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Before entering into the new market, the firm should evaluate the various environmental factors, because they are directly or indirectly affects the performance of the company. These factors also help the company to increase the profitability as well as prevent obstacles in the growth of the firm. The significant environmental factors are government, political, economical, social, and technological.
Major Legal Entities
India's form of government, traditionally described as "quasi-federal" with a strong centre and weak states, has grown increasingly federal since the late 1990s as a result of political, economic, and social changes. A foreign company can commence operations in India by incorporating a company under the Companies Act, 1956 through Joint Ventures or Wholly Owned Subsidiaries. A Joint Venture Company is not a separate type of legal entity; it could be a Private Limited Company, a Public Limited Company, or an Unlimited Company. Similarly a wholly owned Subsidiary of a foreign company in India could be a Private Limited Company, a Public Limited Company, an Unlimited Company, or a Branch Office. (Madaan &co, 2012)
Influence of organizational choice
Varieties of legal entities in India influence the behavior of Vodafone as it enters into a new foreign market. As Vodafone is entering in the new market for earning profits, in India it is very important to choose a right kind of business or corporate entity which best suits its purposes and takes care of liability issues and tax planning issues. Limited Liability Partnership would be the best option for Vodafone, it is an alternative corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually-arrived agreement.
Although all the entities influence the choice of organization because but various risk factors are associated with this. If the government...
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