firnaz - iom - cw2

Coursework Two

Mohamed Firnaz Mohamed Firose Khan

MDX Student Number : M00501785

BA (Hons) Business Management

(January Intake 2014)

Individual Coursework Two International Operations Management

1 BA (Hons) Business management

Executive Summary

This is a follow up to the Coursework One, here it’s explained how the strategy will be applied

and how can Wijaya Products (Pvt) Ltd can be a successful organization in international market

through joint venturing.

Absorption capacity is the ability and strength to identify the importance of new information and

knowledge by adopting and apply it to its profit making. To carryout it company need to transfer

technology and knowledge to the foreign company.

It is also important that company implement an effective international supply chain. A good supply

chain will ensure the products are delivered on time with excellent quality. It is also important for

the company to outsource certain activities to minimize cost and to work effectively. The company

will outsource Transportation, packaging, marketing and Promotion, R&D and Recruitment and

Training to partnering company AL Rahma Group.

The organization need to use their knowledge, information, capability and resources well. If it’s

done well then it will be a successful organization in competitive global market.



Table of Contents 1. Introduction ......................................................................................................................................................... 3

1.1 Joint Venture .............................................................................................................................................. 4

2. Absorptive Capacity and Knowledge Transfer ................................................................................................ 5

2.1 Social Context ............................................................................................................................................. 5

2.2 Organizational Context ............................................................................................................................. 6

2.3 Relational Context ...................................................................................................................................... 6

2.4 Technology and Knowledge Transfer....................................................................................................... 7

3. International Manufacturing Networks ............................................................................................................ 8

4. International Supply Chain ............................................................................................................................... 9

5. Outsourcing ....................................................................................................................................................... 10

6. Conclusion and Recommendation ................................................................................................................... 11

7. References .............................................................................................................................................................. 12



1. Introduction

In the Coursework One, Told about Internationalization and it’s important for Wijaya Products

(Pvt) Ltd. The Internationalization will be done through FDI by partnering with an established

local company in Qatar. In the first coursework, it is mentioned how the internationalization will

take place. Wijaya Products (Pvt) Ltd is not new to the international market it is already exporting

to Australia, New Zealand, Japan, South Korea, Maldives, Cyprus, Italy and England through

export, but in this scenario it is going to collaborate with a local company in Qatar because it will

help to understand the market even better.

One of the main advantage that Wijaya Products having is the Spices in Sri Lanka are very rich in

standards (The Spice Council of Sri Lanka 2010) The Joint Venture strategy will minimize the risk

of Internationalization due to local company knowledge and competencies. There are lot of South

Asian people living in Qatar and in its surrounded Middle East countries and they prefer to have

spices in their foods. So there will be no burden for demand for spices in Qatar.

The joint venturing agreement will be made stating that the products will be produced in the name

of Wijaya Products (Pvt) Ltd but will be packed according the social and cultural differences in

Qatar. So the company will do the business in the name of Wijaya Products. It will own more

percentage of shares between both the companies. The internationalization will be made with the

help of partnering company.



The Coursework Two will be explaining the way that recommended strategies will be

implemented through Joint Venturing in Qatar with a local company by Foreign Direct Investment.

There are some advantages which will be gain through joint venturing, such as

1. It will be politically acceptable.

2. Can be able to access local partner’s knowledge.

3. The risks and development costs will be shared.

1.1 Joint Venture

The Internationalization will happen through Joint Venture. Wijaya Products (Pvt) Ltd will

be partnering with “AL RAHMA GROUP” which was established in 1990 and it’s

currently in the food sector for the supply of Spices, Grains and Animal Feeds.

Al Rahma is focusing on bringing the best quality product to people in Qatar. They have

been specialized in rice and Grains. This Partnership will help the company to become

specialized in spice business too, because the quality of Sri Lankan spices is very high.

Wijaya Group has also got Halal certificate which is most compulsory in Qatar.



2. Absorptive Capacity and Knowledge Transfer

The organization ability and strength to identify the importance of new information and knowledge

by adopting and apply it to its profit making is defined as Absorptive capacity. Kostova (1999)

defined it as, the success of transfer as the degree of institutionalization of an organizational

practice in the recipient organization.

Joint Venturing will enable the organization to acquire new knowledge from the partner and most

importantly learning is a major objective for the formation of Joint Venture (Hamel, 1991; Makino

and Delios, 1996). These alliances will shorten the learning cycle and expediting its response to

the needs and wants of its customers. The most important measure of Absorptive capacity is R&D

investment but in this scenario it is not very complex because the partnering company already have

done it.

Implementation and Internationalization are the factors which determine effective organizational

practices. It is categorized into three context, which are Social, organizational and relational.

2.1 Social Context

It analyses about the country which is Sri Lanka. In this case Wijaya Products (Pvt) Ltd going to

do internationalization through partnering. Which will break down the entry barriers and increase

the market reach. According to Commonwealth Alliance Program, joint venture/ alliances

accounted 25% of all revenues in 2005 (CAP, 2005). Under Psychic distance pattern the entry

rules and regulations will be minimum and it can be done easily when compared to opening an

own sales subsidiary.

Under regulatory framework there is a vast differences in culture and laws. In Qatar Islamic law

is followed but in Sri Lanka they are following British law, Sinhalese law and as well as Islamic

law. The major strength to Wijaya Products is that they have gained Halal Certificate which is very

important to carryout business in Qatar and Middle Eastern countries. In both Sri Lanka and Qatar

the culture is more or less same and also there are lots of south Asian people living in Qatar to

work and all the peoples taste and style are same. The major drawback is language because the

national language in Qatar is Arabic but English is widely spoken. Since it’s a joint venture it will

be much easier to maintain it.



2.2 Organizational Context

Wijaya Products needs to transfer its successful strategies and practices to new sales subsidiary

and make needed to make changes according to the current location and people. The company’s

R&D department in Sri Lanka has been doing many activities to make the products a successful.

The company also motivating the employees well and making them comfortable to work and sense

them that they are working to the organization who respects and listen to the idea in further

developments.

Wijaya Products needs to take it forward to the partnering company which is Al Rahma Group

with collaboration. In any organization in any part of the work every employee’s dream is to feel

that organization is valuing them. So the strategy needs to be followed in Qatar as well.

2.3 Relational Context

It is very important that cooperative relationship is maintained well and strong boding is formed.

In Wijaya Products (Pvt) Ltd always make the employees feel good and motivated in very friendly

environment. It is very important to respect and every employee of the organization in in order to

generate loyal employees and as well as profit. These types of traits should be transferred into new

sales subsidiary. Since the most of the workers in the company is south Asians people, organization

can follow same or little changed strategy to motivate and satisfy employees.

In Sri Lanka there are Sinhalese, Christians, Hindus, Muslims etc. religious peoples are working,

and it is used to celebrate each and every religions festivals as a whole. These emotional bonding

needed to be transferred to the new sales subsidiary too. These strategies will ensure the success

of the organization



2.4 Technology and Knowledge Transfer

The technology which is used in Sri Lanka needs to be transferred and as well as need to adopt to

the technology which is available is Qatar. The best technology needs to be carried out in

manufacturing and packing. Since the national language in Qatar is Arabic and also English is also

there, the organization need to re-design the packing of the product to suit the current location

because in Sri Lanka most of the packages are designed according to Sri Lankan Peoples tastes

and styles and it’s in Sinhalese and also in English language. But it needed to be changed here and

the package needs to be in Arabic and as well as in English to cover all segment.

The controlling part will be done by both the companies but Wijaya Products (Pvt) Ltd need to

transfer best practices and technology from home country. The home company has different style

of handling customers, which was very successful in Sri Lanka and it also needed to be transferred.

This strategy will make customers loyal and emotionally touched to the product.

The home company which is Wijaya, need to closely look and handle whether the technology and

knowledge has been transferred effectively and efficiently. If there is any lack of performance then

needed to provide training facilities to make it better.



3. International Manufacturing Networks

Spices which are available in Sri Lanka are very rich in standard and qualities and have enough

demand in local and world market. Which can’t be produced in Qatar with same quality so the

manufacturing plant will be in Sri Lanka. The production will be done in Sri Lanka because the

resources are available nearby and it will reduce huge costs.

Since the company is aiming to form a series of Internationalization to various Middle Eastern

countries, in future there will be a huge demand so mass production is needed. If it happens Wijaya

has a plan to open up a manufacturing plant in India which is geographically close and also the

spices in India is very rich in standards.

Organization is sufficient enough to meet the demand for the people in Qatar. The raw materials

are available enough to carry out internationalization in Qatar by joint venturing with Al Rahma

Group.



4. International Supply Chain

The Products (Spices) will be exported directly from Sri Lanka to Qatar through Cargo services

from “Transco – International Cargo Services (Pvt) Ltd”. It is one of the pioneer company in

freight forwarding and custom clearance services in Sri Lanka and across the globe and they are

established as competent and reliable service providers. It has freight forwarding by Sea and Air.

They have partners worldwide. It also provide at low cost with maximum efficient and cost

effectiveness without compromising the quality of the service.

Original copies of goods which are shipped into Qatar are essential. Which are commercial

invoices, shipping document, packing list and certification of origin must accompany goods

entering into Qatar. Transco (Pvt) Ltd has agent (Sealine) in Doha, Qatar and they will guarantee

that all necessary arrangement will be made to successfully ship goods to Qatar. The general

custom duty for cargo which entering Qatar is 5%, custom clearance will happen 1-2 days for air

cargo and 2-4days for sea cargo.

The spices which are produces in Sri Lanka can be kept for more than 3 to 4 years without any

reduction in quality, which is a major boost for international trade where any unfortunate technical,

natural disasters interruption will cause some delay in delivery but it won’t affect the goods when

it late for some days. But the goods need to be delivered before stocks become out of stock in

Qatar, which is more important. Because customers’ needs anything when it’s really needed if it

is not delivered on time they will switch to any available substitute, which will be a huge drawback

to Wijaya products and to its reputation. It will be delivered directly to Wijaya (Pvt) Ltd sales

subsidiary in Qatar without any third party involvement, which will reduce the transportation cost.

It will be stored in warehouse safely.

Supply Chain will be,

Wijaya Products (Pvt) Ltd (In SL)

Transco Pvt Ltd (Shipment) End Customer

Sales Subsidiary (In Qatar)



5. Outsourcing

Outsourcing is one of the most effective strategy if it is used well. It is used to reduce costs and to

save money. Wijaya Products (Pvt) Ltd will outsource few areas to its partner Al Rahma Group.

The company will outsource Transportation, packaging, marketing and Promotion, R&D and

Recruitment and Training.

Transportation is a major factor is sales of products because the products need to be delivered on

time with safely handling the goods. It costs very huge money for transportation alone so

outsourcing will be a key here to minimize cost. The packaging needed to be done in suitable to

the customers in Qatar by taking their styles and tastes and designing the package. In the package

it need to be in both Arabic and English languages. By outsourcing it to the local company, they

will know much better about it than new company. It’s same for the marketing and promotion

strategies, because Al Rahma Group is been doing business successfully from 1990 and they know

which strategy will attract the customers.

R&D team will find out how the products are moving around customers and whether they are

satisfied or not, and also identifying market opportunities and working in line with sudden market

changes. Recruiting qualified employees to further improve the sales and work towards long term

success and stability.

There is also drawbacks in outsourcing, the own company might lost managerial control because

it will be given to outsource company. Another major disadvantage is important and secret

information will be shared with outsourced company. The outsourcing might try to decrease

expanses so it may reduce the quality as well.

It is must to have a very good relationship with outsourcing company to avoid such issues and

build a strong relationship.



6. Conclusion and Recommendation

The Internationalization will make Wijaya Products (Pvt) Ltd products to reach global market. In

order to success in the foreign market and make profits, there is no better way than joint venturing,

which is much more risk free when compared to opening up a own sales subsidiary without having

information and knowledge about Qatar and its culture. By collaborating with a local company

which will make life lot easier but cannot guarantee the success. Therefore the company needs

transfer the knowledge which they gained in doing business in Sri Lanka (Home).

The organization need to transfer successful strategies and practices which were followed in Sri

Lanka. Joint venturing will further give strong support to Wijaya Products (Pvt) ltd because the

partnering company have enough experience and knowledge regarding the spice industry and the

market in Qatar. The company need to use the opportunities which is available and make it

successful.

Wijaya Products (Pvt) Ltd also need to analyze the successful and unsuccessful strategies which

is performed in Sri Lanka and make sure the right strategy is followed to make the company a

successful. If the Internationalization become successful it will open further more market to

internationalize to other Middle Eastern countries as well.

The organization need to use their knowledge, information, capability and resources well. If it’s

done well then it will be a successful organization in competitive global market.



7. References

1. Shaker A. Zahraa, , James C. Haytonb, 2008, The effect of international venturing on firm

performance: The moderating influence of absorptive capacity, Volume 23, Issue 2, Pages

195–220.

2. Isabel Estradaa, Gabriel de la Fuenteb,Natalia Martín-Cruza, 2010, Technological joint

venture formation under the real options approach, Volume 39, Issue 9, Pages 1185–1197.

3. Kostova, T, (1999), Transnational Transfer of Strategic Organizational Practices: A

Contextual Perspective, the Academy of Management Review, Vol. 24, No 2, pp. 313.

4. Xiaobo Wu1, Xuefeng Liu2, 2009, Absorptive capacity, network embeddedness and local

firm's knowledge acquisition in the Global Manufacturing Network, Volume 46, Number

3-4/2009, pages 326-343.

5. John B. Houlihan, 1985, International Journal of Physical Distribution & Logistics

Management, Vol. 15 Issue: 1, pp.22 – 38

6. Douglas J. Thomas, Paul M. Griffin, 1996, Coordinated supply chain management,

Volume 94, Issue 1, Pages 1–15

7. Benita M Beamon, 1998, Supply chain design and analysis:: Models and methods, Volume

55, Issue 3, Pages 281–294

8. Varun Grover, Myun Joong Cheon, James T. C. Teng, 1996, the Effect of Service Quality

and Partnership on the Outsourcing of Information Systems Functions, Vol. 12, Issue. 4,

pp. 89-116.

9. Linda Argotea, Paul Ingram, 2000, Knowledge Transfer: A Basis for Competitive

Advantage in Firms, Volume 82, Issue 1, Pages 150–169.

10. V. Albino, A.C. Gravelly, M. Gorgoglione, Organization and technology in knowledge

transfer, Volume 11, issue 6, and pp.584 – 600.



11. The Spice Council of Sri Lanka [Online] Available from:

http://www.srilankanspices.com/sl_spices.html [Accessed: 3rd July 2014].

12. Joint Venturing 101 - Should I start a joint venture? [Online] Available from:

http://entrepreneurs.about.com/od/beyondstartup/a/jointventures_2.htm [Accessed: 3rd

July 2014].

13. Al Rahma Group [Online] Available from: http://www.alrahmagroup.com/index.html

[Accessed: 3rd July 2014].

14. Transco – Our Services [Online] Available from:

http://www.transcocargo.com/index.php?view=services [Accessed: 4th July 2014].

15. Charles Hill, W. L. (2012) International Business: Competing in the Global Market Place.

9th edition. New York: McGraw-Hill Irwin

16. Charles Hill, W.L & Arun Jain, K. (2013) International Business: Competing in the Global

Market. 6th edition. New Delhi: McGraw-Hill Education (India) Private Limited

http://www.srilankanspices.com/sl_spices.html

http://entrepreneurs.about.com/od/beyondstartup/a/jointventures_2.htm

http://www.alrahmagroup.com/index.html

http://www.transcocargo.com/index.php?view=services

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