Acquisitions in India: the case of Michelin

India has positioned itself as a powerful tool for global ecomic growth, currently it is believed to be performing below its potential but there are triggers in the environment which indicate the prospective growth of the nation in the future these triggers include: (Singh, 2010)

• Competitive business environment.

• Privatization agenda.

• Potential and strong services sector.

• Cheaper labor hand.

• increasing Foreign Direct Investment.

The two last items named before (cheaper labor hand and Direct investment) are those that I am going to talk about, because the cheaper labor hand has attracted many FDI to India in the recent years, consequently that FDI has influenced positively in the economy of this country.


To understand better the impact in the economy of this phenomenon, firstable I want to define what exactly FDI is; According to the economy watch, Foreign Direct Investment (FDI) is that investment, which is made to serve the business interests of the investor in a company, which is in a different nation distinct from the investor's country of origin. A parent business enterprise and its foreign affiliate are the two sides of the FDI relationship. Together they comprise an MNC. The parent enterprise through its foreign direct investment effort seeks to exercise substantial control over the foreign affiliate company.




It means that many companies from all over the world, specially from United States are interested in investing in enterprises located in India due to its rapid and constant economic growth. In the case of Michelin, it entered to India by acquiring (that is a type of FDI) a Tyre´s local company, now they are planning to invest more money in this country acquiring more plants, because in the last year they have received great profits from this investment. It is very profitable for both countries, in this case for France and India, because Michellin created jobs in India and that makes the economy of that country to improve. In addition, the initial investment at the moment to acquire the plants or other enterprises, the money from that sell enters to the recepient country balance of payment. On the other hand, it is very profitable for France, because Michellin now is selling more and the margins are higher.


The role of Government is very important, because it is permissive with the entry of FDI to India in the tyre sector, it does not impose any restriction, but at the same time it gives subidies to the local producers of tyres, in order to avoid the big Multinational Corporations "swallow" the small ones.


There is an importan aspect that I want to mention: culture. Because acquisitions selection decisions are generally driven by financial and strategic considerations, yet many organisational alliances fail to meet expectations because of difficulties in the acculturation process which would compromise the knowledge transfer and learning. (Salama, Holland, Viten, 2003)


In this case we encounter two different countries: France and India, it means two different cultures, and the relation between workers and managers from both countries must be good, in order to achieve the goals and to be able to transfer technology and knowledge, do not forget that value creation is one of the most important objectives in successul acquisitions too, not just to maximize profits.

References:

"DAWN.COM Economic & Business Foreign investment plans for tyre manufacturing." DAWN.COM Home Latest News, Pakistan, World, Business, Cricket and Multimedia. N.p., n.d. Web. 24 Oct. 2010. http://72.249.57.55/wps/wcm/connect/dawn-content-library/dawn/in-paper-magazine/economic-and-business/foreign-investment-plans-for-tyre-manufacturing.

Foreign Direct Investment (FDI) Definition Economy Watch." World, US, China, India Economy, Investment, Finance, Credit Cards Economy Watch. N.p., n.d. Web. 24 Oct. 2010. http://www.economywatch.com/foreign-direct-investment/definition.html.

"Michelin to invest Rs 7,000 cr in India - The Economic Times." The Economic Times: Business News, Personal Finance, Financial News, India Stock Market Investing, Economy News, SENSEX, NIFTY, NSE, BSE Live, IPO News. N.p., n.d. Web. 24 Oct. 2010.

Salama, Alzira. Holland, Wayne. Vinten, Gerald. (2003). Challenges and opportunities in mergers and acquisitions: three international case studies- Deutch Bank - Bankers trust; British Petroleum- Amoco; Ford-Volvo. Journal of European Industrial Training. pag. 313

Singh, Kavita (2010). An Analysis of Relationship between the learning organization and the organization culture in Indian Business Oganizations. Organizations and Markets in emerging economies, Vol.1, No. 1(1). pag.144


Images taken from:
http://www.guiasenior.com/contenidos/images/Michelin-F.jpg

http://elturismologo.files.wordpress.com/2010/06/taj-mahal-agra-india.jpg

http://www.definicionabc.com/wp-content/uploads/francia.jpg

Interesting video !

Here, I let you a video about a case of a woman who was helped by the IOM. It is very interesting and accurate for the last post!




This video was taken from:
http://www.youtube.com/watch?v=MU9wdmz7umI, The Power to Choose: Self-Defense for Women Migrant Workers 1 of 3, 23 Oct. 2010

International Organization for Migrations & women migrant workers

International Organization for Migration (IOM) was established in 1951 and is an inter-governmental organization that manages migration issues and provide aids for migrants and governments around the world.

In this moment it has 127 members. IOM works to help ensure the orderly and human management of migration, to promote international cooperation on migration issues, to assist in the search for practical solutions to migration problems and to provide humanitarian assistance to migrants in need, including refugees and internally displaced people. (IOM, 2010).

IOM works in the four broad areas of migration management:

• Migration and development
• Facilitating migration
• Regulating migration
• Forced migration.

Almost half of the total number of migrant workers in the world today are women, the IOM has a special treatment because they are considered more vulnerable than other migrants, most of them leave their origin countries leaving behind their families, they children and their stability.

When they arrive to the new countries they will be established, they found that to be and to work there is not as easy as they thought, and the majority end up working in low-skilled or sexual jobs. they do not have access to social security and everything becomes more difficul when they do not have even ID cards.

The International Organization for Migration (IOM), through its gender policy,is committed to ensuring the particular needs of all migrant women around the world, IOM watches over the human rights of these women, because they are vulnerable to discrimination, sexual abuse and labour exploitation.

Some of the objectives of this policy are:

• Protecting women migrant workers from sexual and gender-based violence,
  domestic violence, abusive labour practices and discrimination.
• Addressing women migrant workers’ disproportionate labour market discrimination.
• Addressing gendered forms of racism and xenophobia against women migrant
  workers.
• Promoting the physical and mental health and well-being of women migrant workers.

IOM has created programs for these women to teach them new languages, new tasks, new habilities and to give them psychological support. And in this way, make them easier the adaptation processes to the new culture in the country they will be.

IOM helps these women with legal advice if they need it, because some of them turn to low-skilled jobs because they do not have ID´s or in the worst scenario, they are deported.

The job of the IOM is very importan because it prepares women and migrants in general to adapt to their new life abroad, and it gives them tools such as employment and cultural orientation to face all kind of situations they can stumble with during the process. it goes with them and their families during all the process.

Here, I let you a video in which you can see a testimony of a girl who is a migrant and the role of the IOM in his process.

References:

International Organization for Migrants, IOM - About IOM." IOM. N.p., n.d. Web. 16 Oct. 2010. http://www.iom.int/jahia/Jahia/about-iom/lang/en.

ACNUR, IOM, (2009), Working to prevent and Adress violence against women migrant workers. 16 Oct. 2010 . http://www.acnur.org/t3/fileadmin/Documentos/nuevo_sitio/2010/conferencia/3.%20Background%20Information%20on%20Mixed%20Migration/Respecting%20the%20Human%20Rights%20of%20People%20on%20the%20Move/IOM%20-%20Working%20to%20Prevent%20and%20Address%20Violence%20Against%20Women%20Migrant%20Workers.pdf

Ubuntu: Peaceful and Hamonious relationships

Ubuntu is an South African philosophy that promotes communality and good relations. It states that everyone must recognize him/herself and others as humans and act like one, respecting others´ positions and thoughts, thinking in others´welfare and appreciating what ohters think and express.

This philosophy can be applied to management based on generating a good working environment, in order to take advantage of it and increase productivity and efficiency.

Ubuntu helps to understand and to accept values, norms, beliefs and other factors that affect cultures and that can be useful for cross-cultural managers. It serves to improve working environment and relations when the company has employees from different countries. Taking into account that productivity and efficiency increase as relationships are gettiing better.

Inside the organization Ubuntu philosophy can be used to promote community, harmony, solidarity and hospitality between its members, they realize that they cannot do all the tasks alone, they need help,advices and cooperation from their workmates, they can share or divide the hard work and in this way they diminish the burdens, as I said before: to increase efficency.

Under ubuntu philosophy, inside the organization appears interdependence "A person is a person through others", it means the unity is the most important rather than the work that independent parts do (synergy). the fact that the organization succeed because of the joint work of all the members, creates motivation and tight relations, then everybody will trust each other and they will act as a "family", they will feel confident to talk and expressed what they want, what they think and what they expect from the organization. employees will feel confident to transmit ideas and complaints to managers, they can discuss them together and achieve consensus to take decisions and actions. In this way employees will be identified with organization´s objectives and both, managers and employees can benefit from that.

As a conclusion, from Ubuntu perspective, we can affirm that if people feel they are bieng treated with respect and their ideas are worth, they will have a great commitment to achieve organizational goals; following this, cross- cultural managers mus implement and foster Ubuntu philosophy inside the organization to have a good impact on the output: improve the working environment and and then efficieny and productivity. (organization´s goals)

It is important to mention that the modern organizations must to adapt themselves to the environment and culture in which they are working, and the most successful are those ones who can adapt to it better and faster. (Dynamic work)

References:

Mangaliso, P. (2001). Building competitive advantage from Ubuntu: Management lessons from South Africa. Academy of Management Executive, Vol.15, No. 3.

Pictures taken from:

http://www.omgalec.com/images/itsAwildWORLDholdHANDS1680.png

http://travelblog.portfoliocollection.com/FeaturedImage/ubuntu.jpg