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Foreign Investments

Global Car maker investment in a local Partnership with Chennai, India
Globalization has encouraged firms to extend their operations to foreign locations. Some firms opt to invest in foreign countries directly while others invest in partnership with other local companies. There are many potential benefits as well as challenges that may accrue as a result of investing in the global market. These benefits depend on the global market entry strategies that the company uses to penetrate into the international market. Foreign direct entry is difficult and can affect the establishment of a firm due to the logistics involved in controlling both home and foreign production (Alfaro & Chen 2010). This paper discusses on the probability of a global car maker partnering with Chennai, India to invest in an automobile assembly facility. It explains the kind of relationship that the two companies will have in terms of exercising control. It defines the areas in which the local company may control and those that are controlled by the foreign firm.
Benefits of International Business Partnership
Partnerships are relatively easy to establish and operate, but firms entering into such partnership should take time when developing partnership agreements. This is crucial because it will enable members in a partnership to prevent complexities and conflict which may a rise in the future. Additionally through partnership, the global car maker may benefit from business synergy; this synergy may in turn provide the global car maker with a competitive business advantage over the other business operating in the same automobile industry (Park & B2B International, 2008).
The global car maker is a big company as compared to the local company which is likely to contribute much less in terms of physical resources. In turn it is likely to get diverse opportunities to invest in different portfolios in Chennai, India. This means that it will have control over the human resources and the business resources shared between the two organizations (Park & B2B International, 2008). The partnership will further promote technological sharing between the two firms and this will enhance the productivity as well as the quality of output additionally the partnership will create a wider market where the global car maker will sell its vehicles, this will in turn increase the profits of the company substantially (Alfaro & Chen, 2010).
This partnership may provide the global Car maker with an opportunity to obtain resource that the company may not be having at a cheaper price hence, reducing its operating cost substantially. The resources that may be obtained include; human resources, financial resources and Low materials at a subsidised cost than in the home market of the parent company. However since the global car maker is the main firm, it will control the operations of these departments (Park & B2B International, 2008).
The Level of Control for the Company Using this Strategy
In Partnership and strategic alliances, different kind of business relationship exist here; such as shared manufacturing, distribution alliances, marketing agreements as well as research and development arrangements. The level of control the company may have depend on the content of the agreement (Keillor, B. 2012).Essentially, in this form of partnership there is an equal control this is because, companies remain separate and independent from each other.Inorder to have effective control of this alliances, both parent firms should set smart objectives, in addition to setting smart objectives, the parent companies should provide support to the established partnership ventures.
Therefore, based on the above discussion, the global car maker may obtain some advantages by entering into partnership with the local firm. These two organizations are at different levels in terms of resources. While the local firm is conveniently located in India and has local advantage over global car maker, it is lacking in resources. Therefore the foreign company will control all the resources and allow the local company to carry out the operations. It is advisable for companies to evaluate the potential benefits and the level of control the company would obtain. This helps to control the risks associated with such a ventures in the future.

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