Collaborative ventures and foreign subsidiaries globally are always the effective and important strategy for raising finance for organizations. This should be considered about the performance of cost of finance, such as the cost of capital and the expected investment of return. In domestic market, the liquidity of securities market is limited and capital market is small. However, In the international market, it is not only provide a more liquidity of securities market and larger capital market, but also companies are possible to improve liquidity of shares and provides a market for new events, also the share price could be increased by handle illiquid and segmented market. Additionally, the firm visibility and political acceptance could be improved for their stakeholders as well.
In order to make a better performance of cost of capital, investment of return, the weighted average cost of capital (WACC) concept is a significant method for managing finance. In this method, the debt and equity financing is used for calculating the minimum level of return on investment.
In the BBC new of ‘India opens retail to global supermarkets’, it is illustrated advantages and changes after India open up its lucrative retail sector to global supermarket chains. However, this decision had impact their market deeply. The foreign airlines had brought 49% stakes for local carriers as result the trouble of Indian airline industry has been increased and the price of dramatic diesel had been raised 14%. On the other hands, there are some benefits had been brought by this decision. There are many business leaders backed to the Indian supermarket market and the more investment had been attracted, therefore, the economy of Indian increased by this decision. Many companies has already invested entirely $100m (£ 67m) for Indian industry, such as Tesco, Wal-Mart and Carrefour, they have already built their own outlet in town or high population cities in Indian. For the benefit of multinational retailers, Wal-Mart said that ‘lower the price of products, improve the livelihoods of farmers and ease supply-side inflation’.
In this case, the Indian open up their supermarket market in the global wide, there are more benefits are possible to be predicated. Firstly, the more investment from foreign countries will be liquid in the Indian market. Secondly, the more new design of product will jump in the market and it is possible to improve the Indian technology level. Thirdly, the Indian manager might learn the advanced management strategies from the venture companies.
On the other hands, the benefits for the company which venture into the Indian market could be highlighted. According to the Mail news of ‘Tesco to venture into giant Indian market after their government allows foreign superstores’, Tesco had took the effort for learn the Indian consumers ahead of entry laws and the big chains have joint forces with local players, as result Indian market is became the crucial one for the Tesco, additionally, Tesco had achieved that its international business accounts for a third of group sales.
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