Aureole Institute of Business Management

Assignment On International Business
QUESTIONS Q1) Why couldn't Chevy sell the Nova in Spanish countries? How far is the understanding of culture of various countries important for international business? & Q2) Analyze the current business environment of India.

Name: - Aman Bhattacharya Roll No: - A209 Submission Date: - 9th October 2010

Submitted to: - Mrs. Sukalpa

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Q1) why couldn't Chevy sell the Nova in Spanish countries? How far is the understanding of culture of various countries important for international business? Ans) An American automobile brand Chevrolet under General Motor invigilation, one of the well known brand around the globe, Chevrolet is a pre- world war 1 company mark it self in the year of 8th November 1911. After a year of service the western front of World War 1 breaks out the world wide. In that time there was 270 car manufacturers in America. After the war ends up only few remains in the market were Chevrolet is one of them with Ford motors. Chevy introduce nova variant class car in Latin America Spanish speaking countries (Mexico, Honduras, Costa Rica, Panama, Cuba etc) and Europe state county Spain. A car like nova, which is most popular segment with in the America and it sub-continents 1961 – 1988.in that time its performance, Look and reliability gives tough competition to its rival (Ford Motors). So the question is why they failed to gain a market in Spanish countries. The legend says that the car sold poorly because the word "Nova" is similar to the phrase "no va" which translates to "doesn't go." There was no confusion, however, as the pronunciation of the two phrases is different, "Nova" having the accent on the first part of the word and the phrase "no va” has the accent on the second word. Understanding the cultures from various countries or the country where the business going to set up can help to understand where and what changes need in the project as per the society and that is the reason why Chevrolet fails. As entrepreneur or business developer why does he/she need to get a sense of the prevailing culture? It is essential to understand the culture of the society if the company wants to make impression or money. Understanding the culture can mean the difference between attracting and retaining impression from the societal consumers. International Business
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When it comes to international business, understanding cultural differences and promoting cultural sensitivity will help ensure that communication across borders is effective and that business transactions are successful. Each country has its own cultural standards of being, thinking, and acting, and these cultural differences strongly influence workplace values and business communication. What may be considered perfectly acceptable and natural in the workplace of one country, can be considered confusing or even offensive in the workplace of other country. For examples:Basically the Hollywood movies those releases in India gets it hindi name such as The Matrix named as Maha shaktimaan and so on. The film Avatar release world wide but the name stud still in India because the term AVATAR derives from Sanskrit refers to the hindu god Vishnu. So the word creates different impression in mind and people those who are don’t like to watch English movies (as per the Indian mind sets) can watch hindi version of the movie. And the same problem with the Spanish countries also (they didn’t aspect/like the name of the car), was the name creates huge barrier between the Chevy ‘Nova’. So each and every company should focus on while they enter in the new market or country or introducing new product in to the commodity market about the culture and its different society actually they should know what consumer looking for and want from them. The company should be aware of how other cultures differ across the following dimensions. Many of these dimensions are based on Geerte Hofstede's framework for assessing culture. Power Distance In some countries, such as the Arab nations and many Latin American countries, people recognize and respect differences in power. In these high power distance cultures, bypassing a supervisor or any other superior would be considered insubordination. In low power distance countries, such as America, the lines between International Business
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superiors and subordinates are often blurred. It is perfectly acceptable in America, for example, that supervisors can mingle with subordinates as equals within a social setting. Explicit Versus Implicit In some countries, such as America and Germany, people tend to be explicit in communication. Ideas are fully spelled out, and when trying to understand a message, people will depend on what has been actually said or written. In other countries, such as Japan, people tend to speak and communicate in an implicit and indirect manner. In this case, people depend on common understanding in knowledge and etiquette to extract the underlying message. Monochronic versus Polychronic Monochronic cultures prefer to focus on one task at a time. They emphasize order and do not favor interruptions. For these people, time is a precious commodity. Schedules and timetables are greatly valued and are meant to be strictly followed. Polychronic cultures, on the other hand, like to multi-task and are generally less stringent when it comes to establishing or following an agenda. In this setting, the concept of time is more fluid, and the pace of life is more relaxed. Individualism versus Collectivism In individualist cultures, such as America, individuality, independence, and selfdetermination are valued. In collectivist cultures, such as Japan, people are expected to identify with and work well in groups. In exchange for their loyalty and compliance, people receive a sense of security, protection, and shared responsibility. Masculinity versus Femininity The cultures those are more masculine, such as Japan, value competitiveness, assertiveness, ambition, and the accumulation of wealth. On the other hand, feminine

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cultures, such as Sweden, place more emphasis on relationships, compassion, and the general quality of life.

Uncertainty Avoidance This dimension concerns the level of uncertainty and ambiguity that members of a culture are comfortable with. Cultures that are high in uncertainty avoidance prefer rules and structured circumstances. Within their structured environment, these people tend to be more emotional and expressive. Cultures that are comfortable with uncertainty avoid rules and in general are less emotionally expressive and pragmatic. Every culture possesses a unique mixture of attitudes, values, and social expectations. When conducting business across countries, it is vital that business representatives are provided with an understanding of the cultural differences and are able to be sensitive to them. Q2) Analyze the current business environment of India. Ans) Basically India is an emerging economy and it promotes Foreign Investments in the
country. That's why the legal system for businesses in India is very flexible. The implementation of the legal system starts right from your decision to start a business in India. You have to take an online Director Identification number and then you obtain an online Digital signature certificate. It is a legal requirement to register the name and nature of the business in Registrar of Companies or ROC. Then you have to stamp the company documents from a superintendent. Medical insurance is also required for all sorts of businesses. There is an employee provident organization, where registration of companies are carried out. It is a legal requirement for all of the businesses to register for profession tax. Although India encourage business opportunities over there but still the legal environment requires a lengthy process to start or carry on a business.

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Growing sectors in India Telecommunication
India's telecom sector has been one of the major successes in the country. With more than 270 million connections, India's telecommunication network is the third largest in the world and the second largest among the emerging economies of Asia. The total number of telephones has increased from 76.53 million on March 31, 2004 to 688.38 Million telephone (landlines and mobile) subscribers and 652.42 Million mobile phone connections as of July 2010 it is projected that India will have 1.159 billion mobile subscribers by 2013.Furthermore, projections by several leading global consultancies indicate that the total number of subscribers in India will exceed the total subscriber count in the China by 2013.The industry is expected to reach a size of 344,921 crore (US$74.85 billion) by 2012 at a growth rate of over 26 per cent, and generate employment opportunities for about 10 million people during the same period. According to analysts, the sector would create direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall telecom equipments revenue in India stood at 136,833 crore (US$29.69 billion) during the fiscal, as against 115,382 crore (US$25.04 billion) a year before. The tele-density has also increased from 23.9 per cent in December 2007 to 58.17% July 2010.

Real Estate

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The infrastructure sector also growing it wing in a massive scale. Due to commonwealth games government of India spends Rs 28,054 out of which Rs 16,560 crore was given to the Delhi government for upgrading the capital infrastructure and building of various stadiums (Rs 650 crore for street scraping, Rs 900 crore for development bus depots, Rs 3,000 crore for extension of Metro, Rs 18,000 crore for augmenting DTC bus services and Rs 3,700 crore on flyovers and bridges). As of newly union budget of Rs.1, 73,552 crore for infrastructure growth in the country in budget 2010. Government has set the target of constructing 20km of national highways on daily basis and to trigger these changes projects have been undertaken via public private partnerships (PPPs). The government also allotment the road transport to Rs.19, 894 crore against the previous Rs.17, 520 crore for 2010-11. In an attempt to revise and enlarge the railway network, he also allocated Rs.16, 752 crore.

Automobile Industry
The growth of the Indian middle class along with the growth of the economy over the past few years has attracted global auto majors to the Indian market. India provides trained manpower at competitive costs making India a favoured global manufacturing hub. Propped by the increase in its car sales after the launch of General Motors’ (GM) new model Beat, along with the robust growth in the Indian automobile sector, Kevin E Wale, President and Managing Director, General Motors China Group stated that India should be among the top ten markets for the company globally by 2011. As of now all the major player of the Indian market show huge turn over in the month of August were India’s largest commercial vehicle producer, Tata Motors reported a rise in its July global sales near about 36% and Hyundai India claims 17.2% of growth.
Domestic Sales Figures (units) - 2010 Passenger Cars Commercial Vehicles Two-Wheelers

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June Januar y • • • • •

141,184 145,905 53,447

933,101 834,383

Annual Domestic Motor Vehicle Sales (Apr '09 - Mar '10) Passenger Vehicles: 1.95 million Commercial Vehicles: 0.53 m Two-wheelers: 9.37 m Three-wheelers: 0.44 m TOTAL: 12.29 m

Information Technology Sector
Software/BPO/KPO - The Indian BPO market is a highly developed service segment. It is estimated to grow at 19% annually till 2013. According to Gartner Research, the Indian BPO market is expected to reach $1.2 billion by 2011 and can further grow to $1.8 billion by 2013. Gartner Research Director T J Singh says, "In the last two years, many established Indian BPO providers and some of the multi-national corporation service providers, focusing primarily on the international offshore services market and have shifted focus and investments to the Indian domestic market.” The IT services which are being exported include various sectors such as financial services (41%), high-tech/ telecom (20%), manufacturing (17%) and retail (8%). According to the latest government survey, 90% of the new jobs were created during the last quarter of the financial year 2009-2010. During the October-December quarter there was a huge rise in employment opportunities i.e. around 0.7 million new jobs were created which reflected in the economy. According to a NASSCOM report, there is a tremendous opportunity in the long term. The BPO sector in India allows global companies to access the skilled workforce at lesser wages.

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The business of global KPO is estimated to reach $17 billion by the year 2010, out of which business worth $12 billion would be outsourced to India according to a report by GlobalSourcingNow. According to the National Association of Software and Services Companies (NASSCOM) Indian software industry grew by 12 percent in the financial year 2009 and it earned revenue to the tune of $71.7 billion. IT-BPO exports (including hardware exports) reached $47.3 billion in 2009 as against $40.9 billion in 2008, a growth of 16%. The overall exports exceed $36 billion in 2008-09, while the annual growth rate of the industry never dropped below 30%. The share of exports in total IT output has risen to almost 70% during the same period, as compared to 19% in 1991-92. According to NASSCOM, direct employment in Indian IT-BPO crossed the 2.2 million mark, an increase of about 226,000 professionals over 2008. It estimates an indirect job creation of about 8 million. As a proportion of national GDP, the sector revenues grew from 1.2% in 1998 to an estimated 5.8% in 2009. Net value-added by this sector, to the economy, is estimated to be 3.5-4.1% for 2009. It also reports a maturity of the Indian market and predicts a good future for the domestic industry. Where The Indian government is providing incentives to the software development industry in India by way of developing Software technology parks (STP) and Special Economic Zones (SEZ).Software Technology Park is the most effective scheme provided by the Indian government. It provides exemptions from custom duty as well as service tax for STPs. Other policies include exemption from excise duty and rebate in the payment of Central Sales Tax. However, the most important policy initiative is the provision for 100% income tax exemption until 31st March 2011. Special Economic Zones (SEZ) are also encouraged to boost the software development industry. The SEZ policy came into effect from February 10, 2006. The policy is ideal for big industries. It provides exemption from income tax for 15 years,

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100% exemption for export income in the first five years and 50% exemption for the next five. Data Warehousing - Large retail companies such as Wal-Mart and Metro have adopted data warehousing solutions for Business Intelligence (BI) and analysis. Many companies work on Business Intelligence applications that are dependent on data warehousing. It provides a retailer the ability to leverage his data assets to gain strategic insight, recognize emerging trends, and respond quickly. Many leading retailers see data warehousing and Business Intelligence as essential strategic investments for their competitiveness. Investments in Data Warehousing has given companies substantial returns on investment as they see increased revenues, increased margins, reduced markdowns and shrink, and increased inventory turns. After a mere 5.4% growth in 2009, India’s ITES industry is expected to bounce back and grow at 15%. The ‘Market Top 10 Predictions 2010’ report by ICT market intelligence firm IDC India said that important structural changes brought about by the impact of economic slowdown, would accelerate industry transformation towards a new "market order". The recent global economic slowdown did not affect the Indian IT industry as disastrously as it did in Europe and the US. This clearly demonstrates the Indian ITES market potential. One of the major hubs in India for Data Warehousing is Bangalore, the Silicon Valley of India. In fact, a major contribution in India's phenomenal growth in the field of software is provided by the software companies based out of Bangalore. There are various reasons such as a favorable climate, excellent infrastructure, availability of human resources, International quality research and development centers, cosmopolitan ambiance, favorable government policies. Cities like Mumbai, Pune and Nagpur are also growing markets in the field of data warehousing.

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Life science
Pharmaceutical - India’s pharmaceutical industry is the third largest in the world in terms of volume and stands 14th in terms of value. According to data published by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total turnover of India's pharmaceuticals industry between September 2008 and September 2009 was US$ 21.04 billion. Of this the domestic market was worth US$ 12.26 billion. India also supplies more than 80% of AIDS drugs to African countries. According to the All India Organization of Chemists and Druggists (AIOCD), the pharmaceuticals industry in India will grow by over 100 per cent over the next two years. The pharmaceutical industry is currently growing at the rate of 12 per cent, but this will accelerate soon. The sale of all types of medicines in the country stands at US$ 9.61 billion, which is expected to reach around US$ 19.22 billion by 2012. Biotechnology - The Indian biotechnology sector is one of the fastest growing knowledge-based sectors in India and is expected to play a key role in shaping India's rapidly developing economy. With numerous comparative advantages in terms of research and development (R&D) facilities, knowledge, skills, and cost effectiveness, the biotechnology industry in India has immense potential to emerge as a global key player. The Indian biotech industry grew threefold in just five years to report revenues of US$ 3 billion in 2009-10, a rise of 17 per cent over the previous year, according to the eighth annual survey conducted by the Association of Biotechnology-Led Enterprises (ABLE) and a monthly journal, BioSpectrum, based on inputs from over 150 biotech companies. The biopharma sector contributed nearly three-fifth to the industry's revenues at US$ 1.9 billion, a rise of 12 per cent, followed by bioservices at US$ 573 million and bioagri at US$ 420.4 million. The remaining revenue came from the bioindustrials US$ 122.5 million and bioinformatics US$ 50.2 million segments.

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India is already being globally recognized as a manufacturer of economical, high-quality bulk drugs and formulations. With a huge base of talented, skilled and cost-competitive manpower, and a well-developed scientific infrastructure, India has great potential to become a leading global player in the field of Life science. Healthcare - The healthcare industry in the country, which comprises hospital and allied sectors, is projected to grow 23 per cent per annum to touch US$ 77 billion by 2012 from the current estimated size of US$ 35 billion, according to a Yes Bank and an industry body report published in November 2009. The sector has registered a growth of 9.3 per cent between 2000-2009, comparable to the sectoral growth rate of other emerging economies such as China, Brazil and Mexico. According to the report, the growth in the sector would be driven by healthcare facilities, private and public sectors, medical diagnostic and pathlabs and the medical insurance sector. According to the report, diagnostics would contribute US$ 2.5 billion to the healthcare industry by 2012. An increasing number of public and private healthcare facilities are expected to propel demand for the industry, accounting for another US$ 6.7 billion in this period. The Government of India launched the National Rural Health Mission (NRHM) in 2005. It aims to provide quality healthcare for all and increase the expenditure on healthcare from 0.9 per cent of GDP to 2-3 per cent of GDP by 2012. According to Union Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee increased the plan allocation for Ministry of Health and Family Welfare from US$ 4.2 billion in 2009-10 to US$ 4.8 billion in 2010-11. Moreover, in order to meet revised cost of construction, in March 2010 the government allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutes and upgradation of 13 existing Government Medical Colleges.

Tourism & Hospitality

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As per the Travel and Tourism Competitiveness Report 2009 by the World Economic Forum, India is ranked 11th in the Asia Pacific region and 62nd overall, moving up three places on the list of the world's attractive destinations. It is ranked the 14th best tourist destination for its natural resources and 24th for its cultural resources, with many World Heritage sites, both natural and cultural, rich fauna, and strong creative industries in the country. India also bagged 37th rank for its air transport network. The India travel and tourism industry ranked 5th in the long-term (10-year) growth and is expected to be the second largest employer in the world by 2019. Medical Tourism - According to Pawan Verma, senior executive vice-president, hotels division, ITC the market size of medical tourism in India is worth US$ 2.4 billion and is growing at 27 per cent annually. The country received 1.1 million medical tourists in 2009, registering a growth of 17 per cent. According to a report by RNCOS, medical tourism will grow at a CAGR of over 27 per cent in the period 2009–12 to generate revenues worth US$ 2.4 billion by 2012. The number of medical tourists is anticipated to grow at a CAGR of over 19 per cent to reach 1.1 million by 2012. The report adds that India’s share in the global medical tourism industry will climb to around 2.4 per cent by the end of 2012. According to the World Travel and Tourism Council (WTTC), the growth in the hospitality industry is pegged at 15 per cent every year, with 200,000 rooms needed, the hotel segment of India is on the brink of an astounding growth. According to the Tourism Satellite Accounting (TSA) research, released by WTTC and its strategic partner Oxford Economics in March 2009: • • The demand for travel and tourism in India is expected to grow by 8.2 per cent between 2010 and 2019 and will place India at the third position in the world. India's travel and tourism sector is expected to be the second largest employer in the world, employing 40,037,000 persons by 2019.

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• • • Capital investment in India's travel and tourism sector is expected to grow at 8.8 per cent between 2010 and 2019. The report forecasts India to get capital investment worth US$ 94.5 billion in the travel and tourism sector in 2019. India is projected to become the fifth fastest growing business travel destination from 2010-2019 with an estimated real growth rate of 7.6 per cent. Each and every country today is looking to boost their business and increased global competition. Outlined below are the structural transformations undertaken by the government that have had a positive impact on the growth of the Indian economy & improving the rankings of India in terms of Business Environment among 183 countries of the world.

Key benchmarks indicating Business Environment in India rankings among 183 countries of the world.
Doing Business Doing Business Change in rank

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2010 rank Doing Business Starting a Business Dealing with Construction Permits Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business 133 169 175 104 93 30 41 169 94 182 138 2009 rank 132 166 174 102 92 27 38 171 97 182 142 -1 -3 -1 -2 -1 -3 -3 +2 +3 0 +4

Based on the above finding we can conclude that there is a definite improvement in the Business Environment in India. However, India still has to work on other areas important to business freedom such as an economy’s proximity to large markets, the quality of its infrastructure services (other than those related to trading across border), and macroeconomic condition or the underlying strength of institutions.

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