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RENAULT ENTERS INDIA WITH A JOINT VENTURE
Renault, the French auto-maker, is partnering with Mahindra and Mahindra, the Indian tractor and SUV maker, to launch its ‘Logan’. It has developed the Logan especially for Emerging Markets. The four door saloon car is already sold in Romania and is a low-cost car suitable for emerging market purchasing power.
Logan will enter India’s mid-market and will compete head to head with Tata, Ford and Hyundai. The mid-market segment represents 20 per cent of the total auto market, which reached 1 million cars in 2004. Renault’s partnership with Mahindra and Mahindra will force the latter to dispose of its small stake in the Indian Ford subsidiary. Renault together with Nissan (now 44 per cent owned by Renault), is focusing on growing auto markets in emerging countries.
Source: K. Merchant, ‘Renaul/Mahindra to Launch Logan in India’, Financial Times (2004: 28).
In relation to the above Mini case study, answer All the following questions.
1. Examine the factors that influenced Renault's Decision to choose a joint venture entry mode as opposed to Green Field entry mode to enter the Indian market. Include in your answer an explanation of how have the characteristics of India affected this decision.
2. Discuss the main advantages and disadvantages for Renault of using a Joint Venture mode compared to a Green Field entry mode. In your answer, explain the main differences also between the two modes in terms of control, risk, and flexibility. Include an action plan in your recommendation section which includes some steps to portray Renault as a good corporate citizen and to reduce its political risk.
Overall, Support your answers with examples and statistical/evidence and arguments in your answers