Identification of the Strategic Issue
Graneer Systems needs to determine the attractiveness of the Indian water purification market and determine the best mode of entry. Graneer needs to determine what life cycle the industry is in, how many competitors exist and what are their competitive strategies, what are the forces in the broad environment and how are they going to inhibit or promote market entry. Graneer also needs to determine the best product design for entering this market and a pricing strategy.
Listing of Alternative Courses of Action
Joint working arrangement – Graneer would supply key purifier components to an Indian company which would manufacture and market the assembled product. License fees would be on a per-unit basis over the term of the agreement (typically 5 years with option to renew for 3 more). 2.
Joint venture agreement – Graneer would partner with an existing Indian company solely for the purpose of manufacturing and marketing water purifying systems. They would split profits and there would be a buy/sell option after a minimum time period. 3.
Acquisition – Graneer would purchase an existing Indian company and expand operations to include the water purifying system. Profits would belong wholly to Graneer.
Analysis of Opportunities and Threats in the External Environment •
Demographic: Chatterjee identified the target market as 44 million households. 50% of the target market currently uses the traditional method of boiling, and boiling and filtering. 40% uses candle filters and water purifying devices. The remaining 10% of the target market was unaware of water problems and did not use any water filtering or purifying system. This is the least attractive segment of the target market. •
Economic: Graneer would have to go through a 6-month, no-fail approval process to enter the market. Foreign companies were taxed on income coming from Indian operations. However, profits are also higher because return on assets has been higher for all Indian corporations than for United States corporations. Repatriation of profits might not be required and if it was, Graneer could take actions to unblock profits. •
Physical/Natural: There are copious amounts of water problems in developing countries. This is an opportunity for Graneer because water purification systems are necessary to sustain and improve the health of these populations. •
Technological: The “Delight” purifier uses technology to remove four types of contaminants as long as they are present in “reasonable”, defined by the World Health Organization, amounts. Engineers assured Chatterjee that Delight’s design is not a concern. For cost reasons, Graneer should use the “point of use” design over the “point of entry design.” Eventually, Graneer will have to provide the Indian market with more models and more features but for starters, two models is sufficient – one larger capacity and one smaller capacity purifier. •
Political/Legal: Liberalization opened the Indian market to foreign investors. Indians realized protectionist policies did not work and accepted that western systems worked. India is an attractive market to foreign investors. •
Socio-Cultural: Graneer is an American country and thus will encounter cultural and language barriers upon entering the Indian market. Many Indians felt the need for improved water conditions. The wealthier, better educated, health-conscious consumers actively engage in water filtering and purification systems. This group finds these factors most important when purchasing water purifiers: o
Ease of installation and service
Style and appearance
Warranty and availability of financing
Competitive: Over one hundred competitors existed in the Indian market for water purifying systems and filters. Three major competitors were identified. o
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