International Business Report: Vauxhall's India Market Strategy

This report delves into the international business landscape, focusing on Vauxhall's potential for global expansion. It begins with an executive summary, followed by a company profile and a critical analysis of international trade theories, including absolute and comparative advantage, and the impact of globalization and protectionism. The report examines the role of the World Trade Organization (WTO), its benefits, and the impact of Brexit on UK-based companies. Based on its analysis, the report identifies India as a promising market for Vauxhall and recommends an internationalization strategy, considering logistics and special economic zones. The report concludes by summarizing the key findings and recommendations, emphasizing the opportunities and challenges for Vauxhall in the global market. Reference list and table of contents are also included.

Running head: INTERNATIONAL BUSINESS
International business
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Executive summary
The aim of this report is to discuss about the role of world trade organization in the international
business between the countries. It is identified that they are more biased towards the developing
countries. In addition, the major determining factors for the business organizations in operating
in the foreign countries are also being critically analyzed in this report. This report recommended
that Vauxhall is having the requirement for increasing their business in the foreign countries and
India will be the most potential country or market for them. There are number of advantages
being discussed in this report that proves that India will pose huge opportunities for Vauxhall.

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Table of Contents
Introduction......................................................................................................................................3
Company profile..........................................................................................................................3
Critical analysis of the international trade theories.........................................................................4
Theory of advantage....................................................................................................................4
Globalization................................................................................................................................4
Protectionism...............................................................................................................................6
Role of World Trade organization...................................................................................................7
Benefits of WTO memberships...................................................................................................8
Impact of Brexit...............................................................................................................................8
Identification of the potential country.............................................................................................9
Recommended internationalization strategy of Vauxhall................................................................9
Logistics process........................................................................................................................10
Special Economic Zones............................................................................................................10
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................12

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Introduction
International trade and business is the most critical success factor for the contemporary
business organizations. This is due to the reason that in the current era of globalization, entire
world had become accessible for the business organizations and they are having the opportunities
of tapping the global market in large. Thus, the business opportunities for the contemporary
multinational entities are more than it was a decade ago. However, on the other hand, it should
also be noted that with the increase in the level of opportunities, the challenges are also getting
increased for them (Clarke, Tamaschke and Liesch 2013). There are number of factors that
should also be considered in getting succeeded in the international business scenario. Some of
these factors are based on the internal aspects of the entities, while some of them are purely
based on the external scenario.
This report will discuss about the different theories relevant in the current trends of
international business and that are having impacts on the trade opportunities for the companies.
In addition, this report will also discuss about the role of World Trade Organization in the global
business along with the impact of Brexit on the business of the United Kingdom based
companies. Based on the different data and statistics, the host country will be selected along with
the entire process of logistics.
Company profile
Vauxhall is the one of the largest and oldest car brands in the United Kingdom and they
are currently offering large varieties of automobiles to the market. Vauxhall is majorly operating
in the mass market urban segments and thus they are having better chance of getting succeeded
in the global market as well. They are owned by PSA group of France and currently serving only

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the market of the United Kingdom. However, in the growing competition in the United Kingdom
automobile segment, it is important for them to tap the foreign markets in order to maintain their
market status and business. The following sections all the concepts and theories in relation to the
international business of Vauxhall and will recommend a specific country for targeting.
Critical analysis of the international trade theories
Theory of advantage
One of the major determining factors in the current international trade process is the
absolute advantage. This theory was originally coined by Adam Smith and states about the
specific advantages that can be gained in operating in a particular country and these advantages
are not available in doing business in other countries. According to Seretis and Tsaliki (2016), it
is important for the business organizations to look out for the absolute advantage prior to
selection of the host country. This is due to the reason that if the business entities can have
proper advantages in doing business in a foreign country, then only their foreign investment will
be viable and they can gain competitive advantages. However, on the other hand, it is stated by
Tsaliki, Paraskevopoulou and Tsoulfidis (2017), that this in the current business scenario, this
concept is not applicable. This is due to the reason that absolute advantage cannot be gained by
the entities from the particular country rather contemporary business organizations are working
on the basis of comparative advantage. This refers to the concept of having more advantages in
doing business in a particular country compared to others. Thus, the business can be done in
different countries but the countries with most opportunities are to be selected.
Globalization

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Theory of globalization is much complex in nature and in the current time, this theory is
being further disintegrated in different perspectives. According to Scott (2013), one of the major
types being practiced in the recent time is political globalization. This refers to political
cooperation and understanding between the countries in accomplishing the common goal. For
example, WTO and UN are the outcome of political globalization. This can help the business
organizations in having the common political scenario in doing business in different countries. In
this case, Bartels (2013) stated that free trade agreements are the result of political globalization.
This is due to the reason that free trade agreements are being initiated by the countries to enable
the companies in not having any import or export barriers. Thus, it is important for the business
organizations to look for the political globalization level of their selected host country to have
lower barriers and higher opportunities in their foreign business.
On the other hand, it is stated by Nica, Manole and Potcovaru (2016) that apart from the
political globalization, economic globalization is much relevant in the current business scenario
This is due to the reason that each of the countries in the current time are involved in global
trading process with importing their scarce goods and exporting the surplus. Thus it is important
for the business organizations to align with this pattern of the economic globalization and invest
accordingly. This is due to the reason that they should have the capability of producing using the
surplus resources available in one country and exporting them to in the country in need.
According to Gunasekaran et al. (2015), outsourcing is the most popular concepts being followed
in the current time in relation to the economic globalization. This refers to the strategy of
transferring a portion of the job or process to the foreign country in order to reduce the operating
cost. For example, the cost of IT services in India and China is less compared to that in the
United States and thus majority of the companies from the United States have outsourced their

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IT process to these countries in order to reduce their internal cost. Hence, with the help of the
outsourcing process, economic globalization can also be gained.
Figure: 1
Current trend of outsourcing
Source: (outsourcinginsight.com 2019)
Protectionism
However, even though the popularity of globalization is ever increasing across the world
but the trend of protectionism is in rise. As per Kim (2016), protectionism can get emerged when
the countries starting to face challenge from the emergence of globalization. For example, there
are number of instances where the economy or the domestic industry of the particular country
got affected due to the increased competition by globalization. The recent tariff imposition by

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Donald Trump on the steel import from China is a prime example of protectionism. This is being
considered as one of the major barriers in the international trade due to the fact that the trading
company will face the challenge if the few goods are being restricted from the global trading
process.
Role of World Trade organization
World Trade Organization is umbrella body for almost all the countries across the world
that looks after the trade disputes between the countries and ensuring lower sets of barriers in the
global trading process. All the member countries of the World Trade Organization are being
involved in the consensus based decision making process and they are bound to follow the
standard rules set by the body. One of the major advantages of the World Trade Organization is
one to one dispute resolving mechanism. This refers to the process of involving only the two
parties in the dispute and resolving their matters. It should be noted that United Kingdom is one
of the earliest members of this body and there are certain benefits being gained by them.
However, on the other hand, there are number of criticisms also be faced by the World
Trade Organization in respect to their different treatment to different countries. According to
Mitchell (2013), it is stated that World Trade Organization is often accused for biasness towards
the developing countries by the developed countries. This is due to the fact that WTO is having
the provision for the developing countries in gaining the flexibility in aligning with the trade
conditions. This is being done in order to ensure the equality between the developed and less
developed countries in the global trade. For instance, India and China are largest beneficiaries
from the World Trade Organization due to the flexibility being gained by them. This is helping
them to impose duties and tariffs even if they are enjoying the free trade with other countries.

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Benefits of WTO memberships
According to Davis and Wilf (2017), one of the major benefits being gained by the
United Kingdom from their membership in World Trade Organization is having the access to the
standard process of resolving the trade disputes rather than opting for more aggressive means.
This is due to the reason that there are number of global conflict being aroused due to the trade
disputes between the countries. Thus, with having the membership of the World Trade
Organization, United Kingdom can resolve the trade disputes with another country in most
effective manner.
On the other hand it is stated by Hoekman (2014) that membership with the World Trade
Organization is also helping the United Kingdom in facing lower sets of volatility in the
international business. This is due to the reason that with the help of the standard rules and
regulations of World Trade Organization, United Kingdom will have proper determination of the
challenges to be faced in doing business with another country and accordingly they can opt for
the foreign business. This will in turn benefit the organizations from the country as they will be
able to determine the potential threats and opportunities prior to investing in a particular country.
Impact of Brexit
According to the report of the Bank of England, Brexit will cause increase in
approximately 10 percent of the price of the vehicles sold in the United Kingdom. This will have
negative impact on Vauxhall due to the reason that with the increase in the average inflation rate,
the purchasing power of the buyers will get reduced and it will reduce the business opportunities
for Vauxhall as well. According to Busch and Matthes (2016), initiation of Brexit will increase
the cost of exports for the UK based companies. This is due to the reason that if United Kingdom

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leaves the European Union, they will also lose the free trade agreements with the other European
countries and import tariffs will be imposed by them. Thus, the UK based companies will lose
out a huge chunk of foreign business. Thus, it can be concluded that Brexit will have majorly
have negative impacts on the business of Vauxhall.
Identification of the potential country
Based on different factors and perspectives, it is recommended that India will be the most
potential country for foreign business for Vauxhall. This is due to the reason that India is the
fourth largest automobile market in the world, which denotes the huge market potentiality for
Vauxhall. However, it should be noted that currently India and United Kingdom is having any
free trade agreements but unofficial talks between them have already started mainly due to the
Brexit. Thus, it can be expected that both these countries will have some sort of free trade
agreements in the coming few years. It is reported that export from UK to India got increased by
more than 30 percent between 2017 and 2018 (worldbank.org 2019). This denotes that positive
pattern will prevail in the coming years also. According to the data of World Bank, 22 percent of
the total GDP of India is valued at imports, which denotes that huge amount of imports in the
country (worldbank.org 2019). It is should also be noted that India is the top most country in the
world in terms of the economic growth and this will be a huge opportunity for Vauxhall in their
doing business in India. This situation coupled with the enormous population in India will
provide more business opportunities for them than they have in their existing markets
Recommended internationalization strategy of Vauxhall
It is recommended that they should have subsidiary in the Indian market and this will
involve foreign direct investments. This is due to the reason that Vauxhall is operating in the

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mass market customer vehicle segment and this segment is highly price sensitive. Hence, direct
exporting strategy will not be effective due to the fact that it will increase the end price. On the
other hand, initiation of the direct investments will help Vauxhall to have their physical presence
in the Indian market. However, it is also recommended that in the initial stage, they should only
have assembly line in India rather than having the full fledged manufacturing operation
(Blonigen and Piger 2014). This is due to the reason that initial stage of the operation of
Vauxhall in the Indian market will be risky affairs. Hence, It is recommended that they should
important the parts of the car models in completely knocked down units (CKD) and will
assembling them in the Indian facility. This will reduce the risks for Vauxhall in relation to their
foreign investments along with regulating the cost of operation. However, in the later stage, the
full fledged manufacturing units should be initiated by them to offer the cars in more competitive
price point.
Logistics process
In terms of the logistics process, it is recommended that waterways shipping lines should
be initiated due to the reason that it will be the most cost effective option for Vauxhall. This
should also be noted that multi modal process of logistics will be followed by them due to the
involvement of waterways, railways and roadways in the process. Railways and roadways will
be opted from the port of destination to the final end. This will ensure that Vauxhall is having
last mile connectivity and penetrated market reach in India. Maerks Line will be partnered due to
the reason that they are having larger distribution in India and thus they will be able to ensure the
extensive market presence of Vauxhall’s inventory.
Special Economic Zones

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Under the Make In India initiative by the government, special economic zones are placed
where investment will help Vauxhall to have tax benefits up to 3 years of inception with proper
infrastructural facilities. Investment in the special economic zones will help Vauxhall to reduce
their cost of operation in the initial stage. It should be noted that India is having free trade
agreements under the SAARC regime in the South Asian region. Thus, manufacturing in India
will also help Vauxhall to avail the benefits of catering to the neighboring countries as well.
Conclusion
This report concludes that India will be most potential country for the foreign business
operation of Vauxhall due to different advantages to be gained. These advantages are being
discussed in this report. In addition, the critical factors that will determine the success probability
of the international trade and business are also being critically analyzed in this report. It is
concluded that considering the biased approach of the World Trade Organization towards the
developing countries, Vauxhall will gain benefits by doing business in India and trading with
other developing countries in the South Asian region. This report also discussed about the proper
and ideal logistics process to be followed by Vauxhall in operating in the Indian market. This
will include multi modal modes of transportation to achieve the extensive market penetration.