International Business: A Case Study of JCB's Strategy in India

This case study provides an in-depth analysis of JCB's international business operations in India, focusing on the benefits and risks associated with operating under the Modi administration's 'Make in India' scheme. It examines the key success factors behind the JCB-Escorts joint venture, highlighting JCB's early entry into the Indian market, strategic technology management, and ability to capitalize on government relaxations for foreign direct investment. The analysis covers JCB's growth from a minority shareholder to a fully owned subsidiary, emphasizing the company's risk-taking attitude and its effective navigation of the Indian business environment. The study also explores the advantages JCB gains from low-cost labor, technological advancements, and streamlined regulatory processes under the 'Make in India' initiative, while noting the minimal risks due to JCB's established presence and the government's supportive policies for foreign investors. This comprehensive case study offers valuable insights into international business strategies and market dynamics in India.

Running head: INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
International Business – Case Study Analysis
Name of the Student
Name of the University
Author Note

1INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
1. Understanding the Benefits of doing Business in India under the Modi
Administration and the Risks Pertaining to the Same
JCB is a British manufacturing company that has grown and evolved from having only
forty percent shares in the collaborative venture that it entered into with Escorts in 1979, for
the production of backhoe loaders that would be sold in India, to taking full control over this
venture by procuring the majority shares needed to for this purpose in the early years of the
decade of 2000’s. By the year of 2016, the company had managed to expand into
considerably, owning as many as 450 machines compared to the 120 that it owned in 2001,
having as many as 275 outlets all over India, engaging with as many as sixty dealers and
occupying fifty percent of the Indian market.
Under the Modi regime, the opportunity for JCB to do good business in India is ripe,
given the many benefits that are associated with the Make in India scheme that has been
launched by the Modi administration to encourage foreign direct investment in India. The
Make in India scheme for foreign direct investment is a type of Swadeshi scheme which
covers as many as twenty five different sectors of the Indian economy. This is a scheme that
was launched by the Indian government on the 25th of September in the year of 2014, in order
to encourage foreign companies to produce or manufacture products in India, enthusing
dedicated investments into the process of manufacturing. The Make in India scheme is in
essence an international strategy that has been created for responding to both global as well
as local challenges through world class knowledge infrastructure and manufacturing status,
creating all the knowledge and expertise that is needed in order to take on global competitors
easily.
One of the biggest benefits of doing business in India under the Make in India scheme
for JCB is the fact that it can set up factories and workshops in India now for very low

2INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
prices. As a part of this scheme, which has mainly been designed to attract foreign direct
investment into India, JCB can take advantage of low priced plots of land and warehouses
and acquire these in order to carry out its manufacturing activities in the country, bringing
about a reduction in costs of manufacture by a considerable extent. JCB can save a lot of
money that it would have otherwise spent on the acquisition of factory outlets and workshop
warehouses, thus investing less and gaining more from the entire process of foreign direct
investment in India, far more than it had done in the past, in spite of the many relaxations that
had been introduced by the previous governments.
As a part of the Make in India scheme the JCB Company can hire labor for far lower
rates than it had been able to in the past, primarily because a plentiful supply of labor will
be made available to all foreign companies intending on starting or expanding existing
operations in India as a part of the Make in India scheme. Apart from being able to rely on
an efficient and effective workforce that will get a lot of the work done for the company at a
reduced price, the JCB Company will also be able to take advantage of a young and well
skilled labor force by investing more in its manufacturing activities in India under the Make
in India scheme. Many of India\s youth today are foreign returned, in the sense that they
have acquired degrees and diplomas from universities abroad and thus possess all the skills
and the expertise that is needed in order to serve a global company like JCB, in the best
possible way. With such a skilled workforce at its disposal, JCB will be able to take on global
competitors through its manufacturing activities in India in the most effective manner.
The Department of Commerce of the Indian administration are carrying out
regulatory clearances in the shortest possible time span for all foreign direct investors,
and the JCB Company is going to be no exception. While the company may have had a
considerable amount of red tapism to deal with in the past, it will not have to do so any more.
Regulatory issues and clearances will be dealt with the commerce department and the Indian

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Ministry of Finance within the shortest possible time, enabling a foreign business like JCB to
run operations in India quite easily.
Indian technology is developing at quite a rapid pace with a number of innovations
and improvements being introduced in the area of technology by companies in the country.
JCB can take advantages of such innovations in technology and the low price in particular of
such innovative technology to make its products really stand out not just in the Indian market
but in the global marketplace. Just like it is able to do in China, where technological
developments are expanding at a very high pace, JCB can utilize developments in technology
in India to ensure that all of its projects in the country get cleared in a short time span as
possible. It will not have to dilly dally around this area at all.
The rate of duty that JCB has to pay in order to manufacture goods in India will be
much less now due to many relaxations being introduced by the Indian government now for
this purpose. JCB will certainly be in a position to profit more and invest less because of the
easy excise and duty rates being prevalent for foreign investors in India under the Make in
India scheme.
The risks of doing business for JCB under the Modi administration are next to
none. This is because JCB has been doing business in India for several years now and has a
thorough idea of the Indian market place, including sufficient knowledge of competing and
rival forces. The many concessions for foreign investors as made available by the Modi
administration also make the prospect of doing business in India a risk free affair.
2. Critical Analysis of the Key Success Factors behind the JCB-Escorts Joint
Venture in India

4INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
There are a number of reasons why the JCB- Escort Joint Venture to produce backhoe
loaders in India turned how to be a huge success. The first of these is the fact that JCB was of
the firm belief at the time that it entered into a joint venture with Escorts in 1979, that the
construction market in India was one that was ripe for growth and that such a market could
become really large in course of time. The managers of the JCB Company believed that the
Indian marketplace was a place where the company needed to get its foothold as early as
possible in order to be able to take on global competitors in the most successful manner. It
did not want to wait until the growth potential of the Indian construction market had been
realized by other global investors, including investors in the United Kingdom. It was clever
enough to make an investment in India so early on, before other global companies could
make inroads into India and take advantage of the ripe Indian construction industry in the
same way that JCB was able to do.
Due to its belief in the ripeness and the possibility of growth in the Indian
construction market, the JCB Company was able to, around twenty years later acquire eighty
percent of shares in the Indian market. The Indian economy was now booming in spite of
many years of de-regulation, giving the joint venture plenty of room for growth and
expansion. The success rate of the joint venture also lay in the fact that JCB was feeling quite
stifled by the fact that being in a joint venture is not something that was allowing the
company to grow and develop in the best way possible. At this point of time, JCB was well
known in the global market for its cutting edge technology, especially laser technology and
the relentless efforts that the company was carrying out in the area of product innovation. Yet
JCB was a company that was intelligent enough to not make the use of such sophisticated
technology known to its collaborators in India, that is, Escorts, should this give the latter an
upper hand in the domain of production in India and elsewhere. JCB as a company made a
really smart move by not letting its partner Escorts know anything about its cutting edge

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technology and waiting until the Indian government had relaxed its regulations even further
in 1999, in order to go ahead and negotiate once again the different terms and conditions of
its joint venture with Escorts, and ended up purchasing as much as twenty percent of the
equity of its partner, thus gaining full and complete control over the joint venture. In the year
2002, the Indian government once again introduced a number of important relaxations on
regulations pertaining to foreign direct investment in India. As a result of this, the remaining
shares or equity of Escorts were purchased fully by JCB and the joint venture was now
transformed into a fully owned subsidiary. This was a time when the JCB Company was also
investing in wholly owned ventures in countries like Brazil and in the United States of
America, so it was no surprise that it was doing the same in India, a country where the
company had believed it could grow, expand and flourish right from as early as the end of the
1970’s.
In order to understand what it is that the made the joint venture between JCB and Escorts
so successful in India and what ultimately led the company to take full control and be a
successful foreign direct investor in India it needs to be first remembered that the company
was willing to take on the risk of investing in a developing country like India in the first
place. At a time when most other foreign companies, including UK based companies were
reluctant to make inroads into India, it was JCB that realized the potential of the Indian
construction industry and decided to take full advantage of the growth prospects associated
with this market which is why it was able to reap all the benefits later on that were connected
to the booming Indian market. JCB chose to risk the fact that the Indian economy was always
de-regulating for the most part, to enter into a joint venture with Escorts, for the production of
backhoe loaders, a move that ultimately ended up paying good dividends for the company
because of the risk that it decided to take.

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Secondly, the JCB Company was smart enough not to let its partner for business in India
know about the cutting edge laser technology and product innovation that had made JCB so
well known in the world market. It did not wish to make knowledge regarding such
technology known until it was sure that it could reap good long term returns from its
investment in India. It took advantage instead of the government relaxation on trading
requirements for foreign companies in the late nineties and early 2000’s to ultimately acquire
all of the equity of its joint business partner, becoming a wholly owned company running its
own independent operations in India.
Thus, there are quite a few interesting factors that led to the rise, growth and expansion of
the JCB Company in India, enabling it to not only fight rivals and competitors in the Indian
construction market but arriving at a position where it was able to do away with the joint
venture and buy all the equity of its partner in order to become a wholly owned foreign
business in India. Excellent strategic thinking on the part of the managers of the company
right from the late nineteen seventies to the late nineteen nineties, led to major success for
JCB’s growth in India.

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3. Understanding the Differences in Workplace Culture between India and the UK
Using Hofstede’s Cultural Dimensions pertaining to the International Workplace
and the way Cultural Differences could Influence Business Practices
There are six cultural dimensions that are outlined by Hofstede for understanding or
perceiving the international workplace. These are power distance, uncertainty avoidance,
collectivism versus individualism, femininity versus masculinity and short term orientation
versus long term orientation. The first, which is power distance, implies the extent to which
who are not very powerful in the society, accept as well as expect that the distribution of
power is something that is likely to be unequal. This notion holds true for the Indian scenario
quite a bit. India belongs to a patriarchal culture and as it is a developing country as well, it is
the norm at the Indian workplace to accept that there are certain people who are going to be
more powerful than others, and that those who wield power and influence at the workplace
are likely to be people who are financially strong and who have the resources therefore that
are needed to exert their power and authority as much as possible. In the United Kingdom
however, managers, leaders, business owners, and workers are expected to be at par within
one another within official premises. UK employees will not readily accept the unequal
distribution of power in the same way that Indian employees would. In the UK, all men are
free and equal before the law and no particular person in the office space has the right to
dictate to others, even if his official position demands that he be assertive by nature. Indian
culture on the other hand is patriarchal and the unequal distribution of wealth that is so
prevalent in India is so readily accepted, that this also implies that the unequal distribution of
power shall be readily accepted by Indian workers, especially female employees in a
patriarchal setup. It is the norm for Indian women to accept and acknowledge that certain
men at least can exert unequal power and control whether this be at home or in the official
work place.

8INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
Uncertainty avoidance refers to the willingness on the part of people to accept
uncertainty and ambiguity. This is a cultural dimension that can be witnessed in both the UK
as well as in India. Workers of the world are not willing to accept uncertainly too readily as it
makes their work environment unstable, in much the same way that ambiguity does. Neither
workers in the UK nor employees in an Indian workspace will be able to perform all of their
duties and responsibilities in the desired fashion if the work situation is uncertain, and there is
no knowing when it is that the firm that they are working for is going to shut down
operations. Hence uncertainty avoidance is easily evident in the workplace in both India as
well as in the United Kingdom.
When it comes to analyze the work place scenarios in India and the UK respectively
using the Hofstede cultural dimension of individualism versus collectivism, it can be said that
the former appears to be more relevant for the workplace in the United Kingdom while the
latter appears to be more evident for the workplace in India. Culturally, people in the United
Kingdom, are reserved and quiet and prefer to work on their own. Indians on the other had
are robust, boisterous and vibrant and like to engage with one another verbally quite a lot for
the sake of professional collaboration as well as for entertainment.
When the Hofstede cultural dimension of masculinity versus femininity is used for
understanding differences between Indian work culture and UK work culture, it can be said
that the Indian work culture is largely masculine in nature primarily because Indian culture is
of a patriarchal temperament. Masculinity implies that the preference for society lies in
material rewards, heroism, assertiveness and achievement for the attainment of success while
femininity has a greater cooperation for quality of life, cooperation, caring for weak people,
and modesty. While many aspects of masculinity can also be witnessed in the workplace in
the UK, it is the norm in the UK to give respect and value to the disabled people, to cooperate
with one another as much as possible in order to work well together and focus on a good

9INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
quality of life by staying healthy and working reasonable hours. In the Indian workplace,
there is a greater emphasis on earning a lot of money, being financially empowered enough to
have status in society and being assertive and aggressive in doing business so as to achieve
success in this area with a reduced emphasis being placed on cooperation, respect for the
disabled and quality of life.
Short term orientation and long term orientation is the final cultural dimension
established by Hofstede that can be used to compare the workplace in the United Kingdom
with the workplace in India. Short term orientation requires working towards establishing
absolute truth while long term inclination shows a tendency to search for virtue. The work
place in the UK is one that operates more along the lines of short term orientation, as western
society is largely rational with little belief in the metaphysical. Indian society on the other
hand places a lot of emphasis on virtue and the attainment of it. While the UK workplace
would focus on actions that are logical always in nature, the Indian workplace could entail
practices and actions that are more designed towards being virtuous and moral rather than the
pursuit of the scientific truth or the absolute truth at all times. Indian people for instance tend
to be religious even at the workplace and often undertake ritualistic practices even while
business operations are on.
What such cultural differences implies between the workplace in India and the
workplace in the United Kingdom for a company like JCB is the fact that the company needs
to be sensitive to the cultural differences between Indian people and people in the UK. If the
Indian employees of the company are to be cared for and retained over the long term, then the
company needs to be sensitive to the fact that Indians like to be loud, boisterous and religious
at work, that they focus on material success and heroism as things to aspire towards and that
they also unfortunately accept the unequal distribution of power and authority at the work

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place, making Indian employees more submissive and more subordinate in nature than UK
employees.
Understanding the Benefits of the Fixed Exchange Rate and the Floating Exchange Rate
and which one works Better for JCB in India
There are a number of advantages that are associated with the fixed exchange rate,
which are worth keeping in mind when analyzing growth and expansion prospects for a
company like JCB in India. One of the most important benefits associated with the fixed
exchange rate is that it avoids fluctuations, enabling a company to procure returns from an
investment at a steady pace instead of procuring high returns at one point of time and low
returns at another point of time. As a result, firms like JCB can feel really encouraged to
invest if there is a fixed exchange rate under which the company is to do business in India.
The company can invest as much capital as it wants to without worrying about experiencing
fluctuating returns on this investment when it is a fixed exchange rate that is being offered.
The fixed exchange rate is also something that keeps inflation at an all time low.
Financial risks and down lows are those that can be easily avoided when there is a fixed
exchange rate in place. The devaluation of currency is something that can be avoided as well
because of a fixed exchange rate. There is no likelihood of there being a drop in currency
when it is a fixed exchange rate that is being offered for business operations. Owing to the
fact that the likelihood for devaluation is minimal when it comes to a fixed exchange rate, a
company can find a far more stable and secure financial climate in which to do its business.
Risks are a lot less for the business and the prospect of accruing a steady amount of profit if
not a lot of profit exists.
The fixed exchange rate is definitely one that is helpful for any foreign business that
is looking to expand to India with a company like JCB being no exception in this respect. It is

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an exchange rate that facilitates a company to do stable business in a country over a long
period of time, and is therefore the best type of exchange rate for foreign businesses that are
looking to conduct operations in a certain country for a considerable number of years. It
allows for stable, secure business practices with a steady pace of returns being assured for
investors.
The floating exchange rate has several advantages to it as well. The floating exchange
rate does not impose any restrictions on trading with foreign countries as well as with capital
flows. Central banks or the government does not need to engage in any constant process of
management when it is a floating exchange rate that is prevailing in the country. The floating
exchange rate is one that puts Indian companies in a position to carry out effective and profit
based trade with foreign companies without any liabilities or restrictions to hold their
operations back.
If the exchange rate is a floating exchange rate, the need to maintain a large reserve of
foreign currency is nullified. Such reserves can be utilized for the purpose of importing
capital goods, which in turn promotes economic growth by a considerable extent. The
floating exchange rate is therefore one that is quite good for boosting the growth of the
economy. Imported inflation is something that a business can be well protected from when it
is a floating exchange rate that is prevailing in the country. Countries that operate on a fixed
exchange rate, faces the danger of importing inflation through surpluses in terms of balance
of payments or due to higher import prices. Of course there are fluctuations that the market is
going to be subjected too very frequently where the floating exchange rate is concerned, and
for foreign businesses it implies that they can incur huge returns from their investment at
some point of time and minimal returns at other times.

12INTERNATIONAL BUSINESS – CASE STUDY ANALYSIS
When it comes to a company like JCB it can be argued that although the fixed
exchange rate could work well for the company, the floating exchange rate would work better
for it in the long term as a floating exchange rate implies that there are likely to be very few
restrictions on trade with foreign companies. JCB can go ahead and do business with as many
Indian investors as it wishes to, when the exchange rate is a floating rate rather than a fixed
rate. It is the floating exchange rate that will provide the company with the flexibility that it
needs to business in the country without having to compromise on the area of profit in any
way whatsoever. Although there are fluctuations and risks that the company will be subjected
to as a result of the floating exchange rate, it will get the opportunity to do a greater amount
of business because of the relaxation on foreign exchange regulations, encouraging several
Indian companies to come forth and collaborate with JCB on a variety of areas, which would
not have happened in the event of a fixed exchange rate. The fact that the company can also
avoid imported inflation and carry out its trading activities in a restriction free environment is
what makes having a floating exchange rate so necessary and appealing for a company like
JCB which intends on establishing itself as firmly in the Indian subcontinent as possible.

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