case study: intreprenuership

International entrepreneurship project of The John’s Pharmaceutical Company

Introduction

The John’s pharmaceutical Company is a leading medicine manufacturer in the United States. It is involved in the research, manufacturing, testing and supply of drugs to the hospitals and clinics within the country. For the last one year, the employee populations have tremendously grown to 5,000 with 40,000 other people indirectly employed. As part of the expansion plan drafted in 2009 by the company’s management board; the Company has decided to go international and explore new markets in the world.

Preferred country for internationalization

After proper assessment of international business, John’s Pharmaceutical Company has decided to explore business in India. Being a third world country, many people are faced with various diseases such as cholera, typhoid, malaria etc hence there would be a ready market for the Company’s products. In addition, India’s large population would not only provide market for the products but would also provide cheap labor thus reducing the company’s operational costs.

Market entry strategy

The company has opted for direct investment method of market entry. This involves the setting up of a manufacturing plant in India that would be able to process and distribute medicine to the general population. This strategy would reduce the shipment costs of the products hence increasing the profitability of this project (Hill, 2012). In addition, the setting up of a subsidiary in India would be economical due to the presence of cheap labor and available raw materials from the country.

Business environment

The general business environment in India is harsh and not sustainable for new business investments. This is as a result of poor infrastructure, low security levels, power blackouts; inadequate amounts of water and lack of government commitment to curb the selling of counterfeit drugs. This is bound to affect the Company’s operational levels hence reducing its profitability.

Cultural profile

The Indian culture is conservative in nature and involves a lot of rules and guidelines in regard to personal beliefs. Though there would be cultural differences, the work output from the employees would not be affected. Moreover, it is expected that there would be a positive reception from the government and other stakeholders such as suppliers and consumers. This is because the government of India encourages foreign investments that would enable creation of employment for the populous youth.

Organizational structure

The John’s Pharmaceutical Company

Headquarters New YorK

 

Brazil Branch

South Africa branch

England branch

Indian Branch

This organizational structure was designed to include all the continents in the world so as to expand the company’s market base.

Staffing policy

The company would opt for an ethnocentric type of staffing policy. This involves the employment of top managers from the original company while the rest of the posts would be filled by the native people in the host country. This mode of staffing policy would be effective because the consumers would be able to identify the company hence improving the sales of their products.

Leadership and motivational systems

The company would develop an open form of communicative leadership; whereby, the employees would be free to express their views to the top management without fear of being victimized. This form of leadership would help to build the confidence of the employees hence encouraging them to work harder.

Moreover, the company can motivate the employees by providing free medical insurance for their families, good salaries and remunerations, fare job promotions, provision of housing facilities and also reducing their working hours (Feenstra, 2005). This would be beneficial in retaining qualified personnel and motivating them to deliver maximum service for the success of the company’s subsidiary.

Communication problems

The management team is bound to face language barrier because the Indian people mostly communicate in Hindu. However, this can be avoided by the employment of qualified personnel who are able to efficiently communicate in good English. Also, the company may opt for the employment of translators hence reducing the communication barrier between the employees and the management team (Ghemawat, 2007).

Special control issues

The company should ensure that it operates under the correct legal terms so as to avoid incidences of corruption and tax evasion. This would be done through acquiring all the necessary documentations from the government of India as per the international trade laws. In addition, the company should ensure that it avoids the incidences of child labor that is mostly experienced in other third world countries.

Concerns of the host country

The host country is bound to be concerned about the environmental pollution resulting from the Company’s production process. Also, the community would be concerned about the erosion of their ancient Indian culture due to the urbanization brought about by the company. In order to address these concerns, the company would develop proper waste disposal mechanisms that would be harmless to the environment. Also, the Company would build the processing plants in an urban setup hence not interfering with the indigenous cultures in the Indian countryside.

Conclusion

In conclusion, the globalization of John’s Pharmaceutical Company is an essential step in its expansion strategy. Its involvement in Indian market would be economical due to the provision of cheap labor, access to raw materials and availability of ready market. The ethnocentric staffing strategy would be effective for this new market hence contributing to the success of this subsidiary. However, the management of the company is bound to face communication barriers and concerns of the host country which must be addressed for it to fully operate.

References

Feenstra, R.(2005) advanced international trade. New Jersey: Princeton University press. Print

Ghemawat, P. (2007) redefining global strategy: Crossing borders in the world where differences still matter. Harvard: Harvard business review. Print

Hill, C. (2012). International business. New York: McGraw Hill publishers. Print