Question

You are the international manager of a US business that has just invented a revolutionary AI equipment, but costs only half as much to current manufacture. Your CEO has asked you to decide how to expand into the China or India market. Your options are: (i) to direct export from the United States (ii) to license a China or India firm to manufacture (iii) to set up a wholly owned subsidiary in India or China with foreign direct investment. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO

Answer 1

As a international manger of US business i have three options to expand business in China or india. Let us discussed pros and cons of each option we have available.

1). To direct export from the united status :

Direct exporting involves exporting directly to a customer interested in buying your product. You are responsible for handling the market research, foreign distribution, logistics of shipment, and invoicing.

Pros :

• Your potential profits are greater because you are eliminating intermediaries.
• You have a greater degree of control over all aspects of the transaction.
• You know your customers.
• Your customers know you, and thus feel more secure in doing business directly with you.
• Your business trips are much more efficient and effective because you can meet directly with the customer responsible for selling your product.
• You know whom to contact if something isn't working.
• Your customers provide faster and more direct feedback on your product and its performance in the marketplace.

Cons:

• It requires more time, energy and money than you may be able to afford.
• It requires more "people power" to cultivate a customer base.
• Servicing the business will demand more responsibility from every level of your organization.
• You are held accountable for whatever happens. There is no buffer zone.
• You may not be able to respond to customer communications as quickly as a local agent.
• You have to handle all the logistics of the transaction.

2). To license a china or india firm to manufacture.

Pros: Indian exporters, having been very exposed to Western buyers/culture/business for a very long time, are much more understanding of Western business assumptions: they take their responsibilities more seriously than Chinese exporters. They understand that they are responsible for quality issues, even when a consignment has been inspected by the buyer. They understand that delivery on schedule is critically important, and understand that they need to compensate if a consignment has problems, or is late. This is not generally true of Chinese exporters.Everyone speaks English, and many, better than. By and large, exporters say what they mean, and mean what they say.

Cons: there are several reasons that might be disappoints to licence india and china to manufacturers AI product. Logistics of india is not too good. Thats why there will be problems in stock loaded or unload. Amount of skill worker that know properly how to manufacture AI products are less we need to train them so that they make optimum production and make a significant profit for us. Taxes and tarrif issues are alose concerns when we take as a international business with both the counties.

3). Setup a wholly owned subsidiary in china or india with foreign direct investment.

Pros:

• Improved capital flows
• Technology transfer
• Regional development
• Increased competition that benefits the economy
• Favorable balance of payments
• Increased employment opportunities.
• The combined effects of all the benefits accruing from foreign direct investment can lead to overall improvements in the standard of living in the host country, as well as increasing its access to and competitiveness in world markets.

Cons:

• Low levels of research and development
• Risk of increase capital outflows
• Stifling of domestic competition and entrepreneurship
• Erosion of host culture
• Disruption of domestic business practices
• Risk of interference by foreign governments.

As a international business manager i suggest my ceo that every option have pros and corn. We need to expand our business in india and china at Law cost and earn greater profit. We need to ensure work flexibility , opposite countrt rules and regulations, policies, about currency market etc.