FACULTY OF COMPUTER, MEDIA AND TECHNOLOGY MANAGEMENT
(FKMPT)
BACHELOR OF BUSINESS MANAGEMENT
(HONOURS)
INTERNATIONAL BUSINESS MANAGEMENT
(BBM 2013)
CASE STUDY
PREPARED BY :
NUR AIN SYAFAWANIE BINTI MAHADI
(23B12I006)
PREPARED FOR :
SIR ZAILIAMRI BIN DERAMAN @ RAMLI
1. Why do you think that the Indian retail sector is so fragmented ?
Indian retail sector is so fragmented because a large percentage of this industry
dominated by small enterprises which are run by individual or family. The total
contribution of retails in India is less than 1% because a large percentage of the
population live in rural area, and open a retail store in those area could hurt the total
revenue. Another reason is logistic in India cost is very high, total cost approximate
14% of India GDP, due to a poor infrastructure and it’s operated by small trucking
company. In addition, lack of warehouse and cold storage put a lot of foods because
it’s damage and rotten before it could reach the market, estimated about 25% to 30%.
The Indian retail industry is a key driver of the Indian economy. India's retail industry
is projected to grow quickly owing to factors such as increasing urbanization, rising
household income, connected rural consumers, and increasing consumer spending.
Clothing, textiles, fashion accessories, jewelry, watches, footwear, health and beauty
products, pharmaceuticals, consumer durable, home appliances, cell phones,
furnishings, utensils, furniture, food, grocery, catering, books, music, gifts, and
entertainment are among the major segments of the Indian retail sector.
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2. What are the potential benefits to India of entry by foreign retail
establishment ? Who are the potential losers here ?
When Indian government allow FDI to take an entry into India retail sector, it
would reform the whole system with many potential benefits:
Lower the food price because large enterprises because they make great
investments in such infrastructure such as cold storage system and efficient
warehouse to keep the produce stay fresh longer.
FDI help farmer tremendously, and most of the farmers are likely to work with
foreign retailers because they’ve help to keep food processing in check so it
won’t hurt farmer revenue.
Increase Employment Opportunity which is more than 7% of the work force.
Many Indian small enterprises are stand to lose because of foreign entry
because they don’t have enough capital and resources to compete with large foreign
retailers. Left-wing politicians who believe that FDI would be harmful to the small
enterprise retailers.
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3. Who stands to lose as a result of foreign entry into the India retail sector ?
Many Indian small enterprises are stand to lose because of foreign entry
because they don’t have enough capital and resources to compete with large foreign
retailers. Left-wing politicians who believe that FDI would be harmful to the small
enterprise retailers. The entry of foreign retailers can lead to increased competition
which may result in lower price, improved products quality and a wider variety of
choices for consumers. Farmers and producers , foreign retailer often invest in the
development of supply chains and infrastructure, which can benefits farmers and
producers by providing them with better access to markets, reducing wastage and
improving their bargaining power.`
The fear of job loses looms large among groups and those employed in the
unorganized retail sector. There are applications, everything often unsubstantiated by
concrete data, that the entry of foreign details could lead to workforce reductions or
changes in employment structures. This anxiety beyond just direct detailed jobs to
associated services and industries, significantly impacting livelihoods across the
supply chain.
Local suppliers and manufacturers might also face challenges. Foreign
retailers, with their global supply networks and specialization strategies, could alter
the dynamics of sourcing products. This might pose a greatest to small local supplies
who might struggle to meet the standards or scale required by these large retailers,
potentially leading to reduced business opportunities for them.
However, it's essential to note that while are potential losers, there should also
be benefits. For instance, consumers might benefit from improved product quality,
better prices, and advanced shopping experiences offered by foreign detail chains.
Farmers could gain from better prices, improved supply chain management, and
reduced waste of perishable foods.
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4. Why do you think reform of FDI regulations in India has been so difficult ?
Firstly, the retail sector in India is deeply entrenched in a historical and
cultural context. For generations, small, family-owned shops have been an integral
part of communities across the country. These establishments have cultivated strong
bonds with consumers based on personal relationships, trust, and familiarity.
Therefore, any reforms that could potentially disrupt this traditional setup face
resistance from both retailers and consumers who are emotionally attached to these
local businesses.
Moreover, the political sensitivity surrounding the issue cannot be overstated.
Retail reform holds significant implications for millions of small traders and shop
owners who form a substantial vote bank. Political parties, particularly those catering
to these constituencies, are cautious about supporting reforms that might jeopardize
their support base or ignite public backlash. As a result, navigating the political
landscape to garner consensus on FDI reforms becomes a formidable challenge.
There are several reason.
India's diverse socio-economic landscape adds another layer of complexity.
What might be beneficial or acceptance in one region may not align with the needs or
concerts of another. This diversity necessitate nuanced polices that ordinary interests
and address regional disparities, posing a challenge to crafting uniform regulations
applicable throughout the country.
The lack of consensus among stakeholders, including political parties, industry
bonds, and consumer groups, further impedes progress toward FDI reforms.
Conflicting interests and ideologies hinder the formulation of a coherent and widely
accepted policy framework.
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Foreign firm still find it difficult to get an approval from the Indian government.
Huge under-investments problem with logistics and infrastructure, supply-chain
management. Therefore, finding a good spot to open a business there could be a
problem.
Culture difference with lead to a different buy habits, and Indian people are price-
sensitive toward luxury good.
