Why India?

[EUNJIN]

In 1979, JCB decided to expand into Indian market. There are three
strategic reasons.
1. Market potential
As the India government pushed ahead with national development
projects about that time, development spread all over the country.
Also the 9th Asian Games were supposed to be held in New Delhi in
1982. In these respects, need for infrastructure construction in India
increased and JCB thought that construction markets in India had high
potential to grow big enough in the future.
2. First mover advantages
The management of JCB preferred to enter Indian market as soon as
possible to get the ‘First mover advantage’ before their competitors
could. By entering Indian market earlier, JCB could pre-empt rivals
and establish strong brand name. Also, they could meet consumer’s
unmet need for infrastructure construction in India and they could get
cost advantage over later entrants by building sales volume and riding
down the experience curve ahead of competitors. In addition, they
could create switching costs that tie customers into their products.
3. Cheap labor
The wages of Indian labors were more than 10 times cheaper than those
in developed countries. So JCB could reduce the cost of production by
entering to Indian market.
In the case of construction market in Western Europe, they had
already achieved a considerable development, so the construction
market potential was lower than India. Also, some companies such as
Caterpillar, Komatsu and Volvo dominated the market in advance so JCB
couldn’t get first mover advantage; furthermore there were high entry
barriers in those developed countries. In addition the wages of labors
were much more expensive. So, it was reasonable that JCB decided to
expand into Indian market, not into the other developed countries.




Is this too long?