CHAPTER - ONE
Conceptual framework and basic issues
India is one of the largest economies in the world in terms of purchasing power and is among the fastest-growing, with a population of around 1.12 billion people, with huge natural resources, and with costs that are at the very low end of the global average. All major consumer companies of India have sophisticated marketing and product development plans. Moreover, the multinationals that are operating in India have business models that are tailor-made to local markets and customs.
After the economic liberalization of 1991, many MNCs have entered India. Today, global companies having subsidiaries in India include Unilever, Nestle, BATA, Colgate Palmolive, Procter & Gamble, General Electric, General Motors, Ford, Pepsi and Coca-Cola. Historically, the main reason for the entry of MNCs into India was to jump the tariff wall. High import duties ruled out the option of exporting finished goods from the home country to India. On the other hand, once they entered the country and set up operations, the country’s high tariffs guaranteed adequate protection. In some cases, the need to customize products necessitated a strong local presence. The multinational companies in India represent a diversified portfolio of companies from different countries. There are a number of reasons why the multinational companies are coming down to India. India has got a huge market. It has also got one of the fastest growing economies in the world. Besides, the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. While several MNC’s have entered India, However, even within a given industry, some MNCs seem to be doing better than the others. Consider the automobile industry. Here, Suzuki and Hyundai are way ahead of formidable rivals such as General Motors, Honda and Ford. Similarly in the FMCG sector, even after allowing for its relative late entry, Hindustan Unilever Limited and Nestle remains a big player in the Indian market.
FMCG are products that have a quick shelf turnover, at relatively low cost and don't require a lot of thought, time and financial investment to purchase. Three of the largest and best known examples of Fast Moving Consumer Goods companies in India are Nestle, Hindustan Unilever limited and Procter & Gamble. The Indian FMCG sector is an important contributor to the country's GDP. It is the fourth largest sector in the economy. It has a strong MNC presence and is characterized by a well established distribution network, intense competition between the organized and unorganized segments and low operational cost. The Indian FMCG sector is the fourth largest sector in the economy. It has a strong MNC presence and is characterized by a well-established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage.
The FMCG sector consists of three product categories, each with its own hosts of products that have relatively quick turnover and low costs: * Household Care
* Personal care
* Food and Beverages
Food and Beverages
* Health beverages; soft drinks
* Beverages bakery products (biscuits, bread, cakes)
* Snack food
* Ice cream
* Soft drinks
* Processed fruits, vegetables
* Dairy products
* Bottled water
* Branded flour
* Fabric wash (laundry soaps and synthetic detergents)
* Household cleaners(dish/utensil cleaners, floor cleaners, toilet cleaners, air fresheners, insecticides and mosquito repellents, metal polish and furniture polish)
* Oral care, hair care, skin care, personal...
Please join StudyMode to read the full document