Intensification of internationalization and globalization over the last years opened new opportunities for companies in terms of their development and expansion. After entering into new markets international companies can expect an increase in their revenues, profit and power. New clients’ base, potential partners and resources attract companies’ managers to make aggressive strategies of expansion, which unfortunately can drive companies to big problems. That is why decisions about entries into new markets must be careful, accurate and well-measured.
In case of Cameron International Corporation the considerations must be even more careful. According to Company’s recent failure on the Transocean BP and the $250 million settlement the situation is not very good. The trust of global community to the company was lowered and this can be a great factor for the future business conducting. An injured image of the corporation may make potential partners less willing to deal with the company, due to which a huge ecological catastrophe has occurred. The current company’s strategy of expansion has to take into account this factor and build an adequate plan of reducing possible risks.
Furthermore, every foreign country has its own business climate, which has to be taken into account too. In case of Myanmar, power and resources here are concentrated in the hands of military leaders and their business associates. A military regime, which had been recently ruling the country, left a legacy of opacity, corruption and inefficiency, as “Myanmar was recently ranked as the world’s 2nd most corrupt country behind Somalia. Not only does this make the practicalities of doing business extremely difficult, but also potentially illegal for companies covered by anti-bribery legislation with extra-territorial reach” (Holman Fenwick Willan, 2012).
A new regime, established by Thein Sein, will obviously attract huge flows of direct and portfolio investments from abroad, as the country is very rich in oil and gas recourses. An aggressive competition for the revenues and market share can begin in the country and it is vital for Cameron International Corporation to get as much profit, as possible. Furthermore, the entry into Myanmar energy industry can help the company diverse its portfolio, which is overreliant on the U.S. market. Moreover, energy sector in Myanmar is considered to be the key to country’s economic growth and that is why many tries will be made to give a life to its potential. As a result, it would be very good for company to participate in such process and take great benefits from it.
The decision whether to expand into Myanmar has to be based on the fact, that this country was isolated from world community for long years in terms of social and economic cooperation. Many sanctions were made against the country to demonstrate the displeasure with country’s internal and external policies. At present moment the situation is better, but the instability is still present and institutional risks are high. Despite the new policy of authorities, new sanctions or restrictions can be made every moment and the possibilities of conducting business properly will be significantly reduced.
The VRIO …