International Operations Essay Example

Bureau of India, Equifax Credit Information Services, and Highmark Credit Information Services (outlookindia.com). Finally, the article will provide recommendations and discuss how implementing changes can lead to success in specific markets.

Literature Review

Experian is experiencing rapid growth as a credit agency, surpassing its rivals in terms of international presence. The company's three main strategies include focusing on data and analytics, driving profitable growth, and optimizing capital efficiency.

The industry is considered global due to the presence of global rivals such as Equifax and Trans Union (Porter, 1986). Stonehouse et al. (2004) state that a company's globalization is influenced by technical, economic, political, and social factors. Furthermore, companies need to globalize in order to target international customers and benefit from economies of scale (Govindarajan and Gupta, 1999). In addition, Experian became a dominant player in the Indian market by being among the first to provide credit agency services.

Experian has a greater opportunity for globalization due to its valuable resources of people, information, and technology. Figure 1 displays the significant international revenue generated by Experian in 2009. Additionally, Experian is experiencing substantial growth in emerging markets such as Latin America and Asia Pacific. Before entering a new foreign market, it is crucial for a multinational company to carefully consider the timing and scale of entry (Hill, 2009).

The importance of considering the long-term benefits of continuous care should not be overlooked, as it can help reduce costs and risks (Hill, 2009). Additionally, factors such as market size, buying power, and future wealth of consumers must be taken into account to ensure long-term effectiveness (Hill, 2009).
Experian initially entered the Indian market on a smaller scale as an IT supporter for UK

operations (Experian.co.uk). However, it also recognized the potential for long-term profit in the Indian credit market. Therefore, even though its Indian office was established in Mumbai in 2006, the credit agency became a joint venture in 2009. According to Bartlett and Ghoshal's integration-responsiveness model introduced in 1989, Experian can be classified as having a "global" strategy among four MNE strategies.

Experian is a global enterprise as it is vertically integrated and connected to a cardinal database (Experian.co.uk). It operates in the areas of people, information, and technology, resulting in high integration and low local reactivity. It is centrally managed and coordinates its resources and strategies globally. Applying the theoretical model of "strategic planning for a global concern" by Chakravarthy and Perlmutter (1985), Experian can be categorized as "ethnocentric."

The reasons are that it is controlled by the parent company, organized to meet the demands of the parent company, influenced by forces from the home country, and standardized with minimal local adaptation.

International Strategy of Experian

Experian initially entered the Indian market with a small-scale IT workforce in Mumbai, taking into account the benefits and risks of expanding into a new market (Hill, 2009). This small-scale entry allowed Experian to gather data for future expansion in the existing market. Although this limited their market share (Hill, 2009), Experian was able to establish itself before making a direct investment as a joint venture. Experian recognized that India is an emerging economic power with a population of over 1 billion. Given that Experian's business is related to people and information, India would be a profitable market in the near future.

According to Dunning (1977), multinational enterprises possess ownership advantages, which are valuable assets

that have not been fully utilized, as well as location and internalization. Experian, in this sense, has advanced technology, managerial expertise, marketing capabilities, and extensive access to resources. Additionally, Experian tends to prefer direct investment through acquisitions (such as in North America) in most cases and joint ventures (like in India) in a few locations. These investment decisions were made considering factors such as physical and cultural distance, loyalty of local participants, national regulations, and so on.

Experian has made the right decision to enter the Indian market through a joint venture, as stated by Hymer (1970). According to Laughton (1995), there are four main methods of international expansion: exporting, licensing/franchising, joint venture, and foreign direct investment (FDI). Due to the nature of being an information service provider and dealing with sensitive data, Experian cannot choose exporting or licensing options. Instead, the most suitable approach is FDI, either through complete ownership or a joint venture based on the specific country.

Despite having both positive and negative aspects, such as sharing cognition, costs, and risks on the positive side, and loss of control over engineering and direction, as well as sharing income on the negative side, joint ventures could be the only option to enter developing countries like India. Experian, for example, initially developed its products and services in the UK and then expanded globally.

The text highlights the development of core competencies and dynamic capabilities within Experian. It notes significant growth and attributes it to the underlying strength of the business. The acquisition of Hitwise in 2007 further enhanced Experian's online performance.

Hitwise is assisting clients in analyzing their online performance and identifying fresh opportunities. The company

is growing its global presence, which includes the US, UK, Australia, New Zealand, Singapore, and Hong Kong. In 2007, it was acquired for $1.7 billion and has made significant investments in acquiring Serasa, Hitwise, Tallyman, N4 Solutions, as well as other smaller firms. This successful expansion in the Asia Pacific region has played a crucial role in Experian's analytics endeavors. Furthermore, Hitwise is procuring new data sources to enhance its services.

Visa expanded its markets globally by acquiring Hitwise to obtain visa dealing information. In 2007, the company invested in Chile, India, and Bulgaria to establish centers and IT workforce, focusing on cost-effectiveness through offshoring. This led to further investment in India through a new joint venture agreement. In order to achieve success in a specific market, no international company can overlook the importance of culture, as it is the means to solve problems within a group of people (Trompenaars and Hampden-Turner, 1997). Moreover, an international company should respect all levels of culture, including national, regional, gender, generation, social class, organizational, etc.

) . Three critical constituents, such as artifacts, values, and premises (Schein, 2004), can be generated by culture. Additionally, culture can be a source of acquiring knowledge, a foundation for strategic adjustment, and a source of competitive advantage. Furthermore, culture affects organizational structure and decision-making practices, management style and communication, market selection, and entry strategies etc.

Hofstede (1983; 1991) outlines 5 dimensions of national culture, including power distance, uncertainty avoidance, individualism-collectivism, masculinity-femininity, and long-term-short-term orientation. There are various core components of culture, such as religion, education, social structure, language, political system, and economy. However, when establishing a business in India, Experian must address the cultural barriers

through joint ventures with local companies.

Effectiveness of Experian's Strategy

Experian possesses a wide range of effective strategies that may steer the company in the coming years. The company's Board has its own vision which revolves around customers, data, and technology.

Experian believes that all of these elements are crucial for the global economy. Many businesses and government organizations now rely on Experian for crucial decision-making analyses. Experian's mission is to dominate the information market and ensure continuous growth, so it is taking steps to maximize its market opportunities for long-term success. Information and analytics are the focal point of Experian's operations.

Experian possesses the ability to collect information on consumers and their interests. They set themselves apart from competitors by exclusively utilizing their own analytics package. Additionally, Experian dominates the market in all of its business endeavors. The company's extensive global popularity and significant long-term growth present significant obstacles for new competitors. Experian plans to apply their vast experience in worldwide operations to their ventures in India. Experian also employs effective financial strategies as outlined by Bock (2009).

Experian is broadening its core capabilities in order to diversify its business and venture into credit risk management and consultancy. The company actively creates software to aid clients with their risk management needs. Experian's offerings drive the business not only in established markets like the US and UK, but also in emerging markets including Brazil and India. Moreover, Experian is ready to adjust to the evolving technological landscape that has arisen from the rise of information-rich channels.

Such channels are helping with sales campaigns driven by more efficient strategies. Experian is creating synergies between the credit and marketing activities. They are utilizing

their data to serve both consumers and businesses. Their primary synergies include Credit services, Decision Analytics, Marketing Services, and Interactive.

Experian aims to achieve organic growth by focusing heavily on recognition markets, which is essential for sustained growth in net income. This strong market position is the result of several factors, including expanding the global network and adapting the existing model to enter new markets. Additionally, Experian embraces innovative approaches to uncover new data sources in order to deliver valuable services to its customers.

Experian is implementing operational excellence through a high criterion of planetary trade name imposed into new markets. Additionally, Experian has strong hard currency flow through uninterrupted investing, which supports its strength. Any excess hard currency is given to stockholders as dividends or used for portion purchases ( experianplc.com ). The Indian economy is expanding rapidly due to recent industrialization, resulting in increased income and improved lifestyles for individuals.

The emergence of a new atmosphere in the recognition market has led to increased competition for obtaining credits. As a result, both local and international companies require risk assessments to make financial decisions. Consequently, India has become an attractive market for global credit agencies. Therefore, it is advantageous for Experian to expand its activities in this growing market. With a consumer base of 300 million people in India, the consumer lending sector has experienced a growth rate of approximately 29% in recent years (Chakravarti, 2005).

Rivals of Experian

In India, Experian faces competition from Credit Information Bureau of India, Equifax Credit Information Services, and Highmark Credit Information Services since it began its operations in 2009.

The oldest credit information bureau in the Indian market is the Credit Information

Bureau of India, established in 2007. It is a joint venture with Trans Union, a recognized US agency. Equifax also entered the Indian market in 2009 (eqiufax.com), through a joint venture with Experian (having 49%). These three recognition companies are primarily operated by international companies, proving their own technology and management systems. On the other hand, Highmark Credit Information Services is a private company based solely in India (myhighmark.com).

However, Experian, Equifax, and Trans Union are the three main competitors in the Indian market, each entering as a joint venture with their own expertise. It is important to examine the international operations of Experian, Equifax, and Trans Union, including market shares, profits, and growth, in order to evaluate Experian against its competitors. Experian currently holds the leading position among similar businesses, with Equifax and Trans Union trailing behind significantly in terms of market position.

Experian, operating in 40 states, had a gross income of $3.8 billion in 2009, as shown in figure 3 (experianplc.com). In contrast, Equifax, Experian's closest competitor with approximately 7,000 employees, has business ventures in 14 states and earned a total income of $1.5 billion in 2009 (equifax.com). Likewise, Trans Union, with 3,100 employees across 25 states, had a gross income of $0.9 billion in 2009 (transunion.com). Experian saw net profits of $825 million in 2008 and $945 million in 2009.

As a result, in 2008 and 2009, Experian experienced a 14.5% growth in net income (as shown in figure 4). Conversely, Equifax's net income remained stagnant at $272.7 million in 2008 and $272.8 million in 2009. Despite both Equifax (established in 1899) and Trans Union (founded in 1968) having extensive experience in data information

businesses, Experian has achieved greater success due to its organizational structure, policies, strategies, and most importantly, underlying strength. The global market consists of Experian, Equifax, and Trans Union. However, the Indian market may be different as Trans Union entered the market earlier and is currently working with Central Bank of India.

Furthermore, although far from having an international presence like Experian, Trans Union (or CIBI) could be considered the main competitor of Experian in India. In India, Trans Union (part of CIBI) offers two main products, namely consumer products (including 7 sub-products) and commercial products (including 2 sub-products). However, Experian has four global main products: credit services, decision analytics, marketing services, and interactive services.

Currently, Experian only offers determination analytics and selling services exclusively to commercial houses. In order to reach consumers' needs, Experian should expand its services to include recognition services and interactive offerings.

Recommendations

Experian currently holds a leading position among its competitors, such as Equifax and Trans Union (mentioned earlier). To maintain this position, Experian should address its limitations and implement new strategies to improve the business. In order to obtain data, Experian relies on other commercial organizations and government bodies.

Acquiring accurate information in India is challenging due to the lack of electronic data. To improve accuracy, it is necessary to gather recent data. However, confidentiality issues can make data collection difficult. In such cases, it is important to adhere to national culture and government regulations.

Furthermore, Experian aims to raise consumer awareness about credit agencies since many consumers are unaware of their existence. However, Experian would also consider the PEST analysis (Johnson, et al., 2008) when entering a new market, as it needs to

evaluate various important factors in that market. The first step for Experian is to assess the political situation in that market and if it is unfavorable, find a solution to address it.

To ensure compliance with Indian authorities' regulations regarding the collection and distribution of personal and organizational data, Experian must adhere to local laws. Additionally, Experian can address environmental and social issues that may arise in these new markets. To navigate these challenges, Experian can enlist the help of local experts in times of social or environmental crises. In terms of technology, Experian is expected to outperform its competitors as it prioritizes technological advancements. This advantage will likely be evident during the company's initial phase in India. In 2005, Experian was fined $300,000 by the Federal Trade Commission of America for engaging in unfair trading practices and violating regulations (ftc.gov).

However, Experian must be cautious of the statutory laws in India to prevent such misconducts. There are millions of people on Earth who are victims of identity theft (Pernes, 2007; Conger, 2009), which could pose a threat to Experian. Experian needs to be careful in protecting the identities of its millions of clients. While the software it uses is secure, it still needs to be closely monitored for any vulnerabilities (Sullivan, 2004). Any security mistakes can present a significant threat to the business. Additionally, proper training and employee loyalty can help overcome these challenges. Moreover, Experian can be seen as a star according to the BCG matrix (Johnson et al., 2008).

Experian, a leading global credit agency, is experiencing consistent growth in net income and market share. In order to continue this success in India, it

is crucial to closely consider the national culture, political environment, and local organizational culture. It is essential to promote effective products and services that are suitable for the Indian market and superior to competitors. Additionally, interactive services, already successful in other markets, should be introduced to cater to the 300 million Indian consumers as soon as possible.

Decision

Experian, as a predominant player in the global credit industry, is expanding its international business operations steadily. Despite geographical variations, its focus on people, data, and technology allows for relatively consistent international operations.

The effect of local reactivity on Experian is minimized, while the advantages of global integration are enhanced. Additionally, the majority of its earnings (over 80%) come from international operations. Hence, Experian is an ideal global enterprise. Experian is currently making investments in developing countries such as India, China, Brazil, etc., as these markets have the potential to integrate the company on a global scale.

Since Experian holds sensitive client data, FDI (whether fully-owned subsidiaries or international joint ventures) is the appropriate approach to entering a new market. Despite the high cost, it enables greater control over operations. In India, the economy is growing due to industrialization and the credit market is rapidly advancing. Therefore, major credit agencies such as Experian, Equifax, and Trans Union are entering the Indian market. Due to political circumstances, cultural differences, and local organizational culture, Experian opted for a joint venture entry mode which could potentially reduce costs and risks.

Still, the Indian market faces challenges in terms of accurate information, national designation, confidentiality, and consumer consciousness. However, Experian can overcome these barriers by leveraging its international experience gained from

operating in 38 other countries.

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