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Unit 12: HRM in Cross-border Mergers and Acquisitions

address the market, a well-connected local distribution partner is almost a prerequisite. Japan Notes
has also a unique pharmaceutical pricing system where the government reimburses medical
agencies for drugs at an officially set price irrespective of the actual purchasing price. The
alliance with Japan provided Ranbaxy a platform to gain experience of the Japanese regulatory
framework and market environment.

Notes Indian Greenfields

Greenfield opportunity refers to a marketplace that is completely untapped and free for
the taking. It is one of the market entry strategies being used by the companies to enter
into the foreign markets. Unlike a JV, where the wealth of knowledge comes from the
foreign partner, the experience of learning from scratch can be rewarding in the long run.
An Indian company can embed itself far deeper in a foreign market with organic growth.
A lone ranger foray will help a company maintain or adapt its organisation culture far
easier than in the case of an acquisition where a company will have to tinker or make do
worth what it acquires. If the local regulations are not well understood, companies can
face a tough time with the authorities. Also, hiring staff can be an issue if the Indian player
is not a removed one.
TCS wanted to enter China not as a JV, or as an acquisition. TCS wanted to learn China by
itself. The company considered a few acquisitions before deciding to go on its own in
China. In June 2002, TCS started its operations by setting up a wholly owned foreign
enterprise in China. Headquartered in Shanghai and with its delivery centre in Hangzhou,
TCS today employees 600 people in China, 95% of who are locals. TCS today knows how
to hire, fire in China. It has an understanding of how the market works there because TCS
started ground-up in China. That’s the great thing about starting from the scratch, the
progress might be painfully slow, and at times with pitfalls, but the learning is immense.
There is another way to be a multinational – by simply manufacturing in the country and
exporting tonnes of the produce. Reliance Petroleum is setting up a refinery that will
produce 29 million tonnes of oil a year – all for exports, specifically to the US and Europe.

Examples of Indian M&A’s

1. Essel Propack Acquisitions: Essel Propack, its products being laminated tubes used to
package toothpastes and medicines, is one of India’s few companies with overseas clients,
overseas bases, and overseas employees. The company has manufacturing facilities in 14
countries through 24 plants in geographies like China, the US, the UK, Russia, Germany,
Mexico, Columbia, Venezuela, Philippines, Indonesia, Egypt, Nepal and Singapore, besides
India.
The company has been using a strategy of acquisitions and organic growth in foreign
geographies to expand its footprint. Established in 1984, Essel made its first international
foray with a joint venture in Egypt to manufacture laminated tubes. In 1997, the company
formed a wholly-owned subsidiary in Guangazhou, China. The big move came in 2000,
when Essel acquired the tubing operations of the Propack group, which was the fourth
largest laminated tube manufacturer globally. Propack had operations in China, the
Philippines and Columbia, Venezuela, Indonesia and Mexico, which immediately propelled
Essel into the big league. In 2003, the company set up a manufacturing plant at Danville in
the US to supply laminated tubes to Proctor and Gamble’s North American operations.

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