The Responsible Corporation in a Global Economy - Case Study Example

? Cameron International Corporation The al risks for considerations and their influences in supporting or deterring market entry Economists argue out that there are numerous barriers in different economies, which often hinder the desired projections in the company’s profits. Cameron International Corporation’s involvement in the Myanmar market shall face direct market barriers since it seeks to diversify its investments through capital-intensive programs to enter the market instead of practicing other entry mechanisms. Currently, the corporation’s involvement in the Myanmar market is often prone to direct barriers to market entry since the country is recuperating from economic crises caused by the lengthened period of sanctions imposed by other economies since early 1990s (Duncan, 2009). Despite Cameron International Corporation’s involvement in other developed nations, the company’s production and innovative approaches towards development of oil extraction equipment may hinder the desired success if it fails to establish the actual needs of the oil drilling industry in Myanmar. The risk involved in the company’s strategic entry in foreign markets is the lack of research and development programs to establish the unseen barriers, and the dependence on its large capital base for diversification of investments (Griese, 2004). Certainly, the risks of production that prompted to the explosion of BP oil rig revealed technological failures thus; the company’s profitability should not serve to guarantee success in Myanmar since technological breakdowns might lead to expulsion and exploitation from the mining industry (Crouch & Maclean, 2011). Arguably, the institutional risks present in the oil extraction corporation serve as deterrence to success in entering the Myanmar oil industry. The institutional risks born to the multinational corporation are; financial, human resources, and the corporate social responsibility practices (Meyer, 2010). However, the management is certain of prosperity in the market due to its capital amount set aside for the investment. VRIO analysis to determine the existence of support to entry VRIO analysis in Cameron Corporation establishes a strategic scheme towards the global market approach. Firms draw their market entry strategies to reflect their vision statements and determine the success of objectives upon any of the corporation’s segments. Ideally, VRIO abbreviations denote value, rarity, imitating or counterfeiting, and organization’s competitiveness in guaranteeing profound market entry variables (Griese, 2004). As an organization, Cameron International boasts over its business success in the continued production of oil services and equipment. The sectoral approach in the energy production industry enables the CAM Corporation of continued innovation of ideal equipment in correlation to the raising performance together that seeks to denote its essential need to deliver value to the mining companies in order to become the global market leader in supplying valves and fittings in subsea oil wells. Secondly, the company asserts that its segment strategy is to enable corporations and countries to meet their energy services needs (Duncan, 2009). CAM targets those companies that operate in petroleum and natural gas exploration and extraction. Due to the strategic involvement in the energy industry, the company is arguably a leader in the production and marketing of pressure control equipment critical for competent oil and natural gas extraction programs. The company’s underlying strengths of rich history in production of valves used in exploration sites in over 300 countries acquaint vast opportunities towards success in its bid to enter the Myanmar oil industry. CAM competes with FMC Technologies and National-Oilwell Varco as the market challenger and market follower respectively (Lincoln, 2007). Therefore, the VRIO analysis declares proficient support in CAM’s entry in the Myanmar oil production industry. Addressing the assessed cultural issues after entry into the Myanmar market Cameron International Corporation’s strategic evaluation of Myanmar social and cultural environment establishes the existence of different issues, which directly and indirectly influence the entry and operations of foreign corporations in the economy. For instance, the team asserted the existence of ethnic politics despite the argued existence of pristine democracy acquired after the eradication of military power (Duncan, 2009). The cultural influence in the politics threatens business’ success upon entry in the market since the underlying constraints exhibited by the ethnic political system aims at autocratic and repressive structures to secure wealth for the key leaders at the expense of the participating foreign business entities and the entire economy (Crouch & Maclean, 2011). Further, the research establishes that the country has various religions, but the Muslim and Christians are the most professed faiths. Therefore, the country’s religions restrain the variance of the market for existing and other potential entrants shall fear the threat of political instability due to the unsolved differences in the country’s culture and religion differences. CAM’s market entry into Myanmar targeting to manufacture oil drilling and exploration equipment is integrated with the general global experience in different economies expressing different cultural practices (Lincoln, 2007). Arguably, the multinational corporation assessment strategy ascertains that the sale of shares to the local population is salient to reduce the constraints that may hinder the desired progresses since the stakeholders will defend it from any unfavorable cultural influences that may serve to halt the business dealings (Griese, 2004). Lastly, the corporation’s approaches of corporate social responsibility and offering of employment to the local population are integral to achieving success in the market since the inhabitants will perceive belongings thus showing loyalty to the company. Determination of whether the company should pursue foreign direct investment over subcontracting to provide component parts The investment capital of the company is overwhelming as reflected from the 2011 financial year at $890 million. Arguably, the financial base is a strategy to assure the company of competitive production and research on its intended equipment in Myanmar’s oil exploration industry (Meyer, 2010). Presumably, the company might incur losses upon licensing and franchising deals since the authorized dealers will undertake production and delivery utilities with the urge of maximizing their profits rather than delivering valuable equipment to the drilling firms for the acquisition of market share rather than maximization of profits (Crouch & Maclean, 2011). Cameron Corporation is a financially competent global entity entrusted with the manufacture of high quality drilling and exploration equipment for oil rigs in sea and land. Despite the company’s failure of its drilling equipment in the Gulf of Mexico oil rig, it is dependable for enhanced equipment manufactured with the latest technologies. These facts are ideal to ascertain CAM’s competence and success in venturing into the Myanmar market directly rather than subcontracting other dealers (Duncan, 2009). Therefore, the company should embark on foreign direct investment approaches, with the limited sale of equities to the local investors to allow a limited extent of influence in its programs. Recommendations on the joint venture partners that are appropriate and the percentage shareholding capacity if Cameron Corporation decides to engage in FDI Despite CAM’s urge to enter the Myanmar market directly, the company’s management should evaluate the necessary needs to engage in joint ventures as a beneficial approach of limiting the threat of competition and other risk factors that may result from the general business environment. Arguably, Cameron Corporation can consider the engagement of other manufacturing firms such as FMC Technologies and Trimble Navigation Limited into a joint venture (Griese, 2004). Certainly, CAM manufactures flow, systems and services for the oil extraction industry thus a joint venture with other competitors seeking to serve the same clientele groups is a factor towards success by limiting any negative pressures from the competitors. FMC Technologies produces industrial chemicals, which are useful in cleaning systems. Further, FMC owns FMC Environment Solutions that ensures that the extraction and exploration processes coincide with environmental controllable measures (Lincoln, 2007). The inclusion of Trimble Navigation Limited is also a strategic approach since the joint venture shall be able to produce highly valuable equipment. CAM Company should secure 50% of the total production mandate while letting the remaining share to the other partners (Crouch & Maclean, 2011). Through this approach, the company shall be able to market almost all types of products required by the exploration and extraction companies with reduced competition since it will have dominated two of the challengers. Three greatest difficulties that may develop and the appropriate strategies that the company should use in case they arise Obviously, the cultural differences that extend to influence the political and economic development in Myanmar shall also hinder the desired progress of Cameron Corporation at the initial stages of operations and the lengthened period if the company fails to seek for appropriate strategies for defense. Cameron Corporation is vulnerable to stringent government regulations that influence production of oil equipment to suit environmental needs and to enhance proper utilization of resources (Lincoln, 2007). Secondly, Cameron Company perceives the existence plans towards the production of renewable energy as a threat to continued production of oil equipment in the market. The volatility of the autocratic leaders and their corruption involvements imposes political and economic risks to the company and hinders the desired beneficial exchanges sort to emanate from business’ participation in the Myanmar market. However, the risk management approaches of extending equity to shareholders and partners in the joint venture are appropriate resolutions to avoid economic and political hindrances. Lastly, the company shall grow towards success after ensuring that its products coincide with the stipulated environmental measures (Griese, 2004). References Crouch, C., & Maclean, C. (2011). The responsible corporation in a global economy. Oxford: Oxford University Press. Duncan, H. (2009). Asset management in theory and practice. S.l.: New Age International Pvt. Griese, N. L. (2004). Energy pipeline news year in review 2003. Atlanta: Anvil Publishers. Lincoln, E. J. (2007). Winners without losers: Why Americans should care more about global economic policy. Ithaca: Cornell University Press. Meyer, T. A. (2010). Innovate: How great companies get started in terrible times. Hoboken: Wiley. Read More