Date: 20/Nov/13

Assignment No. 8

Name: Salman Shahid Registration No. CIIT/FA10-BBA-125/LHR Submitted To: Mr. Shahid Malik

Drivers of Success for Market Entry into China and India

By Joseph Johnson & Gerard J. Tellis

Case Study Analysis

In the modern economic world, China and India are attracting foreign investors and resulting in rapid economic growth. The number of firms entering these two countries is higher than any other country because of the resources and any possible opportunities like similar customer needs and available infrastructure etc. Despite of these entries, many firms including business giants are facing serious problems and even reverting back with huge losses. The authors have carried out this study to observe the factors behind success and failures of these firms entering into China and India. For understanding purpose, the relationship of success/failure has been studied with independent variables categorized into two major divisions. First division focuses on firms internal potential which it uses to enter a country and initiate its business. This category studies the firms internal resources e.g. finance and competence etc. and its strategies e.g. entry timing and mode with the success/failure. Second division focuses on host countrys environment e.g. culture, economic condition and risks involved. On the basis of this analysis, the authors have developed following questions: 1. Does success in entering emerging markets increase or decrease with the degree of control? 2. Does success in entering emerging markets increase or decrease with early entry? 3. Are smaller or larger firms more successful in entering emerging markets? 4. Does entry success decrease with greater economic distance? 5. Does success into emerging markets decrease with greater cultural distance? 6. Does success of entry into emerging markets decrease with country risk?

7. Does success of entry into emerging markets increase or decrease with country openness. The variables in both categories may have different impacts on the success/failure of firms. Presence of some variables may be favorable while others being unfavorable and vice versa. The authors have collected historical results of firms from China and India and systematically examined them to prove the relationships of above mentioned independent variables with the success/failure of firms. The firms entering China have been more successful than those entering India. The results have proved that firms entering in China and India with more control are successful than those with less control probably because the firms are less dependent on others and therefore less exposed to risks. The results also proves that success is not only linked to firms size and resources because having proper market knowledge is essential than to have financial resources or more employees and therefore, many smaller firms surpass larger firms. The results have proved that firms which enter in similar markets or similar cultures have greater chances of success than those entering in totally new countries. Moreover, countys risk also influences the success or failure of a firm as firms entering in less risky countries are more successful. The study has also revealed that openness of a countrys culture has more disadvantages that advantages because a country with open culture will have less entry barriers and therefore increased competition. After the detailed study of historical data from firms entering in China and India, the drivers of success and failures are much easier to understand. The authors have identified very important factors which influence firms success or failure. Despite of few deficiencies in the research including ignorance of factors like marketing plans and studying culture into detail, the research still provides a good source of understanding the success and failures of firms entering in other countries.