INTRODUCTION

For fulfilling the requirement of this project, we have decided to form a joint venture between a Bangladeshi leather company with an Indian company or a Chinese company. The name of the Bangladeshi leather company is Leatherex Footwear Industries Ltd, which will mainly provide leather and labor in this joint venture because labor cost is low in Bangladesh.
The whole manufacturing process will take place in Bangladesh. On the other hand, India and China will mainly provide technology, idea, R&D and special equipment (if required).
We have decided to go for joint venture, rather than exporting because, joint venture provides companies with the opportunity to gain new capacity and expertise. It will allow us to enter new geographic markets, that is, India or China and gain new technological knowledge access to greater resources, including technology and sharing of risks with them. China and India is not an easy market to enter, as from geographic point of view, they are vast and also they possess a total different culture.
Again, it will be difficult for us to monitor and sustain. So, by joint venture, we will be able to penetrate their market and also to their culture easily and quickly through them as they already have enough knowledge about their market.

EXTERNAL ANALYSIS – PESTLE ANALYSIS

THE PESTEL ANALYSIS OF INDIA
Political: (Stable)
After researching the taxation and government policies, it can be said that India is politically stable and it will not upset doing business or growth of the company. India has an open system for the foreign entry. But sometimes the country faces ups & downs in the political sector. Tax rate in India is 30% for Indian companies and 40% for foreign companies. The foreign investments are highly encouraged as 100% Foreign Direct Investment and Joint Ventures are permitted. The political situation in India is quite stable for doing business.
Economical: (Fluctuating)
India is developing into an open-market economy, yet traces of its past autarkic policies remain. The GDP is 6.5%, inflation rate is 9.7% and unemployment rate is 8.5%. However, India's economic growth began slowing in 2011 because of a slowdown in government spending and a decline in investment, caused by investor pessimism about the government's commitment to further economic reforms and about the global situation.
So, the economic condition of India is fluctuating.
Social: (Approachable)
India has many different states but the overall lifestyle of the Indian people is more or less like Bangladeshi culture and also their choices are similar to Bangladesh. The people in India are really friendly in nature and cooperative too.
So, social condition of India is really approachable for doing business.
Technological: (Capable)
India is more capable and developed in technological sectors than Bangladesh. So to do business or operate a business will not be a problem. In fact it would be very supportive.
So, technological factors in India also support doing business.
Legal Factors: (Favorable)
The foreign investments are highly encouraged here and it ensures no discrimination between foreign and local companies. Besides, the labor legislation law of India ensures that it has some policies to facilitate the entry of highly skilled professionals.
So, legal factors are also favorable in India for doing business.

Environmental Factors: (Favorable)
In most of the states in India the climate and weather is very close to Bangladesh. So, it will be favorable to maintain a nice and acceptable business environment. SUMMARY OF THE PESTLE ANALYSIS OF BOTH THE COUNTRIES Factors | India | | Political | Stable | | Economical | Fluctuating | | Social | Approachable | | Technological | Capable | | Legal | Favorable | | Environmental | Favorable | | To select a country for doing business, PESTLE Analysis plays a very effective role to choose between them. It can be seen that among six factors India has only one undesirable factor whereas China has three undesirable factors. So, it is clear that doing business with India would be more convenient compared to China.

INDUSTRY ANALYSIS - PORTER’S FIVE FORCES MODEL

PORTER’S FIVE FORCES OF INDIA
The leather industry occupies a place of prominence in the Indian economy in view of its massive potential for employment, growth and exports.
Supplier Power (Favorable):
With finishing capacity for processing 1192 million pieces of hides and skins per annum spread over different parts of the country, the capability of India to sustain a much larger industry with its raw material resource is evident. The Government of India has allowed duty free import of hides and skins for domestic raw material availability. It is an attraction for any foreign manufacturer who intends to shift his production base. The supplier of leather in India is not very powerful.
Buyer power (Favorable): * Footwear Sector - Second largest footwear producer after China. Annual Production 2065 million pairs. Huge domestic retail market 1950 million pairs (95%) are sold in domestic market. Footwear export accounts for 45.05% share in India’s total leather & leather products export. * Leather Garments Sector – Second largest producer with annual production capacity of
16 million pieces. Third largest global exporter. Accounts for 10.43% share of India’s total leather export.
The major buyers of leathers are usually the MNC. They do have a moderate power because in one hand they don’t have lots of supplier and on the other hand one MNC takes the business from one supplier than it may cause bankrupt for that particular supplier.
Competitive Rivalry (Favorable):
Recently the leather production industry in India is increasing. The major production centers for leather products in India are located in Tamil Nadu, West Bengal, Uttar Pradesh, Maharashtra, Punjab, Hyderabad and Delhi. The competition is low in India because there are fewer well establish company for leather supply.

New entrants (Unfavorable):
In India threats of new entrants are very high because the government does not impose any kinds of restrictions. Government is encouraging companies to enter this industry as leather products are one of the major products for the country. So threat of new entrant is high.
Substitutes (Moderate):
Many pseudo-leather materials have been developed, allowing those who wish to wear leather-like garments. One example of this is vegan microfiber, which claims to be stronger than leather when manufactured with strength in mind. Pleather, Naugahyde, Durabuck, exist, providing some features similar to leather. However people who prefer leather will not shift to other products. Substitute’s power for leather in India is very moderate.

SUMMARY OF PORTER’S FIVE FORCES ANALYSIS FOR BOTH COUNTRIES Factors | India | | Supplier’s power | Favorable | | Buyer’s power | Favorable | | Competitive rivalry | Favorable | | New Entrants | Unfavorable | | Substitutes | Moderate | | According to the Porter’s five forces analysis, India will be a better country than China for investment. Both the country’s leather products got demand in international market but China’s is slowly losing their international markets to India.

Porters Diamond Model: HOFSTEDE

Factor Condition: A country creates it’s on factor condition. Like India, they created its own man power, which is one of the largest which lead them to one of the power house on the world. Its low labor cost and skilled workers has gave them an edge over other countries.
Demand condition: when the market of a particular product is so large in its own country, firms do focus on to export the product based on particular research. A small trend- setting local market helps local market anticipate global trends. Indian leather footwear industry has done the same thing and now they are in a comfortable successful business environment.

Firms strategy: local condition, affects firms strategy. In porters five factor model, low rivalry. While at a single point of time firms do want less rivalry, over the long run more local rivalry is better since it puts pressure on the other firms.

Related and supporting industry: when local supportive industries are competitive, firms enjoy more cost effective and innovative input. This effect is strengthened when the suppliers themselves are strong global competitors like Leatherex.
Swot Analysis: leatherex

STRENGTHS
• High Growth
• Ready availability of highly skilled and cheap manpower
• Large raw material base
• Policy initiatives taken by the Government
• Capability to assimilate new technologies and handle large projects
• Continuous emphasis on product development and design up gradation.

WEAKNESSES
• Lack of warehousing support from the government
• International price fluctuation
• Huge labor force resulting in high labor charges
• Lack of technological inputs
• Lack of strong presence in the global fashion market
• Unawareness of international standards by many players.

OPPORTUNITIES
• Rising potential in the domestic market
• Growing fashion consciousness globally
• Use of information technology and decision support software to help eliminate the length of the production cycle for different products
• Use of e-commerce in direct marketing

THREATS
• Major part of the industry is unorganized
• Limited scope for mobilizing funds through private placements and public issues (many businesses are family owned)
• Difficulty in obtaining bank loans resulting in high cost of private borrowing
• Stricter international standards
• High competition from East European countries and other Asian countries
• Shortage of communication facilities and skills

HOFSTEDE’S CULTURAL ANALYSIS

Doing business in a different country can be quite difficult due to cultural differences. To look for strategic opportunities in India or China, we need to look at their culture and how it differs from Bangladesh.
BANGLADESH’S CULTURAL DIMENSION 1. Power distance: Bangladesh scored 80/100 on power distance. So it indicates that it has a centralization of power. Subordinates think boss is always right. 2. Uncertainty Avoidance: It scored 60% in this dimension. They stick to rigid traditions and ways and do not want to take risk by doing innovation. 3. Individualism/Collectivism: It is a collectivist culture (20%); we prefer to do things in group and are emotionally attached with community. 4. Masculinity/Femininity: High masculinity range (55%). People focus more on competition rather than quality of life. 5. Long-term/Short-term Orientation: Bangladesh scored 40 on this dimension making it a short-term oriented culture. They prioritize quick results.
INDIA’S CULTURAL DIMENSION 1. Power distance: India scored 77% on power distance which makes their culture quite similar to ours in this dimension. So India has high power distance. 2. Uncertainty Avoidance: India scored 40% in this dimension which indicates that the Indians are comfortable in seeking new things and focus on innovation. 3. Individualism/Collectivism: It is moderately a collectivist society as they scored 48%. In this dimension India’s culture is quite similar to ours. 4. Masculinity/Femininity: They have high masculinity range (56%). Indians like Bangladeshis focus on competition. 5. Long-term/Short-term Orientation: Indians unlike Bangladeshis prioritize on keeping long term relations. They scored 61% on this dimension.
COMPARISON OF CULTURE BETWEEN BANGLADESH WITH OTHER TWO COUNTRIES Hofstede’s dimension | Bangladesh | India | | Power distance | 80 | Closer | | Individualism/Collectivism | 20 | Higher | | Masculinity/ Femininity | 55 | Closer | | Uncertainty avoidance | 60 | Closer | | Long-term/Short-term | 40 | Closer | | After doing the cultural analysis, we came to the conclusion that since all are Asian countries culture scored pretty much same or closer in some dimensions. But as India has a bit more cultural similarities with Bangladesh, opportunities of investing in India are more.

COUNTRY EVALUATION RESULT

According to PESTLE analysis, India is better as there is no restriction. According to industry analysis, both countries are more or less similar, but as China is slowly losing their international markets to India, India would be better. The cultural differences between India, China and Bangladesh are almost similar. However as there is less language and cultural barriers between India and Bangladesh, India is more preferable.
After doing the two country evaluation our suggested country supported by the above analysis is India where Leatherex can diversify their business. ENTRY MODE

Bangladesh Footwear and leather goods industry is emerging as an important sector with expanding production base, in view of natural advantage having raw-material combined with of availability of abundant work force.
However, Bangladesh industry lacks domestic technology and expertise; local support chemicals industries are still under-developed, underdeveloped infrastructure, insufficient research and development facilities. Besides, Bangladesh has been facing some international challenges. One of which is the dominance of the world market by China and India as they are preferred by foreign investors and buyers. The International image problem is another constraint, which hinders high value addition as it is known as a low-quality and cheap goods producer.
On the other hand, India has modern technology, improved access to new designs and technical know-how, especially in leather products manufacturing. But India does not have skilled labors as Bangladesh and imports raw-hides from Bangladesh.
In view of expansion of production capacities, Bangladesh and India have opportunities to tie-ups for mutual investment especially for manufacturing footwear components.
So the best entry mode for Leatherex to enter Indian leather and footwear industry is by having joint venture with Picasso. This will help Leatherex engage in coordinated global attacks against its rivals. The production will take place in Bangladesh. The products offered will be shoes, wallets and bags. The new company will have target market in India and Bangladesh.
OTHER ENTRY MODE OPTIONS
Different types of entry modes were also available for Leatherex, such as: * Export: Usually Bangladesh leather industry prefer exporting. But as Bangladesh lacks domestic technology and expertise, having joint venture with India is more preferable. * Greenfield Investment: This would have been more risky for a Bangladeshi company as it is not as strong as Indian companies.
After viewing all of the information, it can be said that choosing joint venture mode will be a good decision to enter India.

ANALYSIS OF INTERNAL ENVIRONMENT

The core competence of the firm will be a blend of cheap labor, raw materials and technological advancement. So the firm will focus on Resource based perspective to take advantage of the external business environment.
ANALYZING FIRM RESOURCES AND CAPABILITIES : Resources - The firm will have abundance of resources. * Capabilities - As resources are not sufficient; the joint venture will provide advanced technology to ensure superior coordination of functional activities to provide valued products. * Core Competencies - Bangladesh has cheap labors and the can be trained to use advance technology provided by India. So the efficient low cost production will provide competitive advantage over the competitors. This has been identified by using VRIO Framework * Valuable - Cheap and skilled labor, good quality of raw materials and technological advancement is definitely valuable for the company. It will help the company to sustain from external treat and turn them to opportunities. * Rareness - The rival companies in both the countries, lack the combination of technological advancement, cheap labors and good quality raw materials unlike this new firm. * Imitability-Though, it is rare and valuable, it is not easy to hide this strategy a secret. * Organization- The joint venture will be provided with proper authority to use its full potential when needed.
VALUE CHAIN ANALYSIS the Company’s value creation will begin with new product development by creating design and specifications for the product. Marketing and sales will generate demand by publicizing customer priorities that the product will satisfy. Marketing and sales will bring customer input back to new product development. Using new product specification, manufacturing unit transforms inputs to outputs to create the product.
HEADQUARTER LEVEL STRATEGY

Global Sourcing Strategy:
The company would follow In-house Domestic Sourcing Strategy for their raw materials such as leather, rubber, etc. This means that most of the components for making the final product will be supplied by the local suppliers. To enter into the Indian market, they would outsource in India and would follow In-house Sourcing from subsidiaries abroad. They would form an alliance with India by getting the know-how, design, technologies and machineries, chemicals from India and they would provide their processed leather and efficient manpower for producing the final product.

Diversification:
Recently Leatherex has become quite a diversified company in Bangladesh. They have formed many sister concerns by allying with countries such as Italy. To enter into the Indian market and serve with their quality leather fashion products, Leatherex would follow Related Global Diversification strategy. Their core competence is manufacturing leather product with their efficient labor. Since Indian market has a high demand for leather products so Leatherex decided to diversify their business there with products such as bags, shoes, wallets, etc.
SUBSIDIARY LEVEL STRATEGY
In future, the company intends to export their products to Vietnam, Indonesia, Japan, Taiwan, Hong Kong and Middle East via establishing subsidiary. The company would produce shoes, bags and wallets which are not based on distinct preference. So the subsidiary level strategy they will follow is support and implementation strategy. ORGANIZATIONAL STRUCTURE

Firms develop their international strategies by developing and maintaining an organizational structure that best leverages resources and core competencies. This firm will have an international division structure. This structure illustrates the importance of coordination and cooperation among domestic and international operations. Frequent interaction and strategic planning are also required. So for joint venture this will be appropriate.
Indian international division will be a mirror image of the core domestic business of
Bangladesh, with a mandate to sell the multinational’s products to foreign markets. Indian subsidiary role would be to sell the firm’s products.
I
NTERNATIONAL
D
IVISION
S
TRUCTURE

Headquarterter Domestic division General Manager Shoes

Domestic division General Manager Bags Domestic division General Manager Wallets

International division General Manager Area line A India (bags, shoes, wallets) I
NTERNATIONAL
D
IVISION
S
TRUCTURE

Headquarterter Domestic division General Manager Shoes

Domestic division General Manager Bags Domestic division General Manager Wallets

International division General Manager Area line A India (bags, shoes, wallets) INTERNATIONAL HUMAN RESOURCE MANAGEMENT
Since the joint venture will have its Headquarter in Bangladesh, it will be difficult to put employees from Indian parent. So they will be using ethnocentric staffing approach. However, Indian parent can easily cope with the situation because of cultural familiarity.
Both the parent company needs to create another department named International Department. The company’s Human Resource, Finance, Marketing everything will be work accordingly. Indian parent needs to start practicing Expatriation. It means employees from each department will be sent to Bangladesh for certain period of time. Leatherex needs to start an International Extension Department where employees will be assigned different assignments. The marketing sub segments, such as Customer Service, Advertisement and Distribution will be controlled by the Indian parent’s marketing department. Finance and Human Resource should be managed by the Employees on assignment from Leatherex and the expatriates from Indian parent.
International affair is a new department where diversity management, political and legal issues will be handled. Yearly reports of performance will be provided by this department. In future if there is a potential chance of expansion, this department will inform the parent companies. Another responsibility will be to make co-ordinations between internal departments.

The non-management will be taken from both the countries. But to blend different cultures together needs a certain level of diversity management. In this context of joint venture, a collective sharing and helpful corporate cultures needs to be made. Hence, HR department should be run by experienced HR personnel. Since marketing will be directly handled by Indian parent, HR should co-operate with this matter.

LIMITATIONS, RECOMMENDATIONS & CONCLUSION
In spite of all the sincere efforts, the report faced some limitations which were beyond our control. Some of the limitations identified are: * In preparing this report, enough information were needed which were not available in some extend and may raise questions of validity. * The current political situation created obstacles to prepare the project to communicate with group members The firm should define their goals and objectives clearly because shared investment may lead to conflicts regarding control. The report described, analyzed and compared the business opportunities with India and China. The analysis is based on external analysis, internal analysis and cultural analysis. The result was India is more favorable for this joint venture and thus, going for joint venture with the Indian company will be much easier and fruitful.