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Q.1 Do you agree with CRISIL's choice of entry mode into the Caribbean market?

If not, how would you approach


it? If yes, why would you support it? Discuss the pros and cons. Extend your analysis to also include the ownership
structure.

Ans 1. Yes . JV was the right choice of entry mode as Joint Venture into Caribbean market due to :-

1. CARICRIS were not looking for immediate profit as their research finding was it would be profitable only 4-
5 years. JV would have easy for maintain the cash flow .
2. Fear of low rating by financial agencies which may impact their business. It was something like they may
be hiring the rating agency to kill their own business. Which Made the rating difficult to get adopted &
may need time to convince the customers.
3. Bias towards developed-country products and services. It would have been difficult for CRISIL to establish
themselves as wholly owned subsidiary in West indies.
4. Caribbean was very far away from India.

Due to local regulations CRISIL have to hire locally & there was lack of local expertise. This risk can be mitigated by
providing training by experts from CRISIL.

The major shareholders are IDB (Inter-American Bank) , the Caribbean Development Bank (CDB), CRISL whose
majority-owned by Standard and Poor’s, and central banks in the region. The IDB provided grant and investment
financing to help launch the company. As most of the stake of holders were local financial agencies, due to which
their will be concern of conflict of interest and customer’s may doubt that rating may be favored /biased to
investors . This may lead to integrity issue.