Greenfield Investment in India
Greenfield Investment in India
The size and age profile of the population of India offers an incredible marketing opportunity for our sports trainers SME. In 2012 the population was estimated at 1,259,721,000, 25% of whom were aged 10-24 (Population Reference Bureau, 2012) i.e. our target market of ‘younger people’. Being classed as a developing country signifies that the majority of the population are supported by the primary industries, 52% of the 487.6 million strong labour force are employed in agriculture (Central Intelligence Agency, 2009). The tertiary sector engages 34% of the labour force but service actually counts for over 50% of India’s GDP (CIA, 2011). Unfortunately the actual number of people who would be suitably qualified, at least at the managerial and sales levels, is quite low. According to the CIA, just 61% of the population can read and write (2001 census), which is detrimental to new investment. Expatriates would need to be placed in the new site for the embryonic stage of the venture, resulting in unwanted relocation costs and training for the local employees. However, India has a very cheap labour force in almost every part of the country (Bose, 2012); an article in The Indian Times (2012) reported that the daily wage for an unskilled worker is £3.22, whilst a semi-skilled worker commands £3.55. This is economically advantageous and a number of British companies have exploited this by offshoring certain functions. However, is this the image the company wants to project?
Economically speaking, the retail market is set to enjoy a 15%-20% growth per annum over the next 5 years, contributing to 14% of India’s GDP (A.T.Kearney, 2012) with the footwear market projected to reach a value of £4,085.2m in 2015 (Mintel Global Market Navigator, 2011). SME’s competition would be Planet Sports and Power, possessing a 14.8% and 6.2% footwear market share respectively (Mintel, 2011), with the remaining competitors all holding a 3.4% share or lower.
The size and age profile of the population of India offers an incredible marketing opportunity for our sports trainers SME. In 2012 the population was estimated at 1,259,721,000, 25% of whom were aged 10-24 (Population Reference Bureau, 2012) i.e. our target market of ‘younger people’. Being classed as a developing country signifies that the majority of the population are supported by the primary industries, 52% of the 487.6 million strong labour force are employed in agriculture (Central Intelligence Agency, 2009). The tertiary sector engages 34% of the labour force but service actually counts for over 50% of India’s GDP (CIA, 2011). Unfortunately the actual number of people who would be suitably qualified, at least at the managerial and sales levels, is quite low. According to the CIA, just 61% of the population can read and write (2001 census), which is detrimental to new investment. Expatriates would need to be placed in the new site for the embryonic stage of the venture, resulting in unwanted relocation costs and training for the local employees. However, India has a very cheap labour force in almost every part of the country (Bose, 2012); an article in The Indian Times (2012) reported that the daily wage for an unskilled worker is £3.22, whilst a semi-skilled worker commands £3.55. This is economically advantageous and a number of British companies have exploited this by offshoring certain functions. However, is this the image the company wants to project?
Economically speaking, the retail market is set to enjoy a 15%-20% growth per annum over the next 5 years, contributing to 14% of India’s GDP (A.T.Kearney, 2012) with the footwear market projected to reach a value of £4,085.2m in 2015 (Mintel Global Market Navigator, 2011). SME’s competition would be Planet Sports and Power, possessing a 14.8% and 6.2% footwear market share respectively (Mintel, 2011), with the remaining competitors all holding a 3.4% share or lower.
References: * A.T.Kearney. (2012). Consumer Products & Retail. Global Retail Expansion: Keeps On Moving. Retrieved on 15.11.12 from http://www.atkearney.com/consumer-products-retail/global-retail-development-index/full-report/-/asset_publisher/oPFrGkbIkz0Q/content/global-retail-development-index/10192 * Bose, T. K. (2012). Advantages and Disadvantages of FDI in China and India. International Business Research, 5,164-174. doi: 10.5539/ibr.v5n5p164 * Central Intelligence Agency. (2009). The World Factbook. Retrieved on 15.11.12 from https://www.cia.gov/library/publications/the-world-factbook/geos/in.html#top * Global Edge. (2011). Global Insights India. Retrieved on 20.11.12 from http://globaledge.msu.edu/Countries/India/economy * Google Public Data. (2012). Retrieved on 19.11.12 from http://goo.gl/C7u87 * Mintel Global Market Navigator. (2011). Footwear – India – a Snapshot. Retrieved on 19.11.12 from http://gmn.mintel.com.ezproxy.systems.swan.ac.uk/snapshots/IND/162/performance/single * Population Reference Bureau. (2012). World Population Data Sheet. Retrieved on 15.11.12 from http://www.prb.org/DataFinder/Geography/Data.aspx?loc=380 * The Times of India. (2012). Minimum wages hiked. Retrieved on 15.11.12 from http://articles.timesofindia.indiatimes.com/2012-10-07/delhi/34305709_1_minimum-wages-semi-skilled-workers-new-delhi * Transparency International. (2011). Corruption Measurement Tools. Retrieved on 20.11.12 from http://www.transparency.org/country#IND