Case Fairchild Water Technologies, Inc.
CASE FAIRCHILD WATER TECHNOLOGIES, INC. 1. The difference between a developing and a developed country are typically based on economics. A developing country usually has a low level of affluent citizens, and higher levels of unemployment. Developing countries also have lower education rates, and often times undeveloped, rural type villages. Developed countries usually have technological advantages, better roads, stable governments, higher education rates, and good health care.
2. By performing some research over the internet, I found out some figures that could justify the attractive of the Indian market.
For instance, globally more than one billion people lack access to safe drinking water and approximately 2. 4 Billion people lack access to proper sanitation, nearly all of them in the developing countries, including India. Nearly a third of the world’s population worldwide live in water-stressed areas.
This figure is expected to rise to two-third of the population by 2025. Base on the numbers mentioned above, the increasing number of people becoming conscious of the risks of drinking contaminated water, the demand for water purifiers is rising rapidly.
In the past few years, Indian water purifier industry has an exponential growth of 22%. The industry saw high growth of rate 17% during 2008 due to the increasing awareness for safe drinking water; on 2009 the water purifier industry sales grew dramatically as well. According to Indian Water Purifier industry will continue its growth trajectory and is expected to growth of more than 22% for 2014, as per some market research. From my point of view, the Indian market has tremendous potential which is more evident when you see the big companies trying to get a big peace of the pie in the Indian market.
Now a day, there are three principal players in India and more are trying to penetrate this market. However as all the competitors, in this case the purifiers companies have to work on their cost structure in order to be competitive and work on their penetration strategy in order to be successful. 3. Three modes of market entry available to Fairchaild Water Inc, in India are : A. Licensee considerations ? The license agreement must be a win-win for both sides or it will not work. ? If you give exclusivity, you should get a higher royalty.
? Investment should be low as other models. B. Joint venture You will allow your partner to have access to new technology, capital and skills, as well as critical business knowledge. ? It could be strategic because, often governments will forbid foreign companies from selling products to its citizens, so as not to take away sales from local industry. ? You would have access to a network of distribution and It would more easy to access the market with a local partner who knows the market.
? Finally, you are sharing risk and the financial part could be higher than other models. C. Acquisition considerations. ? Financial risk exposure will increase as a result of the acquisition. There is risk management, however, the company has to evaluate the risk and work on strategy plan by identifying the potential risk and changes that should be perform after the acquisition.
? Additionally, an acquisition may result in the acquirer being exposed to a greater concentration of counterparty credit risk that did not previously exist. 4. The decision to penetrate the Indian market was based on: A. Focusing on rural and small urban areas, which were not the best idea, they have to analyze the market in depth in order to find the market opportunities and create the strategy. B.
Manufacturing units in India, it is a good idea in order to lower the costs of the production, however there is a need for a prepare work force, so there is a cost involve. C. Find an Indian partner. This is the best idea; Chatterjee should recommend making a joint venture in order to enter the Indian market. India, it is a big country, they need a local due to the language, someone that the potential clients trust, then, their transportation structure (roads) it is deteriorated, so they need someone who knows the country very well and have a good distribution network, so on that way they can penetrate the market quicker than the competition.
