A CASE STUDY ON - GOING GLOBAL – AN

IMPERATIVE FOR GROWTH

Submitted On
13/01/2020
Submitted To
DR SUGANT R

SUBMITTED BY: GROUP 3

Ashish 18114

Thimmaiah 18124

Lavanya M 18138
Q1. Identify the factors that forced Tube Products of India to go international?

 Threats of new entrants and increasing competition in the home country

 Increase in competition specially from China and cost competencies
 By the way of internationalisation, they can enter the untouched markets, and establish
themselves well in the potential markets
 Since the automobile sector is increasing in the global, they can make use of the
opportunities at the earlier stage itself
 Entering the emerging countries also benefits for the company
 Since the company has its expertise in the Electric resistance welded (ERW) and cold
drawn welded (CDW) tubes so they have a good opportunity to explore the other markets

Q2. Do you agree with the decision of foraying into Eastern Europe? Justify your answer.
Yes, we agree with the decision of foraying into Eastern Europe as it is one of the fastest
growing automobile markets in the world. We can justify this by looking at the following
parameters:

For any company to enter into the international market, they should look at the growth of that
sector in that country, look at political, economic and social factors, availability of resources,
infrastructure and so on.

 Political: As all CEE countries are members of the European Union, the region is
politically and economically stable. The laws of the European countries are frequently
amended to meet the EU standards. As EU is a political and economic union of 28
member states, there won’t be any political issues or disturbances in the Europe
countries.
 Economical: Tube productions of India has decided to enter into eastern Europe market
as it has high economic growth especially in automobile sector. There is a well-
developed infrastructure and good transportation connections amongst European
countries which always increases the demand for automotive sector.

By looking at the table, we can say that there is a demand of the cars in these countries and
there is still a space for new manufacturers to enter this market. The automotive industry
strongly contributes to GDP growth of 13% in 2017. Hence, we can see there is a growth in
economy.
  Social: In eastern Europe, the labour force is relatively cheap compared to other parts,
while highly skilled and well-educated. Not only having highly skilled labour,
manufacturers also realise they must make additional investments in education and
training, to align with the labour market’s need like introducing vocational training to
create a workforce with job-ready skills.
 Technology: European countries are faster in technology and also adopting in
automobile industry. The Cooperation between technical universities and the
automotive sector is encouraged by European and state funds, which helps in improving
more research and development activities.

Hence, the economic development of CEE region offers many opportunities for setting up new
businesses. Therefore, it is an opportunity for tube products of India to set up a business in
eastern Europe.

Q3. What mode of entry to the designated markets would you suggest? Why?
Czech Republic: Exporting to this country could be better because the import barriers
were dropped in Czech Republic and also because of the Shortage of skilled labour and
high wages, People have started questioning the dependency of the country on the
manufacturing sector especially the automotive sector which could become a risk. Czech
Republic has a strong supplier base and here there is heavy competition from home market
leaders and other entrants.

Hungary: The company can enter Independently to this country because it’s a mature
economy, Hungary is geographically well placed, and here the country offers a relatively
less labour cost and qualified workforce compared to Poland and others. Also, the legal
systems are not so rigid here.

Poland: Entering into this country in the form of a JV with any existing company in that
country would be better. Because here infrastructure is one of the main challenges in this
country and even the laws and regulations are a problem, availability of quality skilled
labour is also a problem here.

Romania: Entering as a JV with any existing company in this country would be better
because even in this country entering independently could incur a lot because here it seems
to be a lot of procedural formalities and certifications required for setting up plants at
various levels. Corruption is also a major problem in this country. Whereas on the other
side it is one of the large economies.

Slovakia: It would not be wise entering into this country because it has the least
populations in its region, used car imports are a significant factor which accounts to almost
every 2nd vehicle is an import but due to the stability and positive governmental factors it
is good to enter.
4. Evaluate the different countries identified by Tube Products of India with “Market
Penetration Grid” and identify the most potential country for entry

We choose Czech republic because it fetches high return and low risk.