3 Report – Macroeconomics
―Rollator Limited‖2 is a small privately owned company that develops, manufactures and sells walkers for elderly people. Its domestic market are the Netherlands, where it has its office and production facility in Utrecht. A walker is a device which helps the elderly, and those due to physical disabilities who have difficulty walking. The walkers that ―Rollator Limited‖ produces are constructed of a lightweight tubular steel frame with four wheels with rubber tires. This high-end design provides extreme stability, especially when walking on unpaved roads. ―Rollator Limited‖ has found itself in a market which is saturated. The main reasons for this saturation lie in the revised basic health insurance policy in the Netherlands. From 2011, the walker is no longer included in the basic health insurance. Who needs a walker therefore needs complementary health insurance or pay for itself. Besides that ―Rollator Limited‖ is faced with lots of manufacturers and vendors of walkers in its domestic market. With this limited growth prospects ―Rollator Limited‖ wants to explore expansion abroad. Special interest is laid upon India.
Figure 3 | Standard Indian walker
To investigate if there are possible growth opportunities in India for a walker for elderly we need to investigate several key macroeconomic and demographic issues. This report contains the in-depth investigation on a possible investment in the Indian market for walkers.
In the last 50 years the Indian population grew from approx. 435 million in 1960 to - a last reported figure of - 1,210.2 million in 2010 (TradingEconomics, 2011). Indian population is steadily growing with a annual rate of approx. 1.3 per cent and IMF has forecasted that this rate will continue for the next few years (chart 1). As a result of the changing economic situation, which will be discussed later, several key demographic figures have changed in the 50 years. The key figures which are of importance for the exploration of the walker market are:
Chart 1 | Indian population
Chart 2 | Life expectancy at birth
―Rollator Limited” is a fictitious company
Business Economics Report | 11
increase in the life expectancy at birth(1968: 47/2010: 64) (chart 2) population ages 65 and above (1968: 3.2/2008: 4.8) (chart 3) population ages 15-64 (1968: 55/2008: 63) (chart 4) (Source figures and charts: TradingEconomics, 2011)
The target consumer for ―Rollator Limited‖ are the elderly aging 65 and above. From the above mentioned demographic key figures we can concluded that there are sustainable growth possibilities for the near future, since all the key figures are in an upward trend. Besides that there is an positive forecast for the growth in the population, which will derive in future increase of the investigated key figures.
Chart 3 | Population ages 65 and above
Chart 4 | Population ages 15 - 64
India has an diverse economy which consists of traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Services are the major source of economic growth, accounting for more than half of India's output with less than one third of its labour force (TradingEconomics, 2011) GDP According to the World Bank India‘s Gross Domestic Product (GDP) is worth $1,729bn or 2.79% of the world economy (TradingEconomics, 2011). Forecasts for the next 5 years end up with a GDP of $2,777bn in 2016 (Economywatch, 2011). In the last 4 years Indian economy has posted an average growth rate of 8 per cent (chart 5). GDP per capita is still increasing despite of the explosive growth in population, which means that the average Indian inhabitant is getting wealthier (chart 6). Inflation With an average rate of approx. 10% inflation has been high in recent years. Combining the inflation rate with the increase in GDP we can...