Entry Modes characterize the way a company penetrates a market using equity or none equity means. These means are a successful ways companies can enter a market foreign or domestic. Equity means of entry can be wholly owned subsidiaries, joint ventures, or strategic alliances. None equity based modes of entry are indirect or direct exporting, licensing, turnkey projects and franchising. As these modes relate to India, companies have exercised a number of entry modes to penetrate the vastly growing economy. India’s market is characterized by a huge or significantly growing market capacity, transiting economic and political system changing consumption behavior, distinct culture, and a favorable investment environment, offering a good chance of development (Xuemin Zhao, 2005). In India smaller firms are more successful than larger firms. Also, firms can achieve success by exhausting, early entry, greater entry modes and shorter cultural and economic distance between the home and the host countries. (Joseph Johnson, 2008). Although companies have exercised many, if not all, modes of entry in India, the concerns are heighten as companies entre India’s growing market. Companies must consider two broad categories that drive a firm performance when entering a market which are firm differentiation and country differentiation. Within firm differentiation, two key constructs are firm strategy and firm resources. Country differentiation key constructs is host country characteristics. Among these characteristics, the tow that we identify as important are country openness and country risk (Joseph Johnson, 2008). With the right mix of the identified sources and market mix of entry and time, a firm can succeed in India’s immeasurable market.
India is one of the fastest growing countries in the world. It has been projected that in 2010, India’s economy will grow by 8% (Mishra, 2009). India’s retail sector is the 5th largest in the world and is expected to growth at a 10% rate (Mishra, 2009). Changes in government account for desired changes in infrastructure, social sector, and financial sector. According to Mishra “among other reforms in the pipeline are opening up of retail, insurance and banking sectors to more foreign investment and reducing Government ownership in refineries, banks and fertilizer companies” (Mishra, 2009). India’s growing economy and their spending power may attract businesses throughout the world. Many companies have begun to take advantage of the growing economy and have expanded their business into India. While it may be tempting for comings to expand globally there’s in no doubt that the company must do the required research prior to expanding into other areas. As with any other country one must evaluate what has been successful and what has failed in the past. There is no doubt that cultures differences may impact product choices therefore it is an area that must be evaluated closely. Advertisements can impact the success of a company. It is important to have knowledge on what entry modes exist, rules and regulations that must followed, different options for advertisement, consumers goods, media availability, cultural differences, and agency available to help with the process.
Numerous American companies have expanded into India; they have developed a strong business relationship. According to the article American Companies in India “India is also a large depository of skilled yet cheap labor; hence, it becomes easy for the American companies to optimize their productions in India.” American companies are taking advantage of skilled employees and the growing economy. Companies use different methods of entry to enter into India. Common modes of entry used are exporting, franchising, licensing, and joint ventures. “The American retail giant 'Wal-Mart' has gone into collaboration with Bharti enterprise in the Indian retail sector”...