Mfg/Sales Strategy There Are a Research Paper

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India is becoming a popular destination for foreign FDI as a result of that country's large and growing economy and economic reforms (Chakraborty & Nunnenkamp, 2006), meaning that capital inflows to India are not likely to meet with major challenges. The country can also be used as a springboard to the rest of Asia, with Indian production going to other Asian nations. Entering the market with a joint venture for both production and sales is important as well because it creates an operating hedge, thereby reducing the amount of foreign exchange risk faced by the company, important given that the rupee is not a hard currency and the derivatives markets for the rupee are relatively illiquid as a result.

Entering the U.S. market is the most straightforward. Hamilton is no more than 90 minutes from the border and the I-90. Shipping westward is also easy, due to the plant's proximity to the 403/401. Other transportation links with the U.S. are also strong, and this trade corridor is among the busiest in the world. NAFTA has allowed Canada's consumer electronics business to flourish (Datamonitor, 2010) and although the C$ is expected to remain high vs. The U.S.

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$ (Johnson, 2011), the hedging market is highly liquid. There are few cultural barriers in the U.S. market. Shipping to the U.S. will also give the Hamilton plant the opportunity to build economies of scale that will help to lower the average cost of production. This can help with making the plant competitive with respect to shipping to Europe.

It is recommended therefore that the U.S. market is entered only with a sale arm, and manufacturing be conducted in Hamilton. It is also likely that this option will be used for the European market as well. Shipping can go through Lake Ontario/St. Lawrence, or via train or truck to Saint John or Halifax. It is worth looking for a local production partner in Europe, however, but setting up wholly-owned sales subsidiaries as European channels are similar to North American ones. The Indian market will require a manufacturing subsidiary and this should be a joint venture with a local firm. This JV will be responsible for sales as well.

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