Assignment 1: Entry into Foreign Market
Cameron International Corporation with revenues of $6,134.8 million (FY 2010), net profit of $562.9 million (FY 2010) and an operating profit of $858.5 (FY 2010), provides flow equipment and pressure control equipment for both land and sea oil rigs. It manufactured the blowout preventer on the Transocean BP rig that failed. It operates in more than 100 countries through various contractual arrangements. The company has just recently ventured into FDI relationships with a purchase of a Brazilian company that manufactures products for the Brazilian oil and gas industry to support its expansion into that market. One of the weaknesses of the company is the overreliance on the U.S. market, making possible future joint ventures and equity purchases in foreign markets a viable strategy for expansion. Although the company has sales offices in Thailand and Malaysia, this area is a small portion of the companyâ€™s activities.
Recently, Myanmar, formerly Burma, has reversed a decadeâ€™s long policy of isolation imposed by the ruling military regime. Noted more for human rights abuses than anything else, Myanmar has suffered under sanctions and lack of involvement in the international community. In 2011, the country reversed course with the election of Thein Sein, a former military leader, the release of Aung San Suu Kyi, free elections, and negotiations with rebel groups. The country is very rich in oil and gas resources with extraction as the most productive sector, but the â€œbusiness climate is widely perceived as opaque, corrupt, and highly inefficient. Wealth from country’s ample natural resources is concentrated in the hands of an elite group of military leaders and business associates.â€ (CIA World Fact Book, 2012)
As a consultant you have been asked to prepare a report on the pros and cons of market entry into Myanmar, the best means to enter, and potential difficulties if the company enters. The CFO has prepared a report stating that the break-even analysis supports both FDI and subcontracting.
PLEASE FOLLOW INSTRUCTIONS. INCLUDE QUESTIONS AS HEADERS AND INCLUDE CONTENT TO SUPPORT QUESTIONS/HEADERS. MAKE SURE ASSIGNMENT IS WRITTEN IN APA STYLE FORMAT & BE SURE TO INCLUDE THE RUNNING HEAD.
Write a six to eight (6-8) page paper in which you:
- Determine which institutional and risk factors must be considered and whether they support entry or not.
- Conduct a VRIO analysis to determine whether entry is supported.
- Assess existing cultural issues to determine how they should be addressed should the company enter the market.
- Determine if the company should pursue FDI with potentially more risk and higher returns, or subcontract to provide component parts.
- Recommend which joint venture partners the company should approach and for what percentage if the company decides to engage in FDI.
- Determine the three (3) greatest difficulties that may develop and the strategies the company should pursue to these difficulties, should they arise.
- Use at least three (3) quality references. Note: Wikipedia and other Websites do not quality as academic resources
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
- Include a cover page containing the title of the assignment, the studentâ€™s name, the professorâ€™s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Â· Assess the current trends and impact of globalization on labor, business operations, and government.
Â· Analyze the major economic, cultural, and political/legal aspects of the international business environment, including the economic dynamics of foreign trade, regional and global trade integration, and key cultural dimensions.
Â· Apply the concepts of value creation/value chain and formulate competitive market entry strategies that leverage the advantages of international operations.
Â· Use technology and information resources to research issues in international business environment.
- Write clearly and concisely about international business environment using proper writing mechanics.