Political and Legal Environment

Anti Trust litigation Environment protection laws Tax laws

http://www.taxrates.cc/html/argentina-tax-rates.html

Special Incentives Foreign Trade Regulations Attitude towards foreign companies Stability of Government

Corruption Perception Index: 87/178 (2010)

Competition Act
Prohibition of Anti Competitive Agreements (Global Lysine Cartel-5 firms-2 Japanese,2 S.Korea+1 U.S Archer Daniels Midland-Hi penalty imposed) Prohibition of Abuse of Dominance (Microsoft-IE, German Govt. asked Wal-Mart to raise prices) Regulation of Combinations
(Opposition of Merger of staples and Office Depot)

Competitive Advocacy

Political Environment
Influences business from multi angles viz. Deciding, promoting, fostering, encouraging, sheltering, controlling the business activities. Country with stable political system enjoyed the successful business operation. E.g U.S.A Bureaucratic decision making versus quick decision making. As many as 8,500 public sector enterprises brought under private section over 80 countries up to 1991. Command sectors in market economies and market sector in communistic countries. Former U.S.S.R allowed Pepsi when India didn t permit it. Political Relations and International Relations Friendly diplomatic relations between India and the former U.S.S.R not only helped Indian co. but also MNCs operating in India .

Political Risks
Confiscation
Nationalization of a property without compensation. Chinese govt. seizure of U.S property in 1949 when Chinese communist party came in power.

Nationalization
Shifting the ownership of private property from private individuals to the Government. Burma nationalized entire foreign trade. Poland and Czech communists nationalized 100% of their economy. Nationalization of commercial bank in 1969. The same factor was responsible for nationalization of private sector firms in Cuba in 1960.

Domestication
Foreign business firms relinquish control and ownership in favor of domestic investors either partly or fully. Barclays Bank in South Africa,1st Jan.,2006 ABSA group acquire Barclays Bank. How to Minimize Political Risk: Stimulation of Local Economy: by investing in the priority areas/portfolios, may encourage local cos. by purchasing raw material from them Assist local companies in technological aspects. Provide employment to Nationals. Sharing ownership through J.V CSR

Venezuelan President Hugo Chavez has ordered car makers in his country to "share" their technology with local businesses. "the populist leader has threatened to expropriate Toyota Motor Corp.'s local assembly plant if the Japanese car maker doesn't produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit.

Socio Cultural Environment

Lifestyle Changes-(HUL CEO confronted in rural South- Fabric Conditioner/hair conditioner ) Consumer Activism Growth Rate of population India 84 Rank-1.34 Age Distribution of populationHarley Davidson Regional shifts in Population- Hukou Life Expectancies Total population: 66.08years male: 65.77 years female: 67.95 years (2009 est.) Sex Ratio-940 females/1000 males

Birth rates- India Rank 87/221 ,21.76 ,China-150, Japan-220.ranking as per Birth Rates.docx

DINK DIWK SSDW Role of Children HDI Culture

Human Development Index http://www.indexmundi.com/india/

Examples
Social acceptance- Marlboro Established Social values- helping others, Daag Ache hai. Changed Social Changes- Fair & Lovely to Fair and Handsome. Fair & Lovely- Matrimonial to Career Established Social values substitution of product in the established social values- Sweets on Diwali & other occassions to Celebrations.

Hofstede Study and Indian Society

World averages are 55

43

50

64

45

Power Distance Index (PDI)- India Rank 77, - Hi level inequality of power & wealth in the society, accepted as cultural norm. Individualism (IDV)- 42, avg. of collectivism & individualism Masculinity (MAS)- India s ranking Hofstede Dimension at 56, with the world average just slightly lower at 51. The higher the country ranks in this Dimension, the greater the gap between values of men and women. It may also generate a more competitive and assertive female population, although still less than the male population. Uncertainty Avoidance Index (UAI) lowest ranking Dimension -(UAI) at 40. On the lower end of this ranking, the culture may be more open to unstructured ideas and situations. Long-Term Orientation (LTO) India rank is 61.A higher LTO score can be indicative of a culture that is perseverant and parsimonious.

Chinese society as per Hofstede

World averages are55 China 80 India 77

43 20 42

50 50 56

64 35 40

45 118 61

Technological Environment
Spending by government for R&D Total Industry spending for R&D. Patent Protection New Products

Commercialization and Transfer from lab to Market Place- Agility

Technological environment
Changing Workplace- SOHO Brick and Mortar- Click- Click and Mortar Models Use of Robotics, CAD, CAM, etc. Impact on Communication: Teleconferencing replacing physical meetings. Recruitment-vi sumes, Social Networking sites

Investment in Technology
Advanced countries spend considerable amount on R&D nearly 4-5 % of their GDP. India- 0.8%-1% Germany spend 50% of its R&D budget on product Innovation and remaining 50% on process innovation. Japan spends only 30% on product Innovation and remaining 70% on process innovation. USA spends 70% on product innovation and 30% on process innovation. Japanese companies introduce the product in 3 years whereas US firms need 5 years for the same job Zinnov Mgt. consulting: Global R&D expenditures have declined for the first time in 6 years. Countries Dominating R&D in particular sector R&D in Software, Semiconductor Technology R&D in Telecom Sector R&D in automotive Sector N. America N. America and Europe Japan and Europe

India s Stand on R&D

The number of core researchers in India was about 1.5 lakh as compared to China's 8-10 lakh. Number of persons doing research and development in Scandinavian countries is 7,000 per million of population and In U.S 4,700 per million of population. In India, there are 156 researchers per million of population. Of the 0.8% expenditure in India, 80% is by public sector while the private sector share is only 20%. In China and the US, the public sector share is only 30% each while in Japan it is only 18%. China- Govt. plan to increase R&D expenditure from current level of 1.7% to 2.5% of GDP by 2020. (HBRDec,2010)

India s Stand on R&D contdd..

To increase number of researchers in the country, university system will have to be strengthened by expanding and upgrading infrastructure as presently R&D quality in university is negligible.

The 11th Plan allocations for scientific departments including departments of science and technology and atomic energy, has been increased three folds to Rs 75,304 as compared to Rs 25,301.35 crore of 10th Plan Period.

The world s Most Innovative companies

1. Apple 2. Twitter 3. Facebook 4. Nissan 5. Groupon 6. Google 7. Dawning Information Industry 8. Netflix 9. Zynga 10.Epocrates 39 Shaadi.com
http://www.fastcompany.com/most-innovative-companies/2011/