While traveling to Singapore on a vacation you meet Ms. Jenny Chang, an Asian business exclusive, in the plane. She is happy to study that you are the international business development consultant for a multinational company. She becomes concerned in your expertise and asks you to work as her company's consultant for a project involving new business development in Pakistan. Her company has just invented a revolutionary new CAD system for designing and weaving wool carpets that can improve the design and manufacturing productivity significantly. Numerous patents protect the unique design of this technological system. The CEO has asked you to formulate a recommendation for how to expand into Pakistan. Your choices are (i) to export to Pakistan from the manufacturing plant in Singapore, (ii) to license a Pakistani firm to manufacture and market the computer system in Pakistan and elsewhere, and (iii) to set up a wholly owned subsidiary in Pakistan.
Select the best of the three choices for Ms. Chang, Support your recommendation by first evaluating the pros and cons of each alternative for Chang's company.
This assignment is analytical in nature. You are expected to demonstrate your ability to convert your theoretical understanding of the modes of international business entry into practical applications. Therefore, I would hope that you will relate all of your answers to the situation in the case or the scene presented and not provide generic text book answers.
Some factors that must be kept in mind to analyze the situation and make your recommendations look practical to your client. As a consultant you can make certain assumptions about the different aspects, such as-
1. What is the nature of the product: brand new high technology consisting of a computerized CAD system. The CAD system that this company needs to promote in Pakistan consists of two major parts: the hardware which is a sophisticated weaving machine, and the software that designs the carpets and runs the weaving machine. How significant is it to protect patents and the technology from being copied illegally? How significant is the firm's intellectual property? How do transportation costs affect your decision?
2. Where is it being manufactured now: Singapore. What is the level of manufacturing sophistication in this country when compared with the target country?
3. What is the nature of the target market: What are the relative business barriers in the two countries? Demand? Economic development? Legal system for resolving disputes?
Patent protection laws or else enforcement of the law? Availability of skilled engineers and workers? Availability of suitable agents or partners?
The consideration of the above factors will allow you to produce an excellent report for Ms. Chang.