1.

0 Company Background
The company that we are operating is Unicorn Company. This company is a
technology company. Our mission is to invent new technologies and make life easier. The
latest product of our company is Unibloks. This company is founded in 1983, headquartered
in Kuala Lumpur, Malaysia. In 2014, Unicorn employed 9,656 people across 5 countries
reported annual revenues of around RM20 million. The products are launched in some Asia
countries like Indonesia, Thailand, China, Cambodia and Taiwan. We are planning to launch
our products in India as our next target market.
Our products that are ready to be launched in India is called Unibloks which is a
customizable phone. Unibloks had already been operating for 9 years in developing unique
customizable products for the customers. Unlike other phones, our devices allow users to
customize their products according to their preferences. With Unibloks, customers can decide
what gadgets they want it to be rather than us developing self-enhance products to them.
Unibloks operates as a unique device with its naked features which permits users to slot
in any preferences of their own onto their devices. These blocks are inter-changeable base on
customer preferences. For instance, customers who prefer taking pictures can slot in the
camera Nano bloks into the naked device which works just like a Lego format.

Unibloks

Nano Bloks

Our mission is to stimulate innovation between the customers and us and our vision is
ensuring our products to reach global by 2018.

1.1 Country Background

India is the seventh-largest country by area, the second-most populous country with over 1.2
billion people, and the most populous democracy in the world. Until 1991, all Indian
governments followed protectionist policies that were influenced by socialist economics.
Widespread state intervention and regulation largely walled the economy off from the outside
world. An acute balance of payments crisis in 1991 forced the nation to liberalise its
economy; since then it has slowly moved towards a free-market system by emphasizing both
foreign trade and direct investment inflows. India's recent economic model is largely
capitalist. India has been a member of WTO since 1 January 1995. In 2006, the share of
external trade in India's GDP stood at 24%, up from 6% in 1985. In 2008, India's share of
world trade was 1.68%; in 2011, India was the world's tenth-largest importer and the
nineteenth-largest exporter.

1.2 Reasons for Entering India

The reason we choose India is because we believe that India is a potential market to
our product. According to the economists, they estimate India will have a good view in
economy, people in the world know that India is one of the worlds fastest-growing
economies. Besides that, India is also the third-largest by purchasing power parity, which
mean is people in India will remain the purchasing power when the exchange rates between
currencies are in equilibrium. India has 486.6 million worker and this amount of labour force
is the worlds second-largest, as of 2011. If we are planning to expand our market place, we
should consider about the labour as it will influences our cost and effectiveness of
production. Moreover, with the large population, it helps to generate for demands for our
products. Furthermore, with the huge population, it helps us to seek out more labour at a
cheaper costs.
Indias telecommunication industry is also the worlds fastest-growing. Since the first
quarter of 2013, India surpassed Japan to become the third largest smartphone market in the
world after China and the U.S. Since we are planning to launch the Unibloks in India and
India is the top 3 largest of smartphone market in the world, there is a good opportunity for
our products to reach the market. Our products can be customized by own selection and the
price range are different, some people can customize their phone according to their budget
and some people can customize the phone by performance.

2.0 Trade Barriers

Tariff refers to a tax imposed on imported goods and services. Tariffs are used to
restrict trade, as they increase the price of imported goods and services, making them more
expensive to consumers. Although India has steadily opened up its economy, its tariffs
continue to be high when compared with other countries, and its investment norms are still
restrictive. Previously, Indias average tariffs on imported goods exceeded 200 percent before
1990s; restrictions on imports were high and stringent restrictions on foreign investment. The
country began to reform during 1990s and slowly working on its trade reforms which
produced good results. The tariffs were imposed to protect India domestic producers from
foreign competition and also raise revenue for the government.
Import licensing is one of the non-tariffs barriers which prohibiting or restricting on
the imports goods with import licensing requirements. However, some products in India are
still facing import licensing although India removed most of the consumer products from the
requirements. For instance, the government will tend to provide motorcycles import licenses
to foreign nationals permanently residing in India, foreign company that hold at least 30
percent equity workers or foreigners who work at the embassies and foreign missions. On the
other hand, some of the local importers are allowed to import vehicles from foreign firm
without license provided because the exports attributable to the same importer.
An anti-dumping duty is a protectionist tariff that a domestic government imposes on
foreign imports that it believes are priced below fair market value. The measures are meant to
protect the local companies suffer from dumped or subsidized imports and it is allowed by
the WTO Agreements. India implies this trade barrier to protect domestic producer from
dumping activity. By doing so, this could help in raising concerns for the transparency and
due process in India. Recently, India enforced its anti-dumping policy and had topped in the
list of countries advocating new anti-dumping investigations. For example, India imposed
five-year anti-dumping duties on stainless steel imports from China, the European Union and
the United States on Friday, as the government tries to help local companies suffering from
cheaper imports.

Export subsidy is a government policy to encourage export of goods and discourage

sale of goods on the domestic market through direct payments, low-cost loans, tax relief for
exporters, or government-financed international advertising. By providing export subsidies
and domestic support to domestic industries, this could help them to compete with foreign
competitors. In India, profits from exporting activities are free from taxes and exporters are
not subject to local manufacturing tax. While export subsidies are helping local producer by
blocking foreign company exporting to India, the domestic support may also acts as a barrier
to the foreign competitor from gaining access to the local market.

2.1 Mode of Entry Joint Venture

2.1.1 Reasons for Choosing Joint Venture
Our company decided to choose joint venture as a form of entry mode for doing
business in India. A joint venture is meant by establishing a new firm that is jointly owned by
two or more parties. . It is essentially a medium to long-term contract which is specific and
flexible. The most typical joint venture is a 50-50 venture in which each of the parties
involved holds a 50 percent ownership.

The reasons that joint venture is chosen as mode of entry in India is to avoid trade
barriers. By doing joint venture with India local company, we are able to establish a new
enterprise and manufacturer in India to produce goods and sell domestically instead of doing
export activities from our own country and paying tariff. Next, if we choose other mode of
entry except join venture, the import licensing rule in India will brings disadvantage to our
company as the local importers are require to apply license and go through certain
complicated processes in order to import Unibloks.

In addition, joint venture is good for overcoming anti-dumping policy by partnering

with India local company. This is because some people believe that we as a foreign company
will even lower the price of product as dumping below its own cost of production in order to
drive competitors out of business and later raise prices. Hence, local joint venture company
has the authority to prevent dumping activities. Besides, since export subsidies are paid by
India government to the domestic producers, they are able to lower the production costs and
compete against foreign competitors in the long run. Therefore, we decided to set up a joint
venture with an Indian partner rather than enter Indias markets alone since the joint venture
route can be beneficial if done properly with the right planning.

Joint venture also brings some advantages to our company as we are able to get
benefits from a local partners knowledge of the host countrys competitive conditions,
culture, political systems and business systems. Hence, a joint venture have involved with
Indian companies that provides market expertise and the local knowledge necessary for
competing in that country. Secondly, our firm might gain by sharing the costs and risks with
the local partner when the development costs and risks of opening a foreign market are high.
Thirdly, in India, political considerations make joint ventures the only feasible entry mode as
joint ventures with local partner face a lower risk of being subject to nationalization or other
forms of adverse government interference.

2.1.2 Plan on Joint Venture

First of all, some important information is needed and needs to be understood by both
parties before forming a joint venture. For example, we as a foreign investor should conduct
due diligence on the other Indian partner. On the other hand, the Indian partner should also do
due diligence on the foreign investor as well to fully understand what we are getting into.
Choosing of a good host partner is the most important tool to the success of any joint venture.
Hence, the potential partners that suitable for forming joint venture are the Indian top mobile
handset manufacturers such as Micromax, Karbonn Mobiles and iBall.
Secondly, we plan to set up equity joint venture as the method of joint venture in
India. In an equity based joint venture, the profits and loses of the jointly owned entity are
distributed among the parties based on the ratio of the capital contributions made by them.
Hence, both parties are recommended to discuss and negotiate the terms in agreement
thoroughly before signing the joint venture agreement to avoid any misunderstanding at a
later stage
Thirdly, when forming a joint venture in India, it is very important for foreign investor
to understand the rules of the structure of a company set by India government. For instance,
we can choose to set up a private limited company with Indian partner but there will be
certain rules we need to follow such as the minimum number of directors and shareholders.
After that, the process of forming joint venture in India is time consuming and there
are many steps need to be followed. For example, the main steps are reserving the company
name with the Registrar of Companies, creating and submitting the memorandum and articles
of association to the Registrar of Companies along with other various prescribed forms, and
obtaining the certificate of incorporation.
Finally, to ensure that all the parties completely understand and agree to the risks,
issues, and the objective of the joint venture, a Memorandum of Understanding will be signed
by both parties after thorough discussion and negotiation.

2.2 Analysis of Hofstede Dimension

Power Distance
Malaysia currently holds the number one spot for a country with the highest power distance,
scoring a score of 100 according to the power distance index. This means that people accepts
a given hierarchical order where everybody has a place and a superior without the need for
further justification. Power distance in organizations reflect on inequalities and centralization.
Employees are expected to be told what to do and to never question the authority. Employees
believe that their superiors are flawless and a benevolent autocrat.
Power distance in India is not as overwhelming as it is in Malaysia, though it is still
prevalent. On the power distance index, India scored 77 which indicates an appreciation for
hierarchical structure. Indian employees are highly dependent on the upper management for
directions, accepts the inequality between the rick and the poor. Management in India relies
on the obedience of the employees even if the employees do not realize it. Employees expect
to be instructed step by step for their function in the organization. There is control of
feedback in India, communication to upper management is directive and negative feedback
are never communicated. Therefore, in order for us to enter into India markets, we must
compromise their terms and try not to question much towards their suggestions or opinions.

Individualism vs Collectivism
Malaysia scored a score of 26 in terms of individualism. This means that Malaysia is
considered as a collectivist country. Collectivist country are highly loyal to each member
within the group and overrides other societal norms and restrictions. Collectivist country
fosters strong relationship between members of their group. Collectivism in business
organizations perceive employee and employers relationship on a moral level.
India is a country that can be considered as both collectivistic and individualistic country.
India scored a score of 48 in terms of individualism which is in the intermediate range. The
collectivist aspect of India is the need of belonging to a defined group or social framework.
The relationship of business organization in India between the employer and employee is
based on familiarity. The hiring and promoting process is based on relationship established
among the employee and employer. The individualistic aspect of India is a result of Indias
dominant religion. Each individual in India is responsible for their behavior and the influence
they exert on outer forces.

Masculinity vs Femininity
Malaysia scored in the intermediated range for masculinity versus femininity with a score of
50. This indicates that Malaysia is partially driven by competition, achievement and success
with success being defined as the best within a particular specialization. This also means
Malaysia focuses values on caring for others and improving the qualities of living.
India scored a value of 56 in terms of masculinity and therefore, considered as a masculine
country. The motivation and drive for success in India is measured by material gain. Work is
considered as the orbit around an individuals life and is a visible measurement of the
individuals success in life. India did not score as high on masculinity due to the culture and
religion. Therefore, in order for us to succeed venturing into India markets, incentives must
be provided to the retailers if we need them in order to push them to market our products to
the customers effectively. Giving moderate long hours of working to India labors would also
not be a problem as they adapt masculinity norm where they are fine with long working
hours.

Uncertainty Avoidance
Malaysia scored a total of 36 in uncertainty avoidance. This means that Malaysians have a
low preference for avoiding uncertainty and are risk takers. This also means that Malaysia
maintains a more relaxed attitude in business organizations and are more tolerant of deviance
from pre-established protocols. Malaysians believe that there should not be any more
regulations than necessary, as well as the omission of faulty and senseless rules. Schedules
are flexible and punctuality comes naturally to Malaysians.
India scored a total of 40 in uncertainty avoidance. India, similar to Malaysia, have low
preference for avoiding uncertainty and are risk taker. There is a place for imperfection in
Indian culture and high tolerance for the unexpected. Rules and regulations in India are
considered as a point of formality and do not dismiss innovative initiatives if it is considered
productive and efficient despite breaking the rules. Indians would have no issues in turning a
blind eye to the abidance to rules and regulations if it remedies a seemingly insurmountable
issue. Therefore, entering into India markets with our new products will be easy as they have
the curiosity to try out new products and willing to take risks. A great demand can be
expected to be seen through entering India with our new products due to low uncertainty
avoidance.

Long Term vs Short Term Orientation

Malaysia scored a total of 41 in this dimension. This refers to how Malaysia do not focus on
maintaining links with the past while dealing with the challenges presented in the present and
the future. A low score in this dimension refers to how Malaysia has a normative culture.
Malaysians have a small propensity to save for the future and prefers on achieving quick
results.
India scored a total of 51 in this dimension. A higher score in this dimension proves India
holds a preference for long term, and pragmatic results. In India, time is not view as linear
and as compared to countries that score low in this dimension. This dimension shows that
Indians are patient in achieving results. Society have a more tolerable approach towards lack
of punctuality, a change in business plans due to the changing reality or political events, as
well as a level of comfort with diverging from the planned path. Therefore, in order to reap
success into entering India markets, it is crucial to ensure a short and long term benefits to
them in order to build confidence on them to purchase our products.

2.3 Strategic Choice Global Standardization Strategy

Joint-venturing with India is considered as a type of foreign direct investment provide
us an opportunity to pursue a global standardization strategy. It focus on increasing
profitability by reaping the cost reductions that came from economies of scale, learning
effects, and location economies. Hence, our company strategic goal is to pursue a low cost
strategy on a global scale as we have already entered into some low cost countries for the
production, marketing and research and development activities. Pursing this strategy enable
the firm to concentrate in a few favourable locations only.
Since our company is a Uniblok producer, we try to avoid customize product offering
and marketing strategy to local conditions due to the process of customization that requires
high cost. Instead, we preferred a standardized product to worldwide. Next, the main reason
of choosing this strategy is we believe that producing Uniblok has strong pressures for cost
reduction whereas the demands for local responsiveness are minimal as the product serves
universal needs.
By applying global standardization strategy, we as a firm, engage in global business
entails in producing the same product for the national as well as the international markets
with only minor changes in attributes. This is mainly because basic human needs for mobile
phone are the same in all countries. This strategy benefits in the economies of scale accruing
to the company with it being able to produce in large quantities using more or less the same
techniques of production. When it sells the same product worldwide, it can buy its raw
materials in bulk, potentially saving the money for company every year.
Besides that, this strategy helps company to achieve location economies. This is
because the global division of labour is based on wherever best-of-class capabilities reside at
the lowest cost. Company has the opportunity to choose and switch manufacturers with
lowest labour and other input costs in different countries. For instance, certain parts of
Uniblok can be produced in low cost at different countries to reduce cost and send back to the
home country for assembly. It also helps in saving the managerial time and effort to take
decisions regarding the manufacture of different part of products.

3.0 Conclusion
In order to gain access into India market, it would have certain trade barriers that are
imposed by India government are unavoidable for the company. The potential trade barriers
that faced by Unicorn are tariffs, import licensing, anti-dumping policies and export
subsidies. Hence, choosing a right entry mode is crucial for the success of Unicorn in India.
After careful consideration, Unicorn have decided to have joint venture with India local
partner as the mode of entry into India market.
On the other hand, cultural factors are also playing an important role in strategizing
our product into the India market. According to Hofstede five cultural dimensions, our home
country Malaysia are sharing with India the similarities scores of masculinity, uncertainty
avoidance and long term orientation but differences in power distance and individualism
scores. Therefore, strategy used in Malaysia might not be effective in India thus a different
strategy should be imposed. As a multinational corporation, the strategy that we chose is
global standardization strategy in order to serve the universal needs.
In conclusion, we could forecast the result of implementing the suitable strategy
would be great and more likely to be successful in entering India market. This is mainly
because the Indian economy is expected to grow, the population is very high and there are
huge untapped market potential.

4.0 References
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Available

at:

http://www.global-strategy.net/what-is-global-strategy/

[Accessed 3 Apr. 2016].

GlobalTrade.net.

(2010).

Trade

Barriers

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[online]

Available

at:

http://www.globaltrade.net/f/business/text/India/Trade-Policy-Trade-Barriers-in-India.html
[Accessed 31 Mar. 2016].

Geert-hofstede.com. (n.d.). India - Geert Hofstede. [online] Available at: https://geerthofstede.com/india.html [Accessed 2 Apr. 2016].

Geert-hofstede.com. (n.d.). Malaysia - Geert Hofstede. [online] Available at: https://geerthofstede.com/malaysia.html [Accessed 2 Apr. 2016].

India Briefing News. (2011). Establishing a Joint Venture in India - India Briefing News.
[online] Available at: http://www.india-briefing.com/news/establishing-joint-venture-india4833.html/ [Accessed 31 Mar. 2016].