International Foray of Karuturi Global Ltd.

Abstract

Karuturi Global Ltd. (KGL) is an Indian MNC which expanded overseas and has developed as one of the world’s top 25 transnational corporation in less than 15 years of its incorporation. It is one of the leading producers of cut roses with operations in Ethiopia, Kenya, Netherlands and India. Instead of trying to expand within India, it accepted its restrictions and followed what its M.D. says “If we cannot beat them, let’s join them” (by moving to Africa). This study maps the global expansion of Karuturi Global Ltd. (KGL) and tries to understand it using economic theories. In this study, Dunning’s O-L-I framework is used to analyze the rationale behind the global foray of KGL. The strategy of the company combined with in-house innovation offered the ownership advantage needed for global expansion. However, the locational factor surfaces as the dominant factor in expansion. The motive to seek labor at negligible cost combined with the low cost advantage offered by cheap land ideal for rose cultivation, flood-safe geographical area and favorable government policies in the African continent have been the driving factors behind the expansion of KGL. At these locations, continuous production throughout the year is possible with marginal variations. The study also discusses the key elements of business strategy behind this expansion followed by the potential risks associated with operating in a country like Africa, risk of uncertainties attached with agricultural operations etc. Primarily, it was the need to expand into low cost production bases and focus on serving LDC which tempted Karuturi to move out.