Internationalisation process of PanAust in Laos (mining)

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International business essay intro 300 words max “What is the internationalisation process of company…… in (industry and country)? Paragraph 1: Overview of the company as an MNC motive of internationalisation – Resource or assetseeking motives • Access raw materials • Gain access to knowledge or other assets • Access technological and managerial knowhow available in a key market · Climate of the industry in the host country Paragraph 2: Internationalisation process of the firm (how? key challenges?) Analyse the host country (some theories from this course will be useful) HISTORY + theories Theory 1 : porters diamond : It suggests that the national home base of an organization plays an important role in shaping the extent to which it is likely to achieve advantage on a global scale. This home base provides basic factors, which support or hinder organizations from building advantages in global competition. Porter distinguishes four determinants: 1. Firm strategy,structure and Rivalry 2. Related and supporting industries 3. demand conditions 4. factor conditions Paragraph 3: Explain and analyse the company’s action (which entry mode? how? Why? Partners? Any factors affecting the entry mode? The identified case should be from 2000 and onward. Joint ? PanAust is an Australian incorporated company that is owned by Guangdong Rising H.K. (Holding) Limited which is a wholly owned subsidiary of Guangdong Rising Assets Management Co. Ltd (GRAM). GRAM is a Chinese state-owned company regulated under the State-owned Assets Supervision and Administration Commission, the People’s Government of the Guangdong Province in China. Include: exporting ,Turnkey project, acquisition, Management contract Merger, Franchising , Licensing joint ventures Paragraph 4: last paragraph : Reflections (What have you learnt?) Country analysis: already submitted introduction keep unchanged. Lao People’s Democratic Republic, or Laos, is a country that has been seen to be developing in many areas. It is located in South East Asia and is bordered by several other Asian countries such as China and Thailand. One of the recent major developments in Laos has been the large expansion in mining, which has led to a significant rise in economic growth. The key factor behind the increase in the mining market is that Laos is ranked as one of the most resource rich countries in Asia and is home to over 570 mineral deposits. These include gold, copper, zinc and lead. The Laos government has used this potential to promote and allow foreign direct investors (FDI) and thus increase economic development further. Considering that Laos has a significantly stable government and reasonable access to roads, water and power, it becomes a very prospective area for businesses when coupled with its large amounts of mineral deposits. PanAust may be the largest company to make the most of this having been linked to the production of gold and copper in areas of Laos as well as Thailand, Papua New Guinea and Chile. According to the 2014 IMF report concluded in Laos the economic growth has been well documented and the gross domestic product (GDP) growth has been partly due to fiscal tightening and the decrease in credit growth as well as the decline in inflation. The foreign investments and demand has also played a critical role in this GDP growth, with the real GDP growth being projected at about 7.5% in 2014. Despite these positives and attractions within Laos for foreign investments, there are some constraints and issues that may obstruct the success of a business within Laos and the mining field. Examples of these obstructions include financial and technological limitations as well as the lack of development of projects with seventy percent of all projects being in the exploration and feasibility stage. On top of this, there is also a lack of geological mining maps regarding mining deposits, location and quality and there are mining laws in Laos which can create barriers and lengthen licensing processing time. However, the positives are possibly outweighing the negatives within Laos and the mining sector and investing in the industry would be a beneficial move. And despite the low literacy rate in Laos, many citizens can still be employed in the mining field as there are various roles ranging from unskilled labours to senior qualified roles. Therefore, when a foreign nation is considering an investment in Laos for mining, it would be viewed as a positive move that can lead to great success. Albeit there are issues that may arise as you begin your prospective business, the growth and success of the business will outshine them and prove the mining sector in Laos worthy. PanAust is a recognised multinational corporation having established business within Southeast Asia, Oceania and South America. P 1: Overview of the company as an MNC WHY LAOS motive of internationalisation – Resource or assetseeking motives • Access raw materials • Gain access to knowledge or other assets • Access technological and managerial knowhow available in a key market · Climate of the industry in the host country · DUNNING’s Eclectic Paradigm – · Why do firms become multinational? · •One of the dominant frameworks for explaining the · existence of MNCs and the determinants of FDI •O = Ownership: •The firm that invests abroad has a competitive advantage (to exploit) and out-compete the firms that operate in the country where the investment is done. –Economies of scale connected to large-sized company –Possess technologies that give an advantage on the subsidiary abroad –Monopolistic advantages in terms of privileged access to inputs or outputs markets · –Skills of management •L = Location: Advantages of the foreign location: –Different nations have different factor endowments: –Natural resources –Cheap labour force –Skills and capabilities –Country characteristics (political stability, regulations, · cultural distance) •I = Internalisation: NOTE: Internalisation NOT Internationalisation Internalisation occurs when a firm expands its operations in another country, by acquiring the property of the assets that are abroad. •Ownership of foreign assets more convenient than the market •Why? –Information asymmetries (transaction costs can be too high) -> Market failures · –Keeping skills and capabilities internal to the firm – The 12 point font in Times New Roman should be used throughout. Appropriate spacing (1.5 lines) and margins on all sides (at least 2 cm) need to be maintained. – Number each page. 1500 to 2000 words. References: IMF report Hofstede centre Centre of intercultural learning Reference list: https://www.imf.org/external/pubs/ft/scr/2015/cr1545.pdf http://www.panaust.com.au/reports http://www.ide.go.jp/English/Publish/Download/Brc/pdf/02_ch3.pdf http://asiafoundation.org/in-asia/2007/12/12/in-laos-skilled-labor-shortage-and-no-remedy-in-sight/ http://www.panaust.com.au/typical-opportunities http://www.theaustralian.com.au/business/mining-energy/panaust-board-backs-new-12bn-gram-bid/story-e6frg9df-1227346233031