Risks for a UK pharmaceutical firm entering India's market

Topics: Economy of India, Mumbai, Economics Pages: 7 (3313 words) Published: October 29, 2013
This paper is going to critically evaluate the risks which associate with many aspects that a business will have to cope with when expanding into an international market. In more detail, this case is about a pharmaceutical company, from the UK, which desires to develop its production in India. The paper is structured into four main parts which demonstrate risks in cross-cultural, political, financial and commercial presence. Finally, a conclusion and recommendation will be drawn upon exploring and analyzing the context. India is the seventh largest country in the world, covering around 3.29 million square kilometres. The country’s population is the second highest in the world with more than 1.2 billion people (CIA, 2013). The aforementioned two characteristics of India are extremely attractive to any business, especially businesses that have a sufficiently strong base for dealing with a huge and demanding market. The relationship between the UK and India is very healthy and sustainable. In 2011 India was the UK’s largest non-EU market (UKTI, 2012a). Especially, figures from December 2011, Indian Pharmaceutical Industry has grown at 15.7% (UKTI, 2012b). However, before dreaming of any benefit, the firm must consider carefully every aspect of India for a fruitful future and with a right mindset and an adequate diligence then the company could be highly prosperous on its solid position in India. Cross-cultural risks

Regarding cross-cultural risks, there are three main aspects that should be considered are: cultural differences, negotiation pattern and ethical practices. With respect to cultural differences, there are many contrasts in cultural elements. It is recommended that not only an expanding pharmaceutical firm but also all foreign companies need to concern about: the language and the Hinduism. The root of the diversities in culture is the India’s enormous population which consists of two large ethnic groups which are 80 percent Hindus, 12 percent Muslims and 8 percent of many other groups (Katz, 2006a). First of all, although both of the UK and India have a very long history, it is clear that the UK is a typical European country and India as an Asian country, is on the opposite. There are more than 22 languages and a number of dialects in India, the local language changes every 500 kilometres and approximately 90 percent of Indian population speak little or no English (Dash, 2012). In addition, most Indian people speak English in heavy local accents which are quite difficult to hear; some call it Inglish, Indlish or Hinglish (Dhillon, 2007). This is a huge hindrance of communication that could lead to misunderstanding and disrespect in some cases. The Indian expect a smooth conversation in order to build trust and relationship that required for business, if there is no effective communication then there probably will be no business. Hence, to prepare for Indian English is essential. The largest group of religion in India is Hinduism which has more than 80 percent of Indian follow while there is only one percent of British population are Hindus (BBC, 2009). Hindus believe in reincarnation and perfecting oneself each life, worshiping the cows and appreciate ascetic lifestyle. Meanwhile, the UK favours enjoying beef and encourages consumption, this is a huge difference. It could create some contradictory presumptions among Indian partners and the UK partners. Thus, there should be a mutual understanding and for a pharmaceutical firm, which will have to cope with a large pool of employees. A clear notion on religion topics which are very sensitive should be carefully introduced to UK representatives and future employees. With respect to negotiation pattern, at the beginning of business-related purposes in India, a clear relationship that shows mutual interest and understanding is totally necessary not only for national business but also for the international partners environment where it is much more difficult to...
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