National Business Systems and Cultural Conditions in India

Topics: Economics, Planned economy, Mumbai Pages: 8 (2849 words) Published: July 24, 2013
EXECUTIVE SUMMARY
This report will look at the National Business Systems and cultural conditions in India and will provide a brief assessment of how this will affect the firms. The report then moves on to assess the patterns and trends of trades between the two countries especially in the beverage industrys. The implication of international institutions on the firm, an assessment on the entry mode (FDI or export), advices on the problem of establishing and operating a corporate social responsibility (CSR) in India and finally providing recommendation on whether or not Boost Energy should invest in India. INTRODUCTION

This report gives us a brief idea about the investment opportunities for 'Boost Energy' which is energy drink manufacturer based in United States doing business in India. The company wishes to launch its products in India as well as export around the world. The Rs 2.5 billion branded energy drinks sector in India is growing at the rate of 60% growth rate of the Rs 70 billion soft drinks market. On the back of an increasing number of modern retail stores, the energy drinks market is expected to reach Rs 11billion by 2010. Although India's business environments is not an easy one to operate, the country's size and economic potential adds up to a profitable market for those who understands the challenges of the system and develop the skills to work within it. NATIONAL BUSINESS SYSTEM

India has 17.3 percent of the world's population, including a modem, consumption-oriented segment in excess of 200 million. The economy of India is the 12th largest economy in the world by nominal value and the 4th largest by purchasing power parity (world bank). Out of the 200 million population, 40 percent of them are youth. Availability of cheap labour is a motivational factor for our firm since bottling and packaging requires a large work force. One of the other motivational factor is the stable government which has been in power for last 7 years and 3 more years to complete the term. Since 1991, continuing economic liberalisation has moved the economy towards a market-based system. A revival of economic reforms and better economic policies in 2000s accelerated India's economic growth rate. By 2008, India had established herself as the world's second-fastest growing major economy. In this exotic land where threre 17 official languages are recognized, English stands alongside Hindi with an all-India status. Gradual changes have made India more interesting and receptive market. The Indian Government now places higher importance on increasing production in the mixed economy and expanding the role of market forces in resource allocation. New policies have given greater access to imports of technology, machinery, equipment, and intermediate inputs to modernize Indian industry. In the longer run, India faces three additional barriers to economic growth:- lack of infrastructure facilities, bureaucratic obstacles, and environmental degradations. India's economy is already troubled by its inadequate transportation systems and electricity shortage. Similarly, India's complex and entrenched bureaucracy mostly creates a barrier in implementing new economic policies and programs. The United States is India's largest trading partner, accepting 25 percent of India's exports and contributing 10 percent of its imports. Despite occasional political difference between the two countries, the trading relationships have remained essentially immune from the vagaries of international political issues. India have a plenty of natural resources that provide it a competitive advantage in the food processing industry. The semi processed food and beverages food segment is comparatively new and constantly changing. India's cost advantage in manpower can be used to set up large low cost production base for domestic and export markets. If one is to add on significant investment that have come into the country, food processing industry is in a favourable...
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