JCB in INDIA |
Case Analysis |
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When JCB planned their expansion to India in 1979, it was calculating the growth potential in the huge developing economy of India. JCB was forced to enter into a joint venture with Escorts because the prevailing laws at that time did not permit a foreign company to directly invest in India. Due to these restrictions, a JV was formed with Escorts for selling the construction ...view middle of the document...
The JCB did not have a majority stake in the JV as the law did not permit such an arrangement. The JCB was afraid that Escort would eventually become a competitor to them if they lose their competitive advantage in the technological capability.
The JV had limited the expansion capabilities of JCB to a great extent. Product innovation and cutting edge manufacturing capabilities are the strengths of JCB. They were not ready to share this technology to an outsider which had greatly limited their future growth. Even if they license the Escorts to use their technology, JCB estimated that the Escorts could develop into a potential competitor if they have access to the technology.
After 2005, the laws have been relaxed which helped JCB to acquire Escorts and gained full control over its operations in India. They have opened a second factory in China to help its expansion in India and China. Their expansion has helped them to gain advantage over the competition from other global competitors like Caterpillar and Volvo.
The drawback for the strategy if any for JCB is that being a pioneer to the Indian market, they must use their resources to rapidly develop a stronghold in India. They must capitalize on their experience in the country with their long vintage in the market.