Global Business in India - Emerging Market - Case Study Example

Global business in Indian emerging market University Student Id Course Global business in Indian emerging market Introduction The report is about emerging Indian market where the features of the Indian business environment are explored. India is among the most growing emerging market that can effectively support global business. The competitiveness of the Indian market in the global business can be attributed to the stability of the government, and business regulations that support the success of businesses operating in India (Misra and Puri, 2005). The government of India has been committed to making sure that the foreign investors are encouraged to invest their funds through coming up with the necessary policies that enhance the global business. The emerging market in India has attracted many foreign investors leading to increasing in investments in the country. There are many factors that have been making investors seek to invest in the Indian market. For instance, the political climate and regulations controlling the foreign investments are conducive to the foreign investors. India is one of the emerging regions which have a constant progression as well as sufficient skilled manpower which aid in doing various investments. Moreover, India has the most popular democracy and also has the major economic climate which is actually gigantic on the earth (Ayyagari, Demirgüç, and Maksimovic, 2008). This report explores the local business environment, cultural risks, the challenges, the long-term strategies adopted in the process of mitigating the risks facing the Indian market. Finally, the necessary recommendations are provided to help in improving the Indian market with the aim of enhancing the business environment. Local business environment The Indian local business environment has been attractive to many investors because of various factors that make operations of business effective and successful. For instance, the government of India has shown commitment to promoting business through creating an enabling environment that guarantees business success. The economic situations in India have been considered crucial in attracting investors where the administration of India has ensured that there is stability (Eifert, Gelb, and Ramachandran, 2005). The economy has been performing well as the country has been experiencing economic growth making it a good place for investments. The trend that has been shaping the Indian market is the increasing technology use that has contributed a lot to the economic growth. Technology is playing a crucial role in making sure that many investors are attracted to invest in India. Considering the fact that organizations are looking or ways that can reduce costs of production, the adoption of technology has played a crucial role in the process of achieving efficiency. Many investors are venturing into the Indian market due to the availability of technology that plays crucial role in achieving business objectives (Nadkarni and Herrmann, 2010). In addition, India is the fourth largest in terms of the financial system in every particular place. In this country, there is usually a federal system of governance whereby the president has demarcation powers in the state government as well as in the imperative executive. The financial system adopted in India creates a conducive and also a pleasant atmosphere, thus providing room for the traders to do various investments. In India, there are various insurance policies which are related to the direct international funding in among the economies of the world. In almost all the sectors, the FDI has been 100% accepted as a self-regulating approach with an exception of few areas which require authorization from the federal government (Bertrand, Mehta, and Mullainathan, 2000). Therefore, in accordance with the self-regulating approach, the investors are needed to make a notification to the Reserve Bank of India before thirty days are over after receiving the receipt of inward remittances. In the process of facilitating global business, India has articulated and also liberalized the exchange controls for the purpose of the foreign trade. For instance, Rupee has been now made easily convertible in present debts. Also, the dividends, as well as the FDI gains which are earned from the investments, have been put into considerations. Moreover, this country consists of a large socio-fiscal classification whereby around 55% of its population comprises of individuals who are actually below the age of 25 years (Sen, 2003). However, as a result of the increasing per capita revenue and also the rapid monetary progress, there has been a greater growth in the market place of the India. In addition, the Indian executive has laid a lot of emphasis concerning the state of progress in terms of infrastructure in the transport sector (Singh, 2010). Furthermore, the government greatly monitors the individual foreign investment so as to ensure that there is progress in the infrastructure sector. Competitiveness, legal, cultural risks and challenges in Indian market The competitiveness of India in the global market can be attributed to its political system that has been promoting foreign investments. The political system and the regulatory system of India are of great significance to the successfulness of business operations. During the year 1991, India rejected the system of the socialist economic so as to favor the system of the free market in order to facilitate a trade for goods and also encourage investments. However, before this change India had put a lot of restrictions for the foreign investors in entering the marketplace. Therefore, the strategy of free market led to direct investment by the foreigners, whereby for a period of three years the total FDI in every year was almost $1.2 billion (Mishra and Suar, 2010). Besides, legal policies adopted in the country have ensured that business both local and international are protected. For instance, the aspect of the foreign investment was greatly encouraged by various reforms of India. For instance, the Enron Corporation established an entry investment for the Dabhol Power Company which signed a contract with the Maharashtra to construct a power plant (Lall and Mengistae, 2005). However, after Enron had spent almost $ 300 million in the investment sector, in the year 1995, that project was eliminated by the state government because of the political rankling. Later on after around four years, the same project was restarted again even though it was greatly affected by the political instability. According to Kedia, Mukherjee, and Lahiri, (2006), the Government of India came up with this system of the free market so as to generate currency which can cater for the payment of the external debt. Therefore, some of the companies such as the Staples were greatly encouraged to start doing their operations in India, by the government reducing the import duties from 300% up to 50% and also by creating room for the foreign companies to own various business enterprises in India. However, for the Staples Company to conduct its business operations more viable and also for a long period, a serious country analysis is required to be completed. Moreover, strategies which have been successfully employed by the same company in other countries such as in Netherland should also be applied in India. Culture is crucial to the success of the business operating in the Indian market. Failing to understand the Indian culture can result in business failure due to its complexity as the businesses that are against the Indian culture cannot be successful in the market. Besides, there are other challenges in the Indian business environment that can include anti-competitive practices. For instance, the successfulness of the Staples Company in India is mostly based on the regulatory policies and also political policies which are favorable. However, the government of India has come up with a reputation of poor management of budgetary and also inefficiency. There are strategies which are known as the anti-competitive and that are enacted so as to offer protection to the domestic industries from being outdone by the competitive services and goods which are much cheaper (Harriss, 2003). The other challenges facing the business operations in India can include the protection of properly rights. Besides, the business operations in the Indian market are affected by the norms, societal characteristics, values, ethics, and customers. For instance, the marketing activities of the business operating in the Indian market need to consider the values and ethics of the Indians to ensure they are successful. The anti-competitive strategies are usually based on the aspect that, the rise in the importation leads to reduction in the demand of the low wage as well as low-skilled labor. Furthermore, the strategists for the anti-competitive have argued that the domestic industries are not able to thrive well unless they are given a chance to gain profits by being protected against competition (Bhatnagar, 2007). Therefore, this anti-competitive strategy led to various restrictions in terms of the trade practices which aimed at saving jobs and also increasing the revenue for the government. Long term and entry strategies for mitigating the risks Researching the Indian market is crucial for business as they should be aware of the culture and the potential risks that are likely to be faced. The primary entry strategy is franchising to make sure that the business has proper knowledge of the market. The Indian government does not restrict foreign investments hence investors can venture the market. The foreign firms can easily win the market share from the incumbents through adopting competitive strategies that can help in meeting the needs of the consumers better (Seth and Tripathi, 2005). Besides, establishing standard services and products can be crucial. The standards for the both product and services include the kind of measures which set the bounds on the way a product is either distributed or even manufactured. Establishing standards provide customers with the necessary information concerning an individual product or even a service. However, in agreement with the report which has been given by the Hindu magazine, it shows that India has tolerated the products which are not safe since there are no individuals who have protested against them. Therefore, poor quality of both goods and services may be as a result of the absence of the standards for the enforcement and also the failure of the citizens to complain (Batra, Kaufmann, and Stone, 2003). In the year 1987, the Bureau Standards was introduced in India which resulted in greater participation of the customers in the establishment of the standards. Importantly, the standards have made a lot of attempts in the provision of quality goods and services which are safe to the customers. However, there are no exact standards that are set and which are related directly to the office supplies, thus making it difficult for the Staples Company to distribute its services as well as products (Budhwar, Luthar, and Bhatnagar, 2006). Some of the necessary requirements which usually affect the activities of the Staples Company include; the accessories, electrical cables and also appliances. Conclusion and recommendations The businesses entering the Indian market need to look for ways of protecting their intellectual property. India has established various mechanisms that provide protection to the intellectual property even though those protections are not well guaranteed. However, in the countries which are less developed, rights of intellectual property are usually offered in specific patent rights so as to induce the aspect of the invention. Therefore, the country of India has made a decision to improve and also implement the rights of intellectual property in order to facilitate global business. However, since India in most cases have great desires in engaging in business activities with the United State, its government has implemented some laws which should govern the business operations (Sahay and Mohan, 2003). A large number of corporations have been entering into the market since there is no enforcement concerning the laws and also the regulations of the intellectual property. Besides, the businesses entering the Indian market need to consider the norms and the values of the Indians in their operations through engaging the society. The businesses can then be in better position to ensure that the interests of the community are considered in making decisions. Lastly, there is the need to make sure that enough research is conducted to align the operations of the firm with the external business environment. For instance, the impacts of the political risks can result in positive outcomes whereby various trade reforms have been implemented. 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