Vodafone and hutch merger case study

According to the Wall Street Journal:

It wasn't long ago that India was hailed as one of the world's most promising growth markets. But mercurial regulation, stifling bureaucracy and slower economic growth have shaken foreign companies' confidence about making big investments here. Now a case at the country's highest court threatens to make the climate chillier still. India's Supreme Court is preparing to issue its decision on whether U.K.-based Vodafone Group PLC must pay about $2.6 billion in taxes on an $11.1 billion deal it struck in 2007 with a unit of Hong Kong's Hutchison Whampoa Ltd. to enter India. (Sharma, Becket & Bahree, 2012).

In this case study, you are asked to examine the company Vodafone in the context of its merger to form Vodafone India. You are also asked to consider the merger in light of the suit brought against Vodafone India by the government of India to collect about $2.6 billion in taxes that India asserts are owed to it as a result of the merger.

RReeaaddiinngg MMaatteerriiaallss

I suggest that you read the materials that I am providing to you in this order:

1. Multinational Firms Brace for Vodafone Ruling in India.pdf 2. Vodafone India.pdf 3. Vodafone.pdf 4. Vodafone-Outcome.pdf

These are all located in Doc Sharing. Of course, you can read any additional materials you would like to. Please write up the Vodafone India case in the same way that we have been doing with the other cases. Also, answer the specific questions below.

SSppeecciiffiicc QQuueessttiioonnss

1. Consider the mode of entry chosen by Vodafone to enter the India market. What are the pros and cons of this strategy? What is your opinion of the one they chose?

2. Consider what we have been reading about risk mitigation in pursuit of foreign investments. What is your opinion of the strategies that Vodafone used to hedge their risks in their India market entry, and do you think these were sufficient? Should Vodafone have anticipated the legal entanglement they encountered? What, if anything, would you have done differently?

3. Vodafone has developed a reputation as a company that is relentless in its determination to avoid taxes. At the same time, India has developed a reputation for taxing foreign entities in ways that are unexpected, and that many companies think are unfair. Having reviewed the materials for this case, what do you think about the merits of the Vodafone India tax case?