COUNTRY FACTOR ANALYSIS
International business Individual Assignment number I Due date ± August 20th 2010 Submitted on August 20th 2010
BY ALEN JOSEPH
Callister. slightly bitter. B3 and folate. Is more tooth friendly compared to jam or choc nut spreads
y y y y y y
. It is vegetarian food. Morning breakfast or evening snack is incomplete without vegemite. Vegemite is made from used brewers' yeast extract. and umami or malty similar to beef bouillon. toast. crumpets and filling for pastries. Vegemite is a dark brown Australian food paste made from yeast Extract. In this context when we are looking at a Australian product to be launched in an another country . The first name that pops up the mind is of the famous VEGEMITE.Globalization refers to the shift towards a more integrated and interdependent world economy. A product which might be have been produced in one country is exported to the other. Vegemite is a name popular name in all households in Australia.
Inventor Launch year Company Current supplier
Cyril P Callister 1922 Fred Wakker & Co Kraft foods
Nutritional value of Vegemitey Its unique taste & its Nutritional value It is a rich in Vitamin B. It is advisable to be taken by females during the child bearing age. A single 5g serving of Vegemite provides from 25-50% of the recommended daily intake for these four vitamins It has no added colors or flavors It contains no added sugar Rich source of protein. This basically means that world has suddenly become one huge common market. Globalization of a product is on a rise as it is targeted at huge wider market and it also hopes to gain from national difference in exchange rate. It is used for sandwiches. It is salty. It was launched 1922 and was invented by Cyril. Sometimes the countries might have production houses of each country in order to cut down on labour cost &Exporting cost . B2. and various vegetable and spice additives.P. It is one product which is closest to the heart of all Australians is VEGEMITE. It is also rich in vitamins B1. The texture is smooth and sticky.
India has a population of over 1 billion and a rapidly growing middle income population of over 300 million.Therefore is a huge scope for food processing industries. Therefore resulting in many Multinational companies (MNC) setting up factories in India in order to provide for both the local markets as well as to export to other countries. One of major factors in food industry is the ready availability of raw materials in India because of diverse agro climatic conditions . The presence of the whole value chain. The Indian economy is ranked above various developed countries like France. Low labor cost . low-cost production bases for domestic and export markets.-The relatively low-cost but skilled workforce can be effectively utilized to set up large. Indian economy was growing by an average of over 9% over the last 3 fiscal years. 2. Italy. The GDP growth of India is the 3rd largest in Asia as a whole. We should have an over all idea about the political. United Kingdom and Russia.
Economy of India
India is ranked 5th largest economy in the world with GDP estimated at $1.
.2 billion. cultural. In order to understand the challenges and opportunities of Indian market .Advantages of Indian market over others
1. economic factors in India which play a huge role in influencing the market.
3. In Indian fiscal year IFY 2008/09 (April & March).
. which depress the sourcing volumes from India far below their potential. container movement is not at its most cost-efficient. This is changing as India imports more products and inbound freight traffic increases.3%. and therefore does not receive preferential access to the major markets. 318896by 2025. Assuming the Indian economy goals at a real compound rate of 7.3% from 2005. A compound annual growth rate of 5. Therefore both private and government institutes exist. The huge geographical spread further complicates this issue. Cost of shipping is also affected by the fact that inbound freight traffic has been low . This creates issues of lack of control and lack of consistent or reliable performance. including 2 million in 5. A lot of sectors which were earlier under the government have been privatized like electricity etc. sale of arms etc are under government control. India also lacks any serious trade pact memberships. Indian economy is a mixed economy it means that few sectors which are of national importance like security . Indian income levels would triple & middle class population would grow spread beyond top tier to middle tier & small cities.2025. As the Indian household income rises so would overall spreading & consumption making India the fifth largest consumer market by 2025. develop. However there are other sectors which are entirely privatized like the FMCG sector. Fragmentation of supply base also creates barriers to achieving true integration between the various links in supply chain. Super markets virtually do not exist in India.
Risk involved India is distant from all the major markets.160 towns and four million in 627.The medium age of the population is 24 & over 100 million Indians are in the age bracket.It also has a large & growing young population. Consumer demographics India has a large & growing middle class 300 million .
India is home to six million retail outlets. the cost of shipping is high and shipping time adds to the disadvantage. and maintain a robust distribution network
Political situation of india
India is democratic country by democratic we mean that the government is formed by the people exercised by elected representatives. Critical factors for success are the ability to build. It also makes new product launches difficult since retailers are reluctant to allocate resources and time to slow moving products. India lately has been promoting privatization even more. The current political situation in India is fairly stable as congress is heading the government for few years now.Opportunities in Indian market economy Huge market -Indian consumers spend a large share of their income on food with share of expenditure on food& beverages estimated at 42.000 villages. Therefore.3% of total private consumption expenditure in IFY 2007/2008. Growth in real household disposable income will likely grow from Rs 113744 in 2005 to Rs. This makes logistics particularly for new players extremely difficult. This leads to quota and duty disadvantages.therefore.
The labour laws in India are out dated. Labour laws are still seen to be relatively unfriendly to business. The political diversity of India 35 states and union territories.
.Opportunities Government Assistance-The Government has introduced several schemes to provide financial assistance for setting up and modernizing of food processing units. The cumulative FDI inflow in food processing reached US$ 2. double income households. globalization. FDI approvals in food processing have doubled in last one year alone. Food has always been close to Indian hearts.804 million in March '06. Indians do not mind investing on good food. Advantages Indians spend a lot on buying good and labeled food because of the globalization. support for research and development and human resource development in addition to other promotional measures to encourage the growth of the processed food sector. The government has allowed 100 per cent FDI in processing sector. the sector received approvals worth US$ 41 million. In '05-06. creation of infrastructure. y y y Corruption -India bureaucracy also comes in top ten corrupt nations in the world. Conducive food processing policy environment The national policy on food processing aims at increasing the level of food processing from the present 2 per cent to 10 per cent by 2010 and 25 per cent by 2025. and a coalition of ruling parties has led to show progress in rationalizing these imbalances due to debate and discussions. The reservation for the small scale industries is high in India. This figure is almost double the US$ 22 million approved in 2004-05. Foreign Direct Investment -Foreign direct investment (FDI) in the country's food sector is poised to hit the US$ 3-billion mark in coming years. Which often determines whether a product will sell in the market or not. education. exposure to the western food habits has brought about a huge change in the food habits of Indians.
Risk involvedy Indian Bureaucratic procedures The business still has to deal with inefficient slow-moving bureaucratic procedures. Which became as the Excise and other tax imbalances.
Culture of India
No market study is complete without taking into account its culture .
Vegemite will prove to be a new variety in the market and will be instant hit with the youth. It is its diverse nature. and books. The buying culture in India is dominated by both quality and price. As most of the multinational brands who fail in india due to their high rates. computer games.
The consumer market in india. However it should be noted that there are not many players in this sector which opens up opportunity for success. As a result. Amul. parents spend much money and effort securing the right schools and tutoring for their children and invest in nutrition. India s market is divided into two parts the rural india and urban india. several categories of products from protein powders to educational toys have enjoyed rapid growth. The challenge in the culture of Indian market Indian taste buds differ form place to place.The Indians do not have much of options in terms of bread spreads . As they have a inherent habit of trying out new international brands. Beyond basic needs. butter/peanut butter. However there should be long term goals of reaching out to the rural market which huge and mostly untapped. whom we call our target group for any marketing strategy. What works in one state might not work in the other. It should be noted that both the above mentioned names are Indian brands and therefore there are practically no major multinational players in the bread spreads in India. households make their children's future a clear priority.
. Therefore the companies have come up with small packets of the same product in order to fit the budget of all.Market offers less options . It should be noted that majority of the current Indian population is under the age of 25yrs. cheese. Therefore let us now look at the key decision making people in the family . To gain a winning edge. their choices are limited to jams. We need to understand who makes the decision of buying a particular product at home. Competition from other huge names like Kisan. education is seen as a passport to a better tomorrow. For E. Kisan Jam has come up with small packets of jams for Re 1. This has been the strategy used by big brands to enter the huge rural Indian market which is largely untapped. In order to succeed in any market. It is the urban population that our product will be looking at. Which is a golden opportunity for any brand in the sector.g.
and such sachets drove almost all of this growth despite their premium price per unit of volume. To capture their hearts and wallets profitably companies must use that knowledge to tailor the business model to local conditions. they still have many competing pulls on their modest budgets. Offer value at the right price Getting the price right is just as important. Woman In Indian home the lady in the house often decides what comes home. youth & women With about 300 million children in the age group of 4. There were three major emerging segments in the Indian consumer population namely the kids. was revolutionized by ten-milliliter sachets. Affordability also has a bearing on price points for everyday products. Youth power with about majority of the population of India falling under the category of below 25 years of age. The children have come to be important decision makers as to what is to be bought at home. The woman population of india generally wants both quality as well as price.Target group of consumers in Indian market
Children Youth Woman
According to publication released by Spenser Stuart India one of the leading executive search consulting firms privately held since 1956. In ten years.14 years of age in India which is a huge for any market. Winning companies thus have learned the importance of affordability. Although the incomes of Indian consumers are growing. sometimes in a paradoxical way. These products succeeded because consumers who could not afford to spend 20 to 30 times more on a bottle of shampoo can now opt for single-serve portions. for example.
Suggestions to succeed in Indian market
Tailoring the business model to India Knowing what makes consumers tick is a vital first step.
. The shampoo market. What is best for the family therefore lately the markets have started targeting the women population. They are not only brand conscious but also do not compromise on quality. the shampoo-buying share of India's population increased to 45 percent. priced under five cents each. from 18 percent. Specially when it comes to morning breakfast.
Has great potential of untapped market.existence of number of intermediatories involved between the importer & retailer. Research firms in India can provide the information to determine how.000 distributors. which use salespeople trained by Unilever to work with more than eight million retailers The study of Indian market and overall economy before taking the plunge. since building one takes too long and is ultimately more expensive. Unilever. assisting with configuration of the project. for instance. The unique sourcing channels . and pushing through the paperwork required. has achieved national reach through more than 20 distribution centers. There are also companies which can guide the foreign firm through the entry process from beginning to end -performing the requisite research. run by third-party agents.Getting distribution right The key to distributing products successfully in India is to rely on a third-party network. These centers serve in excess of 7. helping develop Indian partners and financing. finding the land or ready premises. Therefore Vegemite can become a household name in India has it has in Australia. Moreover the Indians do not have much of options available to them in terms of bread spreads.
. that transport and store its goods. when and where to enter the market. An organized retailer may source an imported product directly through an exporter or through an Indian importer or a distributor or directly from exporter/ manufacturer.
India despite its existing challenges and huge diverse market.
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