3R Mapping

A vital step in managing your international risk is identifying the potential risks your firm could face in target foreign markets. These risks can be categorized in a general way as: –

• affecting property
•  income
•  liability
•  personnel
• economic
• Political

The following is a checklist of the basic risks encountered in any business venture. This isn’t intended as a comprehensive or exhaustive list, as much depends on the specific circumstances of your business. It also isn’t meant to discourage you and your company from entering new markets. It is, however, a useful way of stimulating your thinking about possible threats to your company’s business operations. And by identifying these threats, you can start planning how they can be managed or mitigated.

External threats that are unpredictable and uncontrollable:

• Regulatory (unanticipated government intervention);
• Natural hazards (storms, floods, earthquakes, etc.);
• Accident, vandalism or sabotage (e.g. tampering with medicines);
• Unanticipated environmental or social impacts as a result of the venture;
• Failure to complete project because of failure in
  • Infrastructure
  • Design
  • financing (bankruptcy of one of the parties)
  • planning;
  • Public Health

External threats that are predictable but uncontrollable:

• Market risks (availability of inputs, cost fluctuations, competition, honouring of agreements);
• Operational (maintenance, suitability, safety);
• Environmental or societal impacts of the company’s activities; and
• Currency fluctuations, inflation, changes to taxation.

Internal threats that are non-technical but generally controllable:

• Management (insincerity, incapacity, inadequacy, loss of control, incompatibility of goals, staff changes, inappropriate structure, poor policies, inadequate planning, unrealistic scheduling, no coordination);
• Excessive reliance on one individual for a critical part of the project (especially in smaller firms);
• Human error (e.g. confusing Imperial and metric systems of measurement);
• Delays due to regulatory approvals, labour shortages, poor productivity, work stoppages, material shortages, late deliveries, unforeseen conditions, accidents, sabotage, start-up problems;
• Cost overruns due to delays, inappropriate procurement, pay negotiations, poor management, contractor claims, under-estimates;
• Cash flow squeezes, interruptions or insolvency; and
• Loss of profits or other benefits arising from other risks.

Internal threats that are technical but generally controllable:

• Changes in technology render part of the venture obsolete, parts are discontinued, competitors introduce better technologies, new technologies are too complex;
• Technology does not perform as required in terms of error rates, crashes, stability, reliability, etc.;
• Technology is not able to fulfill the role expected of it in products, processes, logistics, delivery, marketing, service, etc.;
• Design problems arise because of poor information, inexperience, an inadequate process, lack of detail, too many change requests, or a conflict between design and execution; and
• The overall complexity is beyond the management capabilities of the organization.

Legal threats that are generally controllable:

• A company’s licenses and patent rights are not respected: IP is copied by others because of inadequate legal protection;
• Contractual difficulties due to misinterpretation, misunderstanding, inappropriate contracting strategy, wrong contract type;
• Outsider or insider suits;
• Suits against competitive practices or monopolies; and
• Force majeure.

Regional understanding of the market is crucial especially for a market like India, where every 100 km radius we find a change in value & customs, religion, laws and so does the customer profile. By region we mean the location aspect of the market which include: –

• Industrial clusters   – skilled & semi skilled
• Manufacturing hubs   – public & private
• Customers   – value system & affordability
• Sales   – direct & indirect channel
• Distributors   – sub distributor & master distributor
• Suppliers   – direct & indirect
• Infrastructure  – availability, cost & connectivity
• Labour   – availability & cost
• State Incentives   – subsidy & capital support
• Environment   – hazards & favorable
• Connectivity  – sea, road, railways & airways

Our regional mapping allows for a company for budgetary planning and cost evaluations for : –

• Greenfield Set-up
• Contract Manufacturing
• Product Development
• Sales Distribution
• Regional Sales Team
• After Sales Services
• Conducting Customized Surveys
• Market Research
• Geo Marketing

Resource mapping is a continuous process of evaluating economy & efficiency in whatever we do. In context of Indian market its difficult to ascertain the actual cost of operating, whatever may be the mode of entry & operations. We, at MCG, try to provide the actual costs in doing business in India. One may be operating through a partner or any other mode, there’s a need to conduct a comparative analysis – in order to negotiate on the tables, with the local partner/ supplier, the actual margins & allocate accordingly.

As we go beyond a simple distributor led business operation like a legal entity, local contract manufacturing, JV/ Acquisitions or a greenfield production plant set up; we come across the need to deal with the numbers each time we try to expand / modify our operations. So we take the ownership of a torch bearer for managers & entities to choose the most efficient option for their business viability.

Resource mapping plays a vital role in the following agendas: –

• Margin expectations of a partner
• Valuations in JV & Acquisitions
• Project cost for capital investment
• Marketing & Branding campaigns
• Distribution & supply chain set up
• Hiring of personals
• Operating costs
• Product design & development
• Laisoning cost both government & private sector
• Legal costs
• Customer Servicing cost

MCG tries to map the quotations related to any market activity which always tend to save our client’s money. We have created a methodology of objectively recording different sources & their services, comparing them vis-à-vis cost & quality, filtering the most viable options out and zero down with the last mile negotiations to come up with the quotation which we guarantee to be a most appropriate fit.