Business Management Tutors for MBA & BBA in Howrah

As a MNC it is but natural to harbour in growth through expansion of existing markets as well as entry into new markets.  Expansion into existing markets in a way is relatively speaking less challenging as compared to entry into new markets. This is simply because there are more knowns (experience driven) in an existing market versus the unknowns in a new market.  Thereby before stepping into a new market quite a bit of ground work has to go into that decision.

Some of the factors to be considered and thoroughly examined include:

Regulatory Environment

The company has to examine the local laws and Government policies that affect Foreign Direct Investment into that industry.The questions that need to be examined would typically be

Is investment into the industry allowed through the automatic route or an approval route has to be followed? What is the realistically expected timeline for an approval route? Are there any restrictions on import of raw material or components from outside the country including from the MNC’s own businesses outside of the country? Can a MNC hold majority shares in its business?

Local Taxation Laws and Currency Parity

Taxes directly affect the level of net profitability at the parent level.There needs to be a proper assessment made on the attractiveness of expected post tax returns to the parent after accounting for the risk of movement in the valuation of the foreign currency vis-a-vis the parent company country’s currency.

Strength of competition in the market

Just being an MNC does not necessarily mean easy success in any market.Typically in any market there will be strong local players who have been serving the market for many years with well entrenched brands.Also, there is every possibility of the long standing presence of other MNCs.Thereby competition is another very important factor to be considered while formulating a strategy for market entry.There should be a clear understanding of the comparable strength and weaknesses of the products the MNC wants to introduce in the market versus competing brands as also the acceptable price points from the local consumer perspective.

Establishment Structure – With a Local Partner or Independent

Another very important element that the MNC needs to pay attention to is to decide whether to set up the business independently on the strength of its own name or through a strategic partnership with a credible local partner.This decision would depend upon the assessment the MNC has about the knowledge or familiarity of the MNC’s brands in the new market (potentially served through imports).If the assessment is favourable an independent structure would make sense.On the other hand if the brand is completely novel in the market it would need, atleast initially, some hand holding in introducing its products in the markets.In such a case a JV structure with a long standing existing local player would help.Also, the MNC could potentially go solo on the strategy of building up a credible local team that has the necessary experience and skill sets to successfully introduce new brands and earn market share from competition.

 Management is a scientific way to plan, execute, review/monitor a process containing set of activities.

Management starts from home where you need to identify various activities and carry out systematically so that the members can perform their individual functions without any problem. 

This can be applied to all activities and industries be it hotel management, school management which is basically running a hotel or school. 

Thus Management is a multi-disciplinary subject