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    Case Study: Expanding Business into Pakistan

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    While traveling to Thailand on a vacation, you meet Ms. Jenny Chang, an Asian business executive, in the plane. She is happy to learn that you are the international business development consultant for a multinational company. She becomes interested in your expertise and asks you to work as her company's consultant for a project involving new business development in Pakistan. Her company has just invented a revolutionary new CAD system for designing and weaving wool carpets that can improve the design and manufacturing productivity significantly. Several patents protect the unique design of this technological system. The CEO has asked you to formulate a recommendation for how to expand into Pakistan. Your choices are (i) to export to Pakistan from the manufacturing plant in Singapore, (ii) to license a Pakistani firm to manufacture and market the computer system in Pakistan and elsewhere, and (iii) to set up a wholly owned subsidiary in Pakistan.

    Select the best of the three choices for Ms. Chang. Support your recommendation by first evaluating the pros and cons of each alternative for Chang's company.

    This assignment is analytical in nature. You are expected to demonstrate your ability to convert your theoretical understanding of the modes of international business entry into practical applications. Therefore, I would hope that you will relate all of your answers to the situation in the case or the scene presented and not provide generic text book answers.

    Some factors that must be kept in mind to analyze the situation and make your recommendations look practical to your client. As a consultant, you can make some assumptions about the different aspects, such as:

    1. What is the nature of the product: brand new high technology consisting of a computerized CAD system. The CAD system that this company wants to promote in Pakistan consists of two major parts: the hardware which is a sophisticated weaving machine, and the software that designs the carpets and runs the weaving machine. How important is it to protect patents and the technology from being copied illegally? How important is the firm's intellectual property? How do transportation costs affect your decision?

    2. Where is it being manufactured now: Singapore. What is the level of manufacturing sophistication in this country when compared with the target country?

    3. What is the nature of the target market: What are the relative business barriers in the two countries? Demand? Economic development? Legal system for resolving disputes?

    Patent protection laws or enforcement of the law? Availability of skilled engineers and workers? Availability of suitable agents or partners?

    The consideration of the above factors will allow you to produce an excellent report for Ms. Chang.

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    Solution Preview

    Expansion Alternative: CAD System for Pakistan's Wool Carpet Industry

    Alternative 1: Export to Pakistan from the manufacturing plant in Singapore
    Considering that it's virtually costless to copy software regardless of where the program was originally written, the manufacturing the weaving machine, the exporting it subsequently to Pakistan makes sense. This strategy allows the organization to protect its manufacturing system for the machine which is its competitive advantage.
    However, the company might meet entry barriers in exporting its weaving machine. Nevertheless, it is not impossible. The company can use the plan to partner with a Pakistani firm for the manufacture and distribution of the computer system as a bargaining power to lower the barriers of entry.
    A legal issue could be the repatriation of profits from ...

    Solution Summary

    The solution discusses how to expand business into Pakistan and the different steps and plans to do so.