INTERNATIONAL BUSINESS

Case 1:-

BPO – BANE OR BOON?

Which of the theories of international trade can help Indian services providers gain competitive edge over their competitors?

The theory of free markets can help indian services providers gain competitive edge over their compititors because India has got an edge over other countries at this point of time but other nations may try to make their products look cheaper by manipulating their currencies or by imposing restrictions on imported service especially from india

We need to do something like this - do something better than your competitors (either make a better product, market it better, service it better, price it cheaper, whatever).

Pick up some Indian services providers. With the help of Michael Porter’s diamond, analyze their strengths and weaknesses as active players in BPO.

WNS, which was established in 1996 and transformed from a captive provider to a third-party provider in 2002, announced in December 2004 a new organizational structure focused on its vertical business units. The change to the vertical focus was made to sharpen the company's domain expertise; develop new services and technologies; create superior career paths for talented managers; continue to emphasize entrepreneurship and empowerment, and win and retain business by delivering exceptional value to its clients.

The company's business units are organized into the following vertical sectors: travel services; insurance services; financial services; enterprise services (including financial and accounting services, human resource accounting and health care processing), and knowledge services (including primary and secondary research, and analytics). Each unit is managed by a chief executive officer and has its own operating and sales teams, and draws upon support and "enabling" services across the company.

"We have seen numerous tangible benefits to our decision in 2004 to more sharply focus our vertical structure," stated Neeraj Bhargava, Group CEO. "Specifically, we have strengthened our leadership role in the BPO industry; continued to distinguish WNS from our competitors through our differentiated strategy; maintained our record of creating value for our key constituencies, especially customers and employees, and broadened our global perspective, thus enhancing our ability to help companies meet their business challenges.

"These developments reflect positively both on the soundness of our decision, as well as the breadth and depth of WNS' management team, which is uniquely qualified to lead this company."

Mr. Bhargava added that WNS' travel unit continues to be the offshore industry leader in this segment with a dominant market share, but that "WNS' formalization of our vertical structure clearly allowed us to devote additional resources to our non-travel operations - especially financial services, which include mortgage and insurance. As a result, we have strengthened our expertise and operations in each of our offerings, as well as across the company as a whole."

Compare this case with the case given at the beginning of this chapter. What similarities and dissimilarities do you notice? Your analysis should be based on the theories explained.

Evalueserve: Based in Gurgaon, it has 650 people engaged in market research and business intelligence. Nearly 45% of the company’s revenues come from math related projects. Evalueserve has a research firm called Global Sourcing Now, which specialises in high-quality research reports.

WNS: A Mumbai-based BPO, WNS has just started its KPO division for market research with 300 people. It operates in the knowledge services business segment and offers high-end services such as market, investment and business research.

Wipro BPO - In 2002, Wipro took a quantum jump in the BPO services by acquiring the then Spectramind.

Wipro Limited (Wipro) is engaged in the areas of information technology (IT), services, IT products and consumer care and lighting products. The Company is organized in four segments: IT services, IT products, consumer care and lighting, and others. During the fiscal year ended March 31, 2009 (fiscal 2009), 94% of Wipro’s operating income was generated from its IT Services. In Fiscal 2009, IT products represented 3% of its operating income, and consumer care and lighting, and others represented 3% of operating income. The Company’s IT services segment provides a range of IT and IT-enabled services. In January 2009, Wipro Technologies acquired Citi Technology Services Ltd. (India), the India-based captive provider of technology infrastructure services (TIS), application development and maintenance services for cards, capital markets and corporate banking.

Similarities: 1. Require knowledge transfer of the organization's business processes 2. Involve migration of jobs (along with some people too) to another country 3. Necessitated by business compulsions such as cost reduction or shortage of resources 4. Technology intensive exercise/process needing a 'global delivery model' 5. Requires structured migration process to minimize the probability of failure 6. ITO and BPO Partners are both affected severely by attrition in the workforce Differences: 1. Skills required in the people are different - IT requires strong technology focus while BPO requires strong process understanding focus 2. Replacement of resources (on account of attrition) is easier and cheaper in BPOs than ITOs 3. ITO staffing strategy is to hire "trained people" whereas BPO staffing strategy aims to "hire the crowd and train them" 4. ITO results in loss of jobs to "knowledge workers" - but they don't care since they can get plenty of jobs elsewhere; BPO results in loss of jobs to lower skilled "process workers" - often they do not have anywhere else to go

ITO - Information Technology Outsourcing BPO - Business Process Outsourcing

These are two heads, ITO is bent towards technology i.e. software outsourcing, whereas BPO is inclined towards process outsourcing.

When we say process that could be functional (admin, HR, accounts) shared by all the industries or technical depending upon each industry and skills required.

Moreover, the KPO>RPO>MPO>PPO>EPO and all the newbies are parcel of niche industries vis-a-vis skills required.

Case 2

PERU

What are some current issues facing Peru? What is the climate for doing business in Peru today?

During the 1970s, the Peruvian government nationalized a number of industries and factories and began running them for the profit of the state in most cases, these state – run ventures became disasters.

Peruvian government are facing problem with lack of advance and latest equipment for both locating as well as catching and then loading and unloading the fish.

Peruvian government might step in during the next couple of years and again take over the business. If

this were to happen, it might take an additional decade for the loan to be repaid. If the government

were to allow the fleet owner to operate the fleet the way he has over the last decade, the fleet the way

he has over the last decade, the loan could be repaid within seven years.

Peru is located on the west coast of South America

What type of political risks does this fishing company need to evaluate? Identify and describe them.

Political Risk can be divided into several types of threats.

Interference with operations Confiscation(they take a piece of equipment)

Expropriation (they take the whole company)

Nationalization(they take all the companies in a business sector)

Economic instability, which effects production

Currency Repatriation, not being able to get your money out

Currency  Inconvertibility, not being able to exchange your money for another currency of international value (yen, dollars, pounds)

Contract Repudiation

Persistent and deliberate refusal ...to honor obligations as set forth in a Contract...”

What types of integrative and protective and defensive techniques can the bank use?

Some prevention techniques apply to individual banks, independently of the rest of the economy.

* A bank can take deposits from depositors who do not observe common information that might spark a run. For example, in the days before deposit insurance, it made sense for a bank to have a large lobby and fast service, to prevent a line of depositors from extending out into the street, causing passers-by to infer that a bank run is occurring.[1]

* Banks can encourage customers to make term deposits that cannot be withdrawn on demand. If term deposits form a high enough percentage of a bank's liabilities its vulnerability to bank runs will be reduced considerably. The drawback is that banks have to pay a higher interest rate on term deposits.

* A bank can temporarily suspend withdrawals to stop a run; this is called suspension of convertibility. In many cases the threat of suspension prevents the run, which means the threat need not be carried out.[1]

* Bank regulation or other constraints can impose a reserve ratio requirement, which limits the proportion of deposits which a bank can lend out, making it less likely for a bank run to start, as more reserves will be available to satisfy the demands of depositors.[5] This practice sets a limit on the fraction in fractional-reserve banking.

* Full-reserve banking is the hypothetical case where the reserve ratio is set to 100%. Under this approach, the risk of bank runs would be eliminated,[11] and banks would match maturities of deposits and loans to avoid vulnerability to runs.

Would the bank be better off negotiating the loan in New York or in Lima? Why?

We can think like that New York Bank is in better position to do negotiation with Lima in their own terms and condition. The biggest problem is that the ships are getting old and they needs an influx of capital of make repairs and add new technology. As they explained it to the new York banker. “Fishing is no longer just an art. There is a great deal of technology involved. And to keep costs low and be competitive on the world market, you have to have the latest equipment for both locating as well as catching and then loading and unloading the fish”

Case 3:

RED BECOMING THICKER

Why that Coke is has not been able to make profit in its Indian operations?

Coca-Cola's operations in India have come under intense scrutiny as many communities are experiencing severe water shortages as well as contaminated groundwater and soil that some assert [18] are a result of Coca-Cola's bottling operations. A massive movement has emerged across India to hold the Coca-Cola Company accountable for its actions. The state of Kerala imposed a ban of colas from the state only to be quashed by Coca Cola; the matter is pending in the supreme court.[citation needed] The Plachimada plant in Kerala state, one of Coca-Cola's largest bottling facilities in India, has remained shut for 17 months now because the village council has refused to renew its license, blaming the company for causing water shortages and pollution.

In the initial period of setting the business in India, the COKE was not able to make profit fromthe Indian operation. This is due to a number of factors.

The local population is not accustomed to drinking cola drinks. The market needs to be developed. The initial bottleneck was the lack of adequate network of distributors. Product distribution was weak. The poor distribution created negative impaction the market growth. Volume was low. Overheads were growing. The operation profit was negligible.

Do you think that Coke should continue to stay in India? If yes, why?

I would like to mention some points if in order Coke wants to continue its operation in India.

The allegations in other ways helped Coca-Cola Company, India to show their corporate social

responsibility and to maintain good product quality standards. The initiatives all over India helped them

reach villages for a good cause and also indirectly marketed their products with establishing a trust

among the public. After all these allegations, the CSE is still not convinced of the quality of the product.

Therefore, Coca-Cola must prove that they have upgraded their lab with sophisticated instrument which

is capable of measuring pesticide residue in soft drinks. As per the recent reports by CSE, they claim that

the pesticide residue has gone up 27 times higher than expected level by the Bureau of Indian Standards

(BIS)

Coke is facing different type of problem in which some are mention below

Critical Issues/Problems:

Solid waste and water issue: The communities near the bottling plant in India complained about the

passage of sludge as fertilizer, causing health and environmental damage. The most important issue

concerning these communities is the depletion of water levels caused by the Coca-Cola bottling

operations which have drastically reduced availability of water for irrigation purposes.

Pesticides in soft drinks: The other issue concerning human health caused by Coca-Cola is that their

bottled water and soft drinks contain pesticides which were tested by the reputed NGO, CSE.

Dual product standards: Coca-Cola is accused of having dual standards in terms of their products and

safety measures concerning human health with respect to USA, Europe and India.

Community issue: These allegations affected Coca-Cola largely with its sales and also caused the closure

of one of their bottling plants in Kerala, India. Additionally, Coca-Cola’s products are banned in the state

of Kerala, India.

What cultural adaptations would you suggest to the US expatriate managers regarding their management style?

A key reason for the return of expatriates before the official end of their foreign assignment is the uncertainty and frustration resulting from poor cross-cultural adaptation. The literature provides this general, normative view without much to say about the interpersonal conflict expatriates experience in the workplace abroad caused by cultural differences. Our exploratory study finds that conflicts with co-workers in host countries occur frequently causing high stress and discomfort, and provides three specific sources of conflict as recounted by sample managers. The implications of our findings include: selecting expatriate managers with high emotional intelligence, providing extensive pre-departure cultural training that consists not only of cultural facts but also interpersonal skills such as active listening, conflict management, and ethical reasoning, utilizing sensitivity training techniques to better prepare managers for new situations, and sending the expatriate on one or two pre-sojourn visits to familiarize themselves with the host culture and workplace norms even before the actual expatriate assignment begins. An additional implication is training the host-country workers, particularly those who will work most closely with the expatriate manager, on home country cultural beliefs and workplace norms. We aim to stimulate managerial thinking and further research on the workplace conflicts that challenge expatriates managers.

Using the Hofstede and the value orientations cultural models, how can you explain some of the cultural differences noted in this case?

When business consultants and professionals in the field of workplace learning and development discovered Hofstede's dimensions, applications began to emerge in many areas. The following are merely a few examples of how the field has translated the abstract theory into a series of concrete approaches. In expanding their market to the global level with clear and consistent global brand images across nations, marketers are ever confronting the issue of how to deal with different cultural values. Cultural value is identified as an influential factor on brand image and is widely accepted as one of the crucial concepts in understanding consumer consumption value, which determines choices of consuming everyday products and services. Most firms endeavoring to establish and maintain consistent global brand images, however, adopt a standardized brand image strategy that usually does not consider individual target markets characteristics, including the concepts of cultural value and consumption value. This study developed a conceptual framework which incorporated cultural value not only as a direct antecedent of brand image, but also as an indirect antecedent of brand image through consumption value, and empirically tested it using the category of apparel. Following this framework, this study hypothesized the differences in brand image, cultural value, and consumption value between the U.S. and South Korea. Data were gathered through surveying university students residing in the San Francisco and Seoul metropolitan areas using a convenience sampling method. A total of 329 completed questionnaires were used in factor analysis, discriminant analysis, and structural equation modeling. The results provide insights into standardized brand image strategies and suggest some implementable tools that might prove effective in both countries.

Case 4

THE ABB PBS JOINT VENTURE IN OPERATION

Where does the joint venture meet the needs of both the partners? Where does it fall short?

"One of the most common instances that encourage learning and sharing is cultural differences. In the case study involving the ABB PBS Joint Venture the two companies found it rather difficult to understand certain cultural differences. These differences existed because the managers and employees of the venture were from the post-communist country of the Czech Republic and were new to the structure of a free market economy. The venture had a difficult time interacting and understanding the culture of the European nations that they were conducting business with. To facilitate learning and knowledge the managers of the venture had to change the mentality of employees and develop ways to motivate them to reach the goals of the company. ("The ABB PBS Joint Venture in Operation")"

What lessons one can draw from this incident for better management of technology transfers?

Technology transfer is the process of developing practical applications for scientific research. It is a term used to describe a formal transfer of rights to use and commercialize new discoveries and innovations resulting from scientific research to another party.

It is, regrettably, not uncommon to find big companies and major industrial concerns in the developed countries turning a blind eye to the ethical questions when it comes to technology transfer. The need to show profits, the desire to please shareholders and the compulsion to transfer technology to the South, whatever the outcome, have blurred the vision and concept of fight and wrong.

Mahatma Gandhi said the solution in India is not mass production, but production by the masses. Mass production by organized industry has brought in sophisticated technology and militant trade unions, and has been one of the major factors for migration from the rural to the urban areas. The establishment of small scale industries, and better facilities for the rural workers, will ease the tension in the cities and reduce migratory pressures - but it will mean less profits.

This ill-conceived approach has almost destroyed indigenous institutions. The technology input from the developed countries should have strengthened, supplemented and supported the existing, proven structures instead of replacing them.

It has increased dependency on the outside, for spare parts, for expertise and for consultation, thus controlling and co-opting rather than decentralizing and disseminating. People forget that what is best and most sophisticated could easily be a ball bearing on bullock cart wheels, or a simple set of hand tools for village blacksmiths.