3. Why did JCB not simply license its technology to Escorts?
Escorts is potentially a competitor who could scale globally very rapidly, using the technology and intellectual property to compete with JCB. There is no assurance that the specifics of JCBs machinery would be held in confidence by Escorts and not be used to compete in sales cycles or define next generation products. As a result, JCB is wise to not license their technologies to Escorts.
4. What were the potential disadvantages of JCBs joint venture with Escorts?
First, there is the potential for loss of control of the JCB subsidiary in India if the Indian government rules to make ownership of outside firms even more stringent, to control Foreign Direct Investment (FDI). There is also the potential disadvantage of having Escorts still gain access to confidential data and use it to compete on sales cycles in the short-run and product development in the long run.
5. What were the benefits of gaining full control of the Indian joint venture in 2002? Can you think of any drawbacks?
First, a great deal more freedom and ability to define marketing, selling and product development strategies was obtained when JCB was able to gain full control over the joint venture.
Second, it also created the opportunity for JCB to begin defining new products and create innovation centers throughout India to capture the countrys unique needs (Sampson, 2006). Third, it also gave JCB a stronger foothold in Asia that would prove valuable in expanding into China. The drawbacks are the reliance now on the JCB organization for the functions that Escorts had been handling. These included supply chain management and local service most likely, and intermediating with the Indian government. All three of these areas are resource-intensive and take an exceptional amount of time.
Hill, Charles (2009). Global Business Today . Upper.