Elfin Sports Cars Pty Ltd: International Expansion Strategy for India

This report analyzes the international expansion prospects of Elfin Sports Cars Pty Ltd, an Australian sports car manufacturer, focusing on the Indian market. It begins with an executive summary, followed by an introduction outlining the company background, its product range, and its current market position. The report then delves into a macro-environmental analysis of India, evaluating political and legal factors, economic conditions, and cultural aspects to assess the viability of expansion. Furthermore, the report examines the ethical and social responsibility considerations relevant to the company's operations in India. The conclusion provides recommendations for Elfin Sports Cars, suggesting a phased approach to market entry, beginning with exports and later establishing a manufacturing unit to secure a stable market share. The report emphasizes the potential of the Indian market, especially in the BRICS nations and highlights the challenges and opportunities for the company.

RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
Executive Summary
Globalization has allowed multiple companies to expand their area of operation.
However, the process of internationalization requires companies to evaluate host country
possibilities. The current case analysis includes the Company Elfin Sports Car Pty Ltd. Through
macroenvironment analysis of India, the Company can easily expand in other countries. India is
one of the fast growing markets amongst the BRICS nations. The country offers limited
challenges politically, legally, culturally and has a large consumer market. This offers lucrative
opportunity for the Company to expand its operations in India. A CSR analysis of the Company
has been conducted to understand ethical and other concerns that the company conducts. In the
end certain recommendations has been provided to the company, which states that the Company
need to diversify its operations through export mode initially and then set up manufacturing unit
in India. This will allow the Company to have a stable market share within India. Once the
Company has gained success in India, it can aim at diversifying at other BRICS nations as well.
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
Table of Contents
Executive Summary.........................................................................................................................2
Introduction to the report.................................................................................................................4
Brief company background including why it might consider overseas expansion.........................4
Brief introduction to chosen country...............................................................................................5
Political & Legal Analysis...............................................................................................................6
Economic Analysis..........................................................................................................................7
Cultural Analysis.............................................................................................................................7
Ethics and Social Responsibility.....................................................................................................8
Conclusions....................................................................................................................................10
Reference List................................................................................................................................11
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
Introduction
Globalization has offered tremendous prospects to companies to expand on their products
and services (Van Wormer & Besthorn, 2017). Technological advent has further added to such
impetus allowing companies to globalize easily. The current scope of analysis deals with an
Australian sports car maker, Elfin Sports Cars Pty Ltd’s plans to operate in overseas markets.
Expanding across international countries can allow enhancement of the Company’s sales,
revenues and profits. It would also allow the Company to extend its brand name to a broader
spectrum of customers. The current analysis details aspects of company’s expansion with
evaluation of the country specific factors in which it will consider expanding to (Levermore,
2008). Moreover, a corporate social responsibility evaluation of Company is also taken into
consideration.
Company Background of Elfin Sports Car Pty Ltd
The sports car company was founded by Garrie Cooper in the year 1957. It current
headquarters is based in Melbourne. The Company manufactures several types of motor racing
sports car. Its parent company is Walkinshaw Performance. The Company is currently owned by
the estate of former British racing driver Tom Walkinshaw. The Company constitutes one of the
oldest sports cars making company in Australia. The Company has won over 29 championships
with major Grand Prix titles.
Company Philosophy
The Company’s philosophy is to manufacture some of the best and fastest sports vehicles.
Product Range
The company is focused on manufacturing of sports automobiles only. Some of its
current models include MS8 Streamliner, MS8 Clubman, T5 Clubman.
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
Customers
The customers of the Company includes sports racers, sometimes general consumers also
makes purchase of sports automobiles.
Distribution
The Company has a showrooms located at various places in Australia with its
headquarters in Melbourne.
Overseas Expansion
The Company has not yet expanded to any overseas country. In case the Company aims
at making this expansion, it will be the first expansion of the company, as till date it had been
operating at various locations within Australia.
Introduction of India
The organization has currently decided to expand in India, which is amongst one of the
fast growing economies in the BRICS nations. The robust population and gradual increase in
GDP provides a promising opportunity for the Company (Adlakha, Hipp & Brownson, 2016).
The Company evaluating various countries amongst the BRICS nations selected India. The
country India is an Asian nation with dense population. Increase consumer spending and
presence of large number of service industry makes it an attractive country. Recently, there have
been increased focus of sports activity in the country which has led to spending on stadiums,
racing tracks, training sports-persons and so on (Luthra, Kumar, Kumar & Haleem, 2011). There
are present very few sports car manufacturers in the country and maximum automobile
manufacturers produce passenger vehicles such as SUV, TUV and hachbacks. Demand in sports
cars has recently spurted in the country with consumers importing vehicles from Germany, USA
and elsewhere in the world. Mercedes Benz has set up a small manufacturing and assembling
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
unit in India, however it does not manufacture sports cars designed specifically for the country
(Ray, 2011). This offers the Company with a relatively virgin market for sports automobiles. The
Company can either set up its manufacturing unit within the country or import some of its
models to India. It needs to decide upon its mode of expansion by evaluating macroenvironment
factors present within the country as analysed below.
Macro environmental Analysis of India
Political & Legal Analysis
Prior to expand in any country, it becomes important to evaluate macro-environmental
scenario within the host country (Abel, 2014). India's political situation can be considered stable.
India is a democratic country with immense political challenges. Currently the ruling party in
power is NDA, which is in favor of business setting up within the country. It is a federal
democracy that includes political stability and an effective government policy.
However, there are high amounts of bureaucratic interference within the businesses
established in the country. The political elements relate to economic policy, goods and services,
key economic policy areas, education and employment policy and infrastructure decisions. With
high levels of corruption and taxes, the country though with large number of consumers, offers a
tough battleground for offshore companies. The privatization of India has taken into account a
number of professional practices. Deregulation, preservation and subidation (privatization in
South Asia). Currently there is certain impetus which is being given to businesses for setting up
their operations in the country. India has shrunk its corporate governance policy, which will
increase efficiency and increase activity.
Legal and judiciary situation prevalent within India has been often deeply criticized.
Though there are extensive laws, rules and legislations in the country, the judiciary system
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
remains rather slow (Galanter, 2018). With thousands of pending cases in each court, companies
can literally have their way around the legal system. There are labor laws, company
establishment laws and other necessary legislation required for setting up businesses and in
conducting them. The process of getting compliance if often lengthy and might take years to get
ready.
Economic Analysis
Economic analysis of India reveals that the country has a depreciating currency with high
rates of interests prevalent. Since 1991, India has moved towards industrial policy. The market
system within the country is rather un-regulated and only recently there are various norms which
are getting implemented. Economic factors include interest rates, tax changes, economic growth,
inflation, and the exchange rate. Consumer inflation within the country remains high most of the
times within a year. However, the economy is mainly growth driven from its agricultural and
service sector, which comprises of the major contributor to the economy. A well-organized tax
system in India. The country has emerged to become hubs for manufacturing a number of
products such as automobiles, mobile phones, steel and so on. In addition, the uncertainty created
by the decision-making process as distributors deposit money with the borrowers. There are
several different taxes or mandatory contributions in India. These include taxes on income, social
security contributions, employee social security contributions, taxes, property taxes, fuel taxes,
contracts, insurance taxes, VAT debt CENVAT (taxes, taxes, education), secondary and tertiary
taxes. The Indian tax system is believed to promote trade expansion. Recently, all taxes were
merged for various goods to form the GST (goods and service tax). The robust economy of the
country is driven by the large mass consumption within the country. Companies from all over the
world flock to India to sell their products there. The Indian economy has a huge gap between the
rich and the poor class, with the middle class occupying a sizable portion of the population. The
middle and upper-middle class is the fore-runner for the robust growth in consumer demand
experienced by the country. Inflation is a requirement for pricing. After inflation, India's
inflation is likely to be in the range of 8.5-9.0% of income distribution.
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
Cultural Analysis
Cultural and social analysis of a country is integral as it allows revealing consumer
characteristics within a country. Social changes in the sector have a significant impact on the
demand for business products and the availability and readiness of workers to work. India is
culturally diverse country, with each region having their own individual culture. Due to the
vastness of the country, it is almost impossible to comment on the culture of the country. The
population of one billion people is 31.8% under 14, 63, 1% 15-64 and 5.1% over 65 years. Most
of the population is class.
The diversified culture and society offers companies an ideal consumer mix such that
they can offer their products (Zalengera, Blanchard, Eames, Juma, Chitawo & Gondwe, 2014).
The country in the past had conservative culture system, however recent urbanization and
influence of Western world has had tremendous impact on the country. The social structure of
the country is evenly spread out to include large number of young consumers. The country has
an ideal mix of young adult and old age population. This allows products from varied companies
sold within the country. Indian cultural differences when moving from one country to another. If
Sunday is a day away to see the world, it is not temporary with Indian culture, as on Friday as
free. The rise of the urban India has led to a demand of number of luxury products within the
country. Earlier sports car was a demand amongst the very rich people of the society. However,
recently there is an upsurge demand amongst the service class as well.
Ethics and Social Responsibility
Corporate social responsibility encompasses a broader term to include several areas
where a country or a company creates positive impact on the society. Evaluation of ethical and
CSR issues within India can reveal various facts operational within the country (McWilliams,
2015). India rates low on transparency index, implying that rules, regulations and other
implications are not clear. India has prevalence of high rates of various crimes and corruption,
which has tinted the image of the Country’s ability to attract business opportunities or
investments. Though recent trends depict much tighter norms and practicing of such norms yet
the country needs to adhere to stringent policies so that international businesses can operate
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
effectively. International corruption index score of India is high and is comparative with that of
China, Brazil and other developing nations. Such high scores have failed to attract leading
business players to set up business in the country and operate them. India ranks 81st in
Corruption Perception Index conducted in the year 2017.
Figure 1: International Corruption Index
There are high implications from cultural differences impacting values and belief
perception to drive decision within the country. The country’s majority population mainly
follows some spiritual leader or the other (Lindgreen & Swaen, 2010). This system of belief
system governed by spiritual leaders has immense impact on the ethical system thereby
impacting business within the country.
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RUNNING HEAD: ELFIN SPORTS CARS PTY LTD INTERNATIONAL EXPANSION
Conclusions / Recommendations
The above analysis reveals that India can offer a suitable destination for the Company to
offer its products. The macro-environmental analysis reveals trends that India is a prosperous
country and can emerge to be a leading nation within the next decade. With large number of
consumers and consumer propensity to spend, the country can provide a lucrative position for the
Company. Some recommendations that the Company could adhere to, includes the following;
 The Company can set up export operations to the country initially and later
expand into setting up a manufacturing hub.
 The Company can design specific models of sports cars that suit the taste of
Indian consumers. Through data analytics of Indian consumer it is possible to
arrive at conclusion regarding Indian consumer wants and needs.
 Initially the Company could introduce a low priced model that could easily be
accepted in the Indian markets. Using product mix strategy, the Company
would be able to build a stable market share easily.
 In order to expand its market in the Indian subcontinent, service centers to
compete with Indian automobile manufacturers have to be set up. Non-
availability of spare parts and services can lead to company failure within any
country.
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