Coursework 1

Module Title: International Business- Theory and Strategy

Tutor Name: Dr. Sayantan Ghosh Dastidar

Student ID: 100623493 (100623493@unimail.derby.ac.uk)

Word Count: 2500 words.

Executive Summary

No matter where you're located, you might think that Schneider Electric is a native company. It's
an easy assumption to make. The €25.7B energy, automation and software solutions company is
officially headquartered in France, but its strategy is to localize to the markets it's in.

Considering the ever-changing theories of Internationalization, this research aims to provide

comprehensive analysis of the layers of the business environment, plausible strategic choices,
and propose a suitable method for implementing an international expansion initiative for
Schneider Electric in India. The expansion into a new country presents opportunities for growth
and diversification, but it also requires a careful evaluation of the external environment and the
formulation of an appropriate strategic plan for successful implementation.

Introduction

International expansion offers numerous benefits, such as increased market share, access to new
customers, economies of scale, and diversification. However, it also brings challenges related to
cultural, legal, economic, and competitive factors. This report aims to address these challenges
and provide insights into the implementation process especially in a country like India which is
the world’s third-largest emerging economy, behind China and Brazil. On the one hand,
investment in India has increased most particularly since the 1990s, when changes were
introduced that made it easier for the country to open up to the outside world. Being an emerging
economy with a changing institutional environment, the country’s situation is an interesting
framework from which to examine the influence of certain variables on international decisions.

Brief Background of Schneider Electric

A Fortune Global 500 firm, Schneider Electric is a French multinational corporation with a focus
on energy management and automation technologies. Its products include anything from solar
energy installations for renewable energy to electrical switches, sockets, fans, and IoT in energy
systems (Business standard, 2022). When the business first began in 1836, it was more akin to a
foundry and was connected to the iron, steel, and weapons industries. Through its numerous
strategic acquisitions over the past 180 years, the firm has evolved into a world leader in
electrical systems and products. Over its history, Schneider Electric has benefited from
significant acquisitions of companies including Clipsal, APC, Merlin Gerin, and Square D that
have given it access to international markets. (Hayes, 2003).

Situation Analysis
Schneider Electric's decision to choose India as a target country for internationalization is
supported by a favorable strategic position at the macro, industry/sector, and organizational
levels. This critical evaluation examines the key factors that contribute to the rationale behind
Schneider Electric's choice.

Macro-Level Evaluation:

1.1 Economic Factors: India's strong economic growth and large consumer base present
significant opportunities for Schneider Electric. The country's increasing urbanization,
infrastructure development projects, and government initiatives like Make in India and Smart
Cities provide a favorable business environment. Schneider Electric can leverage its expertise in
energy management and automation solutions to cater to India's growing energy needs and
sustainability goals. Furthermore, India's robust economic growth, burgeoning middle class, and
increasing urbanization present significant opportunities for Schneider Electric. The company
can leverage the country's infrastructure development initiatives and the government's focus on
renewable energy to drive demand for its energy management and automation solutions.

1.2 Political Factors: India's stable political environment and the government's focus on
attracting foreign investment create a conducive atmosphere for Schneider Electric's
internationalization. The government's commitment to renewable energy and energy efficiency
aligns well with Schneider Electric's solutions. Furthermore, the introduction of policies like
Digital India and favorable foreign direct investment (FDI) regulations demonstrate the
government's support for technological advancements and innovation. Government approval in
100% FDI helped foreign firms to take the acquisition route for growth which Schneider Electric
also maximized. A roadmap to connect every home in India with grid power within five years
has called for increased demand in consumer electrical products. India's political environment
plays a significant role in shaping business operations. Continuously, it is crucial to monitor
changes in energy and environmental regulations, tax laws, and trade policies that could impact
the company's operations and market opportunities in India. Engaging with relevant government
agencies and understanding local legal requirements is essential.

1.3 Sociocultural Factors: India's diverse culture and consumer preferences necessitate a
localized approach. Schneider Electric's ability to understand and adapt to local customs,
languages, and consumer needs will be crucial for success. By building strong relationships with
local stakeholders and collaborating with Indian partners, Schneider Electric can effectively
navigate the sociocultural landscape and establish a strong presence in the market.

1.4 Technological Factors: India's rapid technological advancements and digital transformation
initiatives offer a favorable environment for Schneider Electric's solutions. The country's focus
on smart cities, digital infrastructure, and technology-driven industries aligns with Schneider
Electric's expertise in IoT integration, energy management software, and automation systems. By
leveraging its technological capabilities, Schneider Electric can meet the evolving demands of
the Indian market. For example, collaborating with local technology providers and startups can
foster innovation and help Schneider Electric stay at the forefront of the Indian technological
landscape. Digitalization as a concept has spread fast in India over the last few years.
Enhancement in communication technology along with spread of smartphone has created a
disruption in how retail supply chain- even purchases of domestic electrical products are being
done online.

1.5 Legal Factors: Understanding India's legal framework, including FDI policies, taxation
regulations, intellectual property rights, and labor laws, is essential for successful
internationalization. Schneider Electric's experience in navigating legal complexities in various
countries positions it well to comply with local regulations and establish a strong legal
foundation in India. It is also worthy of note that complicated laws are present in modern day
India to keep a tab on unfair business practices such as forming cartels. These are adjudicated by
the Competition Council of India (CCI) council and may result in length court battles. These
legal regulations must be abided with to aid smooth integration and operation of Schneider
Electric in India business environment.

Industry/Sector-Level Evaluation:
2.1 Growing Energy Management Sector: India's energy management sector is witnessing
significant growth due to increasing energy demand, renewable energy adoption, and a focus on
energy efficiency. Schneider Electric's expertise in energy management and automation solutions
makes it well-positioned to capitalize on the market opportunities in India. The company's
diverse product portfolio, including power distribution systems, building automation, and energy
monitoring solutions, aligns with the evolving needs of the Indian market.

2.2 Competitive Landscape: The energy management and automation industry in India is highly
competitive, with both domestic and international players. However, Schneider Electric's global
reputation, extensive research and development capabilities, and technological leadership
provide a competitive advantage. The company's strong brand recognition, established customer
base, and ability to provide end-to-end solutions give it a strategic edge in the Indian market.

Organizational-Level Evaluation:

3.1 Global Expertise and Experience: Schneider Electric's global presence and extensive
experience in the energy management and automation industry position it favorably for
internationalization in India. The company's deep industry knowledge, technological expertise,
and established customer relationships provide a solid foundation. Schneider Electric can
leverage its best practices, global network, and cross-market synergies to successfully enter and
navigate the Indian market.

3.2 Technological Solutions: Schneider Electric's diverse range of technological solutions,

including IoT integration, energy management software, and automation systems, align with
India's focus on smart cities, digital transformation, and sustainability. The company's ability to
provide innovative and customized solutions tailored to the Indian market's specific needs
enhances its strategic position. Schneider Electric can offer energy-efficient solutions, grid
management systems, and smart building solutions to address the growing demand for
sustainable infrastructure in India.

3.3 Local Presence and Partnerships: Establishing a local presence and building strategic
partnerships with Indian companies are crucial for Schneider Electric's internationalization
strategy. Collaborating with local partners provides access to market knowledge, distribution
networks, and customer relationships. By leveraging its global expertise and combining it with
local insights and resources, Schneider Electric can effectively penetrate the Indian market and
build long-term partnerships. Collaborative initiatives can provide access to resources, market
knowledge, and distribution channels, accelerating the implementation of the internationalization
strategy. making acquisitions and forming partnerships with businesses operating in a variety of
markets and industries, Schneider Electric has grown its activities abroad. Schneider Electric
paid Larsen & Toubro (L&T) $14,000 crore in cash to acquire L&T's Electrical and Automation
business in 2020. The L&T division produced a variety of goods, including metering solutions,
industrial automation systems, energy management systems, and voltage switchgear. More than
5,000 employees of L&T's electrical and automation division joined the Schneider Electric team
in India as a result of the acquisition (Baruah, 2023).

The strategic position of Schneider Electric for choosing India as a target country for
internationalization is supported by several factors. At the macro level, India's economic growth,
stable political environment, technological advancements, and supportive policies create a
favorable business environment. At the industry/sector level, the growing energy management
sector and Schneider Electric's expertise align well, providing opportunities for market
penetration. Furthermore, Schneider Electric's global expertise, technological solutions, and
ability to adapt to local needs strengthen its strategic position. By leveraging these factors,
Schneider Electric can successfully enter the Indian market, cater to the evolving demands, and
drive sustainable growth.

Plausible Strategic Choices for Foreign Market Entry into India by Schneider Electric:

Market Entry Modes: Schneider Electric can consider several strategic choices for market entry
into India, including:

a) Greenfield Investment: Schneider Electric can consider establishing wholly-owned

subsidiaries or new manufacturing facilities in India. This strategic choice aligns with Schneider
Electric's internationalization strategy of direct market presence and control over operations. The
internalization theory, proposed by John Dunning, supports this approach by emphasizing the
advantages of owning and controlling foreign operations. Schneider Electric can leverage its
global expertise, technology, and resources to establish a strong foothold in the Indian market.
b) Joint Ventures/Partnerships: Schneider Electric can form strategic alliances or joint ventures
with local companies in India. This strategic choice allows Schneider Electric to access local
market knowledge, distribution networks, and government relationships. The eclectic paradigm,
developed by John Dunning, can guide this choice by considering the location-specific
advantages and the need for local partners. Schneider Electric can leverage the capabilities and
resources of local partners to navigate the Indian market successfully.

c) Acquisitions: Acquiring established Indian companies in the energy management sector can
provide Schneider Electric with a quick market entry and access to an existing customer base.
This strategic choice can also help in gaining local market knowledge and enhancing
competitiveness.

d) Wholly-owned Subsidiaries: Establishing a wholly-owned subsidiary in India would provide

Schneider Electric with complete control over operations, decision-making, and branding. This
approach allows for a direct presence in the market, enabling better customization and adaptation
to local needs.

Product Localization: Adapting products and solutions to suit the specific needs and preferences
of the Indian market is crucial. Schneider Electric can focus on localizing its energy management
and automation offerings to align with local regulations, voltage requirements, and affordability.
This includes adapting products to handle Indian infrastructure challenges, addressing specific
power quality issues, and offering solutions compatible with local energy sources.

Customer Engagement and Branding: Building strong customer relationships through excellent
after-sales service, technical support, and training programs is essential in the Indian market.
Schneider Electric can engage with customers through digital platforms, localized marketing
campaigns, and partnerships with local influencers and industry experts. By focusing on
customer-centric strategies, Schneider Electric can establish a strong brand presence and develop
customer loyalty.

Manufacturing and R&D Investments: Considering India's strong manufacturing capabilities and
the government's focus on local production, Schneider Electric can explore setting up
manufacturing facilities and research and development (R&D) centers in India. This would help
in localization, cost optimization, and quicker response to market demands. Investing in local
manufacturing and R&D also demonstrates commitment to the Indian market and enhances
competitiveness.

Schneider Electric's Internationalization Strategy Benchmark: Schneider Electric's

internationalization strategy can serve as a benchmark for its entry into the Indian market. The
company's expertise in energy management, automation, and digital solutions align well with
India's market demands. Schneider Electric can leverage its global experience, technological
capabilities, and best practices to drive success in India. However, adaptations and modifications
may be necessary to cater to the unique characteristics of the Indian market.

Learning from Past Attempts: Schneider Electric may have learned valuable lessons from
previous attempts at internationalization, including both successful and not-so-successful
ventures. It is important for the company to analyze the factors that contributed to any
unsuccessful attempts and identify areas for improvement. These learnings can be used to refine
the entry strategy and enhance the company's chances of success in India. For example, if there
were challenges in previous market entries, Schneider Electric can adapt its approach, consider
different market entry modes, or address specific market challenges proactively.

Competitors' Internationalization Strategies in the Indian Market: Analyzing how competitors

internationalize in the Indian market can provide valuable insights for Schneider Electric.
Competitors may employ various strategies, including joint ventures, acquisitions, or
establishing local subsidiaries. By studying competitors' approaches, market positioning, and
success factors, Schneider Electric can gain a better understanding of the competitive landscape
and identify opportunities for differentiation. This analysis can help Schneider Electric fine-tune
its strategy and develop unique value propositions to effectively compete in the Indian market.

To support the strategic choices and analyze competitors' internationalization strategies,

Schneider Electric can use internationalization theories and frameworks such as the eclectic
paradigm, market power theory, contractual theory, and network theory. These theories provide a
theoretical foundation and guidance for decision-making in international market entry.

Schneider Electric can consider strategic choices such as market entry modes, product
localization, customer engagement, and manufacturing investments for its entry into the Indian
market. While the company's internationalization strategy can serve as a benchmark, it is
important to adapt the strategy to the unique characteristics of the Indian market. Learning from
past attempts, especially any not-so-successful ventures, can provide valuable insights for
improvement. Analyzing competitors' internationalization strategies in the Indian market can
help Schneider Electric identify opportunities for differentiation and enhance its competitive
position.

Method for Strategy Implementation

4.1 Uppsala Model of Internationalization: The Uppsala Model suggests that firms gradually
increase their commitment to foreign markets as they accumulate knowledge and experience.
Schneider Electric can follow a progressive approach, starting with exporting, then establishing
sales offices, and eventually setting up manufacturing facilities and R&D centers in India. With
6,000 workers working on numerous research and development (R&D) initiatives to create
solutions locally for India and the rest of the world, Schneider Electric also has its R&D hub in
India. Together with the US, France, and China, India is one of the company's four innovation
hubs. Given the distinctive nature of the industry, 80% of the solutions developed in India,
according to the business, are used in India (Baruah, 2023).
4.2 Networking and Partnerships: Forming strategic partnerships with local companies, industry
associations, and government bodies can help Schneider Electric establish a strong presence in
India. Collaborative initiatives can provide access to resources, market knowledge, and
distribution channels, accelerating the implementation of the internationalization strategy.
making acquisitions and forming partnerships with businesses operating in a variety of markets
and industries, Schneider Electric has grown its activities abroad. Schneider Electric paid Larsen
& Toubro (L&T) $14,000 crore in cash to acquire L&T's Electrical and Automation business in
2020. The L&T division produced a variety of goods, including metering solutions, industrial
automation systems, energy management systems, and voltage switchgear. More than 5,000
employees of L&T's electrical and automation division joined the Schneider Electric team in
India as a result of the acquisition (Baruah, 2023).
4.3 Continuous Learning and Adaptation: Schneider Electric should foster a culture of
continuous learning and adaptability within its India operations. This involves actively
monitoring market dynamics, customer feedback, and industry trends to identify opportunities
and adapt its strategies accordingly. Regular evaluation and adjustment of the
internationalization strategy will ensure long-term success in the Indian market.
Conclusion: Schneider Electric's expansion into India presents significant growth prospects, but
it requires a meticulous understanding of the business environment, careful strategic choices, and
effective implementation methods. By considering the economic, political, sociocultural, and
technological factors in India, Schneider Electric can develop a tailored internationalization
strategy. Leveraging relevant internationalization theories, such as the Uppsala Model,
networking, and continuous learning, will enable Schneider Electric to navigate the complexities
of the Indian market and establish a strong presence.

Based on the evaluation of strategic choices for foreign market entry into India, Schneider
Electric can consider the following strategy:

Strategy: Joint Ventures/Partnerships

Implementation of the Chosen Strategy: Schneider Electric can implement the joint
venture/partnership strategy by following these steps:

Identify Potential Partners: Schneider Electric should conduct market research to identify
potential partners in India. The eclectic paradigm, proposed by John Dunning, can guide the
selection process by considering the ownership advantages, location advantages, and
internalization advantages of potential partners. The OLI framework helps in assessing the
compatibility of partners based on their expertise, market knowledge, distribution channels, and
resources.

Evaluate Partner Compatibility: Schneider Electric needs to assess the compatibility of potential
partners by considering cultural fit, shared values, and long-term strategic alignment. The
cultural distance theory, proposed by Geert Hofstede, can assist in evaluating the cultural
compatibility between Schneider Electric and its potential partners. It is important to ensure that
the partners have a similar vision, mission, and commitment to quality.

Establish Clear Objectives: Schneider Electric and its partners should establish clear objectives
for the joint venture/partnership. The transaction cost economics theory, developed by Oliver
Williamson, suggests that this choice is driven by minimizing transaction costs and maximizing
efficiency. Clear agreements should be made regarding the roles, responsibilities, and decision-
making processes of each partner to ensure effective collaboration.

Joint Business Planning: Schneider Electric and its partners should develop a detailed business
plan that considers market entry strategies, product localization, customer engagement, and
manufacturing/R&D investments. The Uppsala model, proposed by Johanson and Vahlne, can
guide the market entry strategy by suggesting a gradual and experiential internationalization
process. The plan should incorporate market analysis, competitive positioning, and risk
assessment to ensure a comprehensive approach.

Leverage Synergies: The joint venture/partnership should leverage synergies between Schneider
Electric's global expertise and the local market knowledge of the partners. The resource-based
view, proposed by Barney, emphasizes leveraging unique resources and capabilities as a source
of competitive advantage. Sharing best practices, technology transfer, and cross-market
collaboration can enhance the competitiveness of the joint venture.

Establish Effective Governance: A robust governance structure should be established to ensure

effective decision-making, regular communication, and performance monitoring. The transaction
cost economics theory suggests that effective governance mechanisms can help mitigate
opportunistic behavior and ensure cooperation between partners. A joint management team with
representatives from Schneider Electric and its partners can oversee the operations and
implement performance metrics for tracking progress.

Challenges and Proposed Solutions

Cultural Differences: Cultural differences between Schneider Electric and its partners can pose
challenges. To address this, cultural intelligence training programs can be conducted to enhance
cultural awareness and promote effective communication. Regular interaction and building
personal relationships can foster mutual understanding and overcome cultural barriers.

Regulatory Compliance: Adhering to Indian regulations and navigating complex legal

requirements can be challenging. Schneider Electric should collaborate with local legal experts
to ensure compliance. Seeking legal counsel during the negotiation and agreement stages can
help anticipate potential legal challenges and develop appropriate strategies for compliance.

Intellectual Property Protection: Protecting intellectual property rights can be a concern.

Schneider Electric should establish stringent intellectual property protection mechanisms,
including confidentiality agreements, patent registrations, and trade secret safeguards.
Conducting regular audits and implementing cybersecurity measures can help mitigate the risk of
intellectual property infringement.
Managing Expectations: Aligning expectations and managing potential conflicts require
proactive communication and a shared vision. Regular meetings, joint planning sessions, and
clear performance metrics can help manage expectations and address any issues promptly.
Building trust and maintaining open channels of communication between partners is essential.

Competitive Landscape: The energy management sector in India is highly competitive.

Schneider Electric should differentiate itself through innovation, superior product quality,
localized solutions, and excellent customer service. Continuous monitoring of the competitive
landscape and adapting strategies accordingly is crucial. Focus on research and development to
stay ahead of competitors and forming strategic alliances with local partners to gain a
competitive advantage.

Conclusion

In conclusion, choosing a joint venture/partnership strategy for market entry into India aligns
with Schneider Electric's internationalization objectives. By considering internationalization
theories and frameworks such as the eclectic paradigm, cultural distance theory, transaction cost
economics, the Uppsala model, and the resource-based view, Schneider Electric can strategically
select partners, establish effective governance, and address potential challenges. This approach
enables Schneider Electric to leverage local market knowledge, minimize risks, and enhance
competitiveness in the Indian market.
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