Management Consulting/Economic and social environment
Sir can u please provide me guidelines on this question: collect data on foreign technical and financial collaborations for the period 2005-2012 of India and write a note on the trends of these collaborations.
.Collect data on foreign technical and financial collaborations for the period 2005-2012 and write a note on the trends of these collaborations.
Foreign collaborations Into the Indian Market has been on the rise since past few years, especially with the boom in the IT sector. Manufacturing, banking, healthcare and textiles are among the other important sectors where foreign ventures have taken place in the Indian market.
The period 1991-2000 saw total number of collaborations in the decade surpassing the total number of all the collaborations in the 4 decades preceding it.
Indeed, the total number collaborations in the 9 years of post- liberalization
(1992-2000) period is observed to be 17810,
while in the 41 years of pre- liberalization
(1951-91), there were only 15105 foreign collaborations.
India is thus banking on expert
technological support for goods and services at an accelerated pace than in the preliberation
era. The rise in number is substantial in the post liberalization era, 10- fold compared to the decade of 1950s, 5- fold compared to the decades of 1960s and
1970s and 2-fold compared to the decade of 1980s
IN THE 20012010 PERIOD,
there were only 25000 foreign collaborations
The data thus, indicates that in the post-liberalisation era, the country is entering into foreign collaborations for a variety of reasons rather than for importing technology to build industrial base or to bridge the technology gaps, most important among them
being to increase variety for meeting the customers choice of products and services,
which is a major shift in pattern of collaborations in the post- liberalization period.
In term of level of collaborations in the post liberalization era (1992-2010) by number,
USA tops the list followed by Germany, the Great Britain and Japan. This is followed by Netherlands, Mauritius (!), Italy, France and Switzerland. The next few places have
been occupied by the south- east Asian countries, nearly. Singapore, Korea(s), Australia and Hong Kong, which did not have any collaborations in the preliberalization
era, They have pushed other leading European countries namely Denmark, Austria,. Sweden & Belgium to the next lower position East European
technology providers of pre- liberalization era, the giant like USSR, Hungry, Poland,
Romania etc., are pushed down to positions lower than even the countries like
Luxembourg, indicating a major shift in both, the geo-political considerations as well
as the main purpose of foreign collaboration (bridging the technology gaps).
Two more striking observations may be worth noting. Firstly, unlike the popular
perception in the west, the foreign collaborations with east- European countries
(U.S.S.R, Poland, Hungary, Romania, etc) have been far lower (10%total) than the
western developed countries, which constituted the balance 90%. Secondly, the giants
of Europe, namely Germany and the Great Britain have badly lost out to USA in
terms of number of collaborations with India in the post liberalization era. Indeed, the
entire west European block has now lost its business closeness with India to the USA
and to some extent even to the south- east Asian countries as discussed later.
Foreign Collaboration by Trade Blocks
EC 6876 23%
Grand Total 100%
there is a major change in
the proportion of technological & financial collaborations in the post- liberalization period, the proportion of financial collaboration, which was only 45% in 1992, has jumped to 69% by 2000, a dramatic rise, indeed a paradigm shift.
THEN IN 2010 TO 72% IN FINANCE.
The shift in the nature of foreign collaboration points towards increasing interest of
foreign partners in playing an active role in the management of the Indian venture
rather than being contended with sale of technology. It also raises a possibility of
concern of both (Indian and foreign) partners to do business together in India, than only
Indian patterns desire for bridging technology gap. Another possibility, extending from this, which needs a more detailed examination, is that perhaps the foreign
collaborations in post liberalization are more of partnerships for trading foreign
goods and services with little valve addition rather than high value addition seeking import of manufacturing technology, which has been the key concern in the pre liberalization era.
Sectors in India attracting collaboration from foreign countries are:
Telecommunications that includes services of cellular mobile, radio paging, and basic telephone
Food processing industries
Pharmaceuticals and drugs
Electrical equipments that includes electronics and computer software
Services sector that includes non- financial and financial
Gypsum and cement products
Countries interested in collaboration in India are:
The manner in which a firm chooses to enter a foreign collaboration.
>Equity joint ventures
>Wholly foreign-owned subsidiaries
>Greenfield investment (building a new facility)<br />Cross-border mergers<br /
>Cross-border acquisitions<br /
>Sharing existing facilities<br /
The Strategic Logic Behind collaboration
>Resources seeking looking for resources at a lower real cost.
>Market seeking secure market share and sales growth in target foreign market.
>Efficiency seeking seeks to establish efficient structure through useful factors, cultures, policies, or markets.
>Strategic asset seeking seeks to acquire assets in foreign firms that promote corporate long term objectives.
> Enhancing Efficiency from Location Advantages
>Location advantages - defined as the benefits arising from a host countrys comparative advantages.- Better access to resources
>Lower real cost from operating in a host country
>Labor cost differentials
>Transportation costs, tariff and non-tariff barriers
>Improving Performance from Structural Discrepancies
>Structural discrepancies are the differences in industry structure attributes between home and host countries. Examples include areas where:
>Competition is less intense
/>Products are in different stages of their life cycle
>Market demand is unsaturated
>There are differences in market sophistication
>Increasing Return from Ownership Advantages
>Ownership Advantages come from the application of proprietary tangible and intangible assets in the host country.
>Reputation, brand image, distribution channels
>Technological expertise, organizational skills, experience
>Core competence skills within the firm that competitors cannot easily imitate or match.
> Ensuring Growth from Organizational Learning
>MNEs exposed to multiple stimuli, developing:
>Broader learning opportunities
>The Impact of collaboration on the Host Country
>Firms attempt to capitalize on abundant and inexpensive labor.
>Host countries seek to have firms develop labor skills and sophistication.
>Host countries often feel like least desirable jobs are transplanted from home countries.
>Home countries often face the loss of employment as jobs move.
FOREIGN FINANCE COLLABORATIONS HELP
>Portfolio Management Services
>Investment Advisory Services
>Credit Reference Agencies
>Credit rating Agencies
>Leasing & Finance
>Foreign Exchange Brokering
>Credit card business
>Money changing Business
Implications of Findings
A steep rise in the number of foreign collaboration is a direct indication of the fact that country is increasingly banking on the other countries for the introduction of
new products and technologies, rather than developing them through domestic efforts. This is in complete contrast to the pre- liberalisation policies of importing
technology to enhance domestic technological capabilities of the country.. It can help
in meeting the needs and serving the domestic market, but not so much in technology development for increasing competitiveness of India.
The infrastructure created may even help in becoming a global outsourcing point, but
that will give reduce the status to that of a small, ancillary supplier, who does not have any bargaining power (and hence can not expect capturing substantial portion of
value created by him in the whole value chain, leave alone controlling the capture of
value creation), and will always remain at the mercy of main product manufacturer.
It may help in earning a bit of foreign exchange to reduce foreign exchange crisis, but can in no way increase competitiveness to become a global player.
An alarmingly large number of small Indian partners, with high financial interest of foreign party, indicate that these are more of trading or marginal value addition outfits, engaged in distribution of foreign goods rather than potential major manufacturers with
strong technological prowess. They may neither have resources nor inclination to
engage in R & D work to increase competitiveness of India, but may only be interested
in quick profits in the liberalised regime, when the going is good, and be instrumental in
making India only a global market as well as cause drain on precious foreign exchange.
The country needs to seriously engage in new product development activity as outlined earlier, developing new product with local endowments and designs and
vendor bases, branching off from the existing applications, developing technology for
scaling up the products of Indian origin. It requires development of attitudes and
orientation of frame-bending and frame-braking8 while thinking of organization innovations and new product development.
Importing technology at successive levels of up-gradation in the name of modernization and on the logic of India does not need to reinvent the wheel is not a tenable one.
New product development is not reinventing the wheel. If it is so, every developed country is doing so on an ongoing basis. The present approach of importing
technology for catching up by latching up10 does not help in development of real technical expertise, but instead generates a myth, a misplaced belief and false sense of technical expertise, which fails to meet the demands of competition.
Further, it must be realized that the principles of science are more universal and generalisable than those related to the business. The moment one moves to
application of the scientific principle to develop product and services, they tend to be
less applicable due to the influence of the geo-political, socio-culture context of the COUNTRY.
1. An Analysis of S Ltd. cost records give the following information.
Variable Cost Fixed Cost
(% of Sales) Rs.
Direct Material 32.8% -
Direct Labor 28.4 -
Factory Overhead 12.6 1,89,000
Distribution Overhead 4.1 58,400
Administration Overhead 1.1 66,700
Budgeted sales for the next year are Rs. 18, 50,000. You are required to determine:
(a) Break even sales value
(b) Profit at the budgeted sales volume
(c) Profit if actual sales: (i) drop by 10% (ii) increase by 5% from the sale.