QUESTION 1

John Swift is the CEO of Trans-Technology Corporation (TTC), a Mechanical Engineering Company headquartered in Cleveland, Ohio. The company is financially strong and has 80% of its output generated from China. The average revenue of TTC has been growing at an annual rate of 18%, the current status quo of the company gives us reliable numbers, its balance sheet shows that the company has its assets and a greater portion of retained earnings to invest back into the business and expand its operations. TTC’s Income Statement shows big figures in its revenues, EBITDA, EBIT and PAT. The company’s financial position and its performance is very much satisfactory and John is thinking of expanding his business into India.

Expansion of any business requires attention to details, these details can be the company’s financial statements and the market that a company plans to expand in, whereas it is also mandatory to consider external factors such as inflation, market analysis, industry analysis and economic conditions while performing the expansion.

Swift gathered some figures which are used in comparing the economic and business environment and some fundamental infrastructure data for India and China. The data highlightsmany advantages to the company, one of them is about cheap labor comparative to the other markets. The figures highlighted in the data show 44 favorable figures out of 57 criteria.

India The Promising Future Harvard Case Solution & Analysis

Major Concerns or risks involved in overseas business

Political

PM Narender Modi assumed office on 26 May 2014. He is the first sitting Prime Minister to be born after independence. He is the current prime minister of India since May 2014. Modi is a member of the Bharatiya Janata Party (BJP) and member of the right wing Rashtriya Swayamsevak Sangh (RSS).

There is a high degree of devolution in the state and has several key issues regarding law & order, land acquisition and resource sharing. The congress party and the Bharatiya Janata Party (BJP) are the two main forces in India’s politics. BJP governs with a coalition with other twelve parties (National Democratic Alliance), BJP on the other hand, led by Narinder Modi and won with a greater margin, creating history where a single party has won with an outright majority.

The nation is in the state of turmoil between these two parties’ war of turf and any business will be affected because of strikes and economic disorder.

Economic risk

From the economic perspective, theIndian market recovered well from the global crises but faces several challenges to sustain its growth, lower inflation and its structural bottlenecks. Economy of India is growing at a slower rate and in 2013-14, it slowed to 4.7% with this slower trend, there still are changes that are of strong recovery. The GDP of India from 2007 to 2010 shows a trend of growth at a slower pace, which might be a risk when operating in India, while in China, growth is much faster and would enable the business to grow when operating in the Chinese market.

Beside this, there is efficient labor that would help business to grow in Indian market..................

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