizeable sum of money to develop a proposal to take Governor Inc. into India. Ben suggested to Peter that he particularly wanted a presence in India as soon as possible but was hesitant to go alone due to government red tape and alleged corruption in India.
Peter pondered this lucrative opportunity, aware that his best friend in the industry, John Loiacano, of Sunstrand Company recently suggested that Americans are, as John says, "too hung up with themselves and the law." John added, "The best way to get into India is to give an expatriate $10 million, and tell him to call you when the plant is set up and ready to roll. This way you will not know whom he paid off getting the plant set up, and you can honestly say to your government and others you don’t know anything!"
There is one other issue tugging at Peter- thoughts. Peter- other acquaintance in the industry, Roger Smith at Prime Pumps, Ltd., suggested that "due to regulations on the amount of foreign investment allowed in certain areas of India, joint-ventures would appear to be the best and lowest cost option. This would involve being very sure of the partners in the agreement, and being specific in areas such as intellectual property."
To compound the above, Peter knows Ben wants this task done as soon as possible, no longer than six months out and accomplished with little to no headlines. Additionally, Melanie LaFave, Governor- lead counsel, is limited in her knowledge of the workings of international law. Peter is deep in thought as he attempts to give himself focus on which of the many entry directions to pursue for Governor, Inc., pondering which will get him there the fastest and quietest.
Your Role
You are Peter Lawford, independent contractor hired by Governor, Inc., to take Governor, Inc., into the country of India. Your assignment is to specifically establish within India a full production facility. You have been given a blank check to undertake this project. You have direct orders from the CEO of Governor, Inc. to "Get it done as soon as possible and with the least amount of market disturbance."
K E Y P L A Y E R S
Peter Lawford
Peter had spent 20 years working for General Electric as Vice President of International Business. Recently, Peter started his own international consulting company, Maddock, Inc., based in Portland, Oregon and focused on International Business and Marketing.
Ben Carr
Ben Carr, is the CEO of Governor,Inc. Ben, like Peter, is 55 years old and has spent his entire career at Governor. He- a local boy made good.
Melanie LaFave
Melanie LaFave, who heads up Governor- legal department. Melanie is a 45-year-old attorney with in-depth knowledge in contract law but unfamiliar with international law.
Roger Smith
Roger Smith is the International Manager of Prime Pumps, Ltd. of London, England.
John Loiacano
John Loiacano, Peter- old friend who hails from New Zealand and is the International Manager of Sunstrand Corporation.
Y O U D E C I D E
Activity
Required: During Week 5, each of you will read the following case summary, accompanying character descriptions, and respond to the six questions pertaining to this case on Governor, Inc. The purpose of this project is to give you a realistic situation involving entering foreign markets along with an opportunity to apply your knowledge of entering foreign markets as taken from Chapter 12 (Pages 411-435) in your textbook. Your responses to the six questions in this project case are due by the end of Week 5, and you will submit the assignment to your individual forum for grading. The case highlights the variables involved in 'Entering Foreign Markets’. It involves the attempt of a U.S. Multinational Company to enter an emerging country.
NOTE: You are being graded on your reasoning, critical thinking, and analytical abilities to respond to the questions below.
Questions:
Q1: From your readings in the text and scenario summary, select what you think to be the most appropriate entry method for Governor, Inc., going into India. Discuss the pros and cons of your decision?
Q2: There are several advantages associated with entering a national market early, before other international businesses have established themselves. These advantages must be balanced against the pioneering costs that early entrants often have to bear, including the greater risk of business failure. Discuss this approach by Governor, Inc., and Ben Carr their CEO, who wanted to get into India ASAP.
Q3: We saw in Chapter 11 that firms often expand internationally to earn greater returns from their core competencies, transferring the skills and products derived from their core competencies to foreign markets where indigenous competitors lack those skills. A distinction can usually be made between firms whose core competency is in technological know-how and those whose core competency is in management know-how. What do you think from your readings are the core competency issues for Governor, Inc., and how do you think this might drive their entry mode into India?
Q4: The greater the pressures for cost reductions are, the more likely a firm will want to pursue some combination of exporting and wholly owned subsidiaries. By manufacturing in those locations where factor conditions are optimal and then exporting to the rest of the world, a firm may be able to realize substantial location and experience curve economies. Discuss if this might be the thinking behind Governors Inc.'s move to India, and if so, why?
Q5: Do you think Peter should share with Melanie what his two peers (Loiacano and Smith) in the industry have suggested about going into India? If so, how might it help Peter and the venture if Melanie is aware of the scenario? Assuming you are Melanie, how might you respond to Peter upon his sharing the comments of his peers with you?
Q6: Discuss the pros and cons of Peter listening to John- and Roger- advice? What do you think Peter should do in this scenario? Give Peter a brief a 5 point-bullet plan of action to follow in the case.
USA 
India