December 2010

Alena Lutzke Aaron Buder Silke Piepenpott Corinna Kaul

(109099) (126510) (109745) (108989)

With the ambition of starting a company every entrepreneur wants to become a player in the international world of business and trade. How difficult it is to expand to new markets especially to new countries we want to show in our report. To be specific we focus on the dairy products of the companies DANONE and UNILIEVER. For knowing how the two competitors are doing, we give an insight on the international strategy of our two companies at the beginning of our report. After comparing and analysing we will select the firm, which we think has it easier to enter a new international market of the dairy industry. As a following step after choosing the company and India as our new market we will develop an international business plan with respect to all marketing, financial, human resource, legal, and CSR factors. Finally the conclusion will highlight all our aspects we took in consideration and how we want to enter the dairy sector in India.


Table of content

1. 1.1 1.1.1 1.1.2 1.1.3 1.1.4 1.2 1.3 1.4 1.5 1.6 1.6.1 1.6.2 1.6.3 1.6.4

Marketing Plan External Analysis Demographic Economic Political Social Target market Entry Strategy Marketing goals Marketing strategy Marketing Mix Product Place Promotion Price

3 3 3 4 4 4 5 6 6 6 7 7 8 9 9 10 10 12 12 14

2. Financial Plan 2.1 Financial Statements 2.1.1 Consolidated Balance Sheet 2.1.2 Income Statement 2.2 Financial Forecast Financing Decision 2.3 3. 3.1 3.2 3.3 3.4 3.5 4. 5. 6. 7. DANONE HRM Aspects General Aspects at Danone Europe Recruitment aspects at DANONE Europe Selection method at DANONE Europe India’s HR history HRM practices for India with the DANONE Company Corporate Social Responsibility Policy of Danone in India Legal Aspects for India Conclusion Literature

15 16 16 17 18 21 20 25 28


31% of the world's population. social and political in order to find out whether or not India is an attractive choice to launch our product Activia.024 364.196.1.759 65+ years: 4.g. “Demographic of India”.1 External Analysis In the following we are examining the most important issues of the external Analysis (PEST) of India demographic.2 Economic The economy of India is the eleventh largest economy in the world by nominal GDP and the fourth largest by purchasing power parity (PPP).356. India is an emerging economic power with a very large pool of human and natural resources.031.215. the average age of an Indian will be 29 years.)1 1. 25 2010 from:http://en.652 languages and dialects spoken in India.18 billion people (as of 2010). and a growing large pool of skilled 1 Wikipedia 3 . 386.289 (2007 est. female: 30. economic. this is definitely an advantage and therefore of course a positive aspect to consider India for our expansion.259. in 2020. with a relatively low unemployment rate and as well as a higher growth rate compared to Singapore e.548% and an unemployment rate of 7. as belonging to one of the BRIC countries. 1. For us. 64. male: 27. Already containing 17. In total. that India is again a favourable country.3%. female: female: 171. with Hindu being the principal official language and English being the secondary official language. India is projected to be the world's most populous country by 2025. India has an astonishing demographic dividend where more than 50% of its population is below the age of 25 and more than 65% hovers below the age of 35.921.9%. male: male: 188.432. India’s age structure is as following: 0–14 15–64 years: years: 30. is the second most populous country in the world with a population of more than 1. It is expected that. which is more than a sixth of the world’s population. Marketing Plan 1.1.8%. there are 1. Nov. India’s population growth rate represents 1.1.8%.258.208.1 Demographic India. Both rates show again.

2010. Danone Groupe has decided to enter the Indian market to target its probiotic product Activia. 27. Since our mission is to “bring Ministry of Statistics and Programme Implementation Wikipedia website.professionals. For this reason the population on the countryside is decreasing and also the number of worker. 2010 from: http://www.3 Political India is the second populous country in the world and has the world’s largest economy. Due to the bad living situation on the countryside more and more people move to the cities with the hope of a better life. Consequently child work is common in India. Particular outside of the big cities like Mumbai and New Dehli.4 Social India is still an emerging country. 3 1. Due to the poverty large parts of the population have nutrient 4 (2005) nutraingredients “Danone. both companies believe that India has great potential as a successful probiotic market with a fast growing population of one billion.nutraingredients. According to the estimates by the Ministry of Statistics and Programme Implementation2. whereby India will become one of the four most dominant economies by 2050.2 Target market After having analyised and evaluated different target markets. 4 Not surprisingly belongs India to one of the BRIC countries.745 (US$ 924.4 per cent in 2009-10. an economy that grew by 7% in 2004 and a long tradition in probiotic products. Laicism the separation of state and religion is one of the most important aspects in Indians political system. By 3 2 4 . from: http://de. Dec. driven by robust performance of the manufacturing sector on the back of government and consumer spending. 1. and China. Yakult choose India to expand rapidly”.S. 1. Nov.wikipedia. the Indian economy has registered a growth of 7. on the countryside the people are poor. The Prime Minister is the head of the India nation. “Facts about India”.1. The country consists of 28 states.91) just ahead Japan and behind U. 1. More than 40% of the population have not enough money and live from 1$ a day. Since Danone has already built up a joint venture with the Japanese company Yakult in India. India had established itself as the world's second-fastest growing major economy with an per capita income is 40.

we opened together with Yakult our new Yakult Danone India Private Limited8.7 Since the Asian market is very large. we are already operating in the Indian market.3 Entry Strategy Through the enormous success of our joint venture with the Japanese group Yakult that we contracted with in 2004. Besides. Nov. which is located at Rai. Therefore. from: http://www. but rather create benefits for our customers that will stay in their Nov. 2010. we will also use the know-how of Yakults R&D for the launch of through food to as many people as possible”5. Sonepat (Haryana).html 6 Dairy Markets in Asia: “An Overview of Recent Findings and Implications” Sept. the launch of Activia will be addressed mainly to people within the age of 15-64 ages at the middle-income state. 2010 from: http://www. has been expanding dramatically with income growth. from: http://ageconsearch. and the dietary changes in many Asian countries. the Indian market is not saturated as a probiotic market. Besides. 1. More since dairy products are still not a common consumption pattern in Asia. but also to make use of the know-how. Possible consumers of Activia can be families with children as well the elderly and young generation. urbanization). India is not surprising a very appealing market being the fourth largest economy in the world.yakult. Danone company website. since this group represents the most powerful group. Asian countries are also experiencing Westernization of their diets. we do not only want to sell dairy products. Hence. we found out that Asian consumption. 27.php?option=com_frontpage&Itemid=1 5 5 . Nov. However we have to be very sensitive. Yakult has just granted our company a license for its YIF-Scan.umn. In the dairy sector. 27. 2005. other players such as Nestle and Britannia are focused heavily on the plain milk business. 2010. with a population of more than 1 especially in developing Asia. Therefore. 27. we will stay with the close tie and use our current alliance with Yakult to launch our probiotic product Activia. our main focus will be aimed to people that are conscious about their health. Since our new enterprise has experienced great success with the launch of the probiotic drink of Yakult. while our focus is on value-added products. changing demographics (population growth.6 Through heavy research of the Asian market.danone. from: 8 Yakult company website. it is just of advantage to produce domestically at our current facility to save costs on the one hand. Furthermore.businessstandard. we will not launch products that are not perceived as 7 (2010) Business-standard: “Danone India sees wealth in health”. Through the joint venture.

however. since cutting jobs contributes to the downward spiral in consumer demand. from: http://danone09.pdf 9 6 .11 Precisely.000 tones of milk powder and 15. 2010. targeting gene sequences (RNA and DNA) specific to particular intestinal bacteria.000 tones of butter butter oil imports liberalised”.a high-precision system that quantifies bacteria. educating the consumers will be the key role in developing the probiotic market. To measure our performance we will make a market research at the end of the first. but also to society at large. We see high potential in the Indian market with the launch of Activia.4 Marketing goals Since India is a relatively new market within the probiotic segment as well as a growing market. our main goal is create awareness of our product in order through high emphasis on advertising. it preserves industrial 11 Danone company website: “Annual report 2009“. 02. The imports are. And. we aim to gain 2% market share in the first year and double it by the end of the second year.html 10 (2010) Business line: “milk powder.5 Marketing Strategy Since we experienced great success with the adaptation of our overall marketing strategy last year. As Indian consumers are still not aware of the healthy benefits of probiotics. 01. Of course our long-term goal is to boost sales and market share. Dec. we can benefit from using their technology in order to adjust our probiotic product to the Indian lifestyle.asiafoodjournal. The success of our (2007)Asiafoodjournal: “ Groupe Danone. particularly when it is perishable. most obviously. subject to tariff rate quota (TRQ) arrangements allowing only certain designated agencies to bring in these goods at nil duty10. It also ensures continuing demand for suppliers of raw materials who need to sell their output. 2010. 2010 from: http://www. 03. from: Another very important aspect for choosing the intermediate mode over direct export or FDI is the fact that the Government of India has permitted duty-free import of up to 30. We will focus on communicating the benefits of Activia in order create awareness and loyalty. Dec. 1. On that point we have a responsibility not only to our employees. It helps preserve a sound financial structure by spreading fixed costs across larger volumes. Dec. since the market is at its growing stage. we will stick to our strategy as well for the Indian market. Yakult Honsha cemet relationship”.9 Since the intestinal microbial flora of Europeans differs from the Indians’ influenced by diet and lifestyle.thehindubusinessline. 1.danone.

There is also a fiber-enhanced yogurt with added cereal and a bottled yogurt variety. we already launched Activia very successful in different markets with different sizes and flavors. 1. By combining this reset strategy with major productivity initiatives. Packaging options include a 24 oz. Central America etc. the people in Singapore are not used to many different tastes of milk. dried apricot. To review. that we are already experienced with the production of 4 and 8 packs in Europe. pleasure and well being in addition to functional benefits. we will: 1. Second.1 Product As our results from 2009 proved.g.. Activia belongs to one of our most successful brands on our portfolio. Therefore we are going to offer our probiotic product Activia in sizes of four and eight packs. 2. kiwi. consumer purchasing power. we will only introduce three different types of Activia products and 2 different flavors in the beginning. This is of course due to our adaptation strategy to different markets as well as in depth R&D in different markets where we are already operating.6. Put increased emphasis on promotion and point-of-sale events. Danone has already consolidated its market shares. Reweighing product portfolios and adjusting prices to ensure that prices in each country are just right: attuned to market realities. As such. First. fibre and prune.S e. Activia Fiber. we will also react to the needs of the Indian market carefully. fiber and cereals and finally Activia Light with fewer calories and zero fat. flavors differ from plain and flavored semi-solid yogurt in regular and "light" (fat free). 3. 7 . Although we have a broad experience with different flavors and products within the Activia portfolio. that the average family size accounts for 5-6 members. Research showed. Activia should be considered as a unique healthy beneficial product rather than just a tasty low fat yogurt. mango.2%. and brand value. Due to that. pack that is not available in European markets.6 Marketing Mix 1. Therefore.strategy is particularly evidence for our growth in sales of 3. Put emphasis in consumer advertising to highlight product quality in terms of taste. Another reason for offering those two different types of packs is the fact. In the U. a combination of low fat yogurt. we will introduce Activia Low fat yogurt. Therefore we will continue with our marketing strategy for entering the Indian market. whereas in South Africa flavors include pear.

Since many Indians still rely on small domestic grocery stores. Hence. 03. we have to take those differences into account. we will only negotiate with those stores that are open until 22. Pune and Bangalore in the beginning. Further research on taste preferences showed us.6. Reliance.Largest segment of reatil” Dec. we will continue to negotiate with further grocery chains. Activa’s overall appearance with its green color has been a great success worldwide. According to Census of India in 2001. that Indians prefer most Guava and Papaya next to Mango. as the color also stands for hope and life. Mango will of course be one of the flavors. NCR. Another system that will be used to distribute Activia is bringing our 12 Retail Mantra: “Grocery chains. Such formats of grocery chains in India include Hypermarket. from: http://india. We decided to introduce Activia in the most well known supermarket chains in India and just in a limited number of cities with a population of more than 1. After having introduced Activia successfully into the market. Chandigarh. Food Bazaar. Shoprite and Tesco. inhabitants like Delhi. we also make them available in hospitals. and Cash and Carry wholesale. the communicative language on the Actvia products will be Hindi and English. more than 1 million native speakers speak 29 languages. Since the principal official language is Hindi and English is the secondary official language. Since Activia is considered as a healthy product. Mumbai. Jaipur. Therefore we have to be very careful with the selection of grocery stores.retailmantra.000. we are going to cooperate with domestic as well as with international grocery chains.html 8 .Since Mango is the national fruit of India.2 Place Since the Asian market has a different purchasing behavior compared to Europe. Such chains will include: Big Apple. Since many people shop their groceries after work and choose those grocery chains that are conveniently located. Convenient stores. we are going to introduce Activia in green as well in India. Supermarket.00 pm and convenient. 2010. Concerning a research food and grocery is the largest segment and it occupies around 74 per cent (US $ 200 billion) of total retail market in India12.

We believe that this pricing strategy is best for India. 8000. 1. Since Activia is a new product on the India market it is important that it is not only communicated via different media such as magazines. As this system was very successful with the distribution of Yakult.000 ladies. Other media that will be used are billboards and magazines to address the people in between. Therefore we will also employ trained sales personnel in the grocery chains that give free samples to and explain the benefits. In detail.6.S using celebrities to promote Activia. Since India is a complete new market for us. through which we can bring Actvia directly to our customers every day and help them to fully understand the benefits. we will of course make use of those two media to promote our product. TV and the Internet. Therefore it is important to reach a broad target group in the beginning. where Yakult has successfully used it to deliver its products worldwide through a network of over 80. since we are operating in a complete new market where yogurt products are not common yet. Furthermore we will create an homepage in two different languages. we are going to operate different TV commercials with a celebrity of India to promote Activia.products directly to our customers at their doorstep. since Activia has to be considered as a healthy product.4 Price Research conducted that the average spending of Indian consumer is Rs. which equals approx. where people can find our different products and flavors. 9 . The system was already introduced in 1963. 131 Euro. 1. lifestyle etc. Therefore we have to be very careful with the price setting for Activia.6. nutrition information as well as information about our company. but also through direct marketing. setting the price for Activia at a similar stage to that of our direct competitors such as Nestle and Yakult. we will use competitive pricing. we are going to introduce a similar system.3 Promotion In order to reach a broad target group in India we will set up a marketing campaign the addresses a variety of different people with different ages. Since the Internet and TV are media that are broadly spread in India. since we experienced great success with TV commercials in Europe and the U. English and Hindi.

546 3.Current assets Inventories Trade accounts and notes receivable 3.083 1. Financial Plan 2.08 € 0.16 € 0.446 765 1.82 € 0.01 € 0.1 Consolidated Balance Sheet As of December 31.term loans Other long-term financial assets Deferred taxes Non.682 10 .91 € 2.1.Cost price Profit margin Cash sales price Cash discount Target sales price Discount List sales price 10% 2% 25% 0.185 3.927 17.83 € 0.1 Financial Statements 2.320 16.846 380 12. plant and equipment.534 2009 3. net Investments in associates Investments in non.consolidated companies Long.65 € 0.180 805 521 27 127 621 22.982 795 1.267 237 73 137 639 21.903 365 12. 2009 (In € millions) Assets 2008 Brand names Other tangible assets net Goodwill net Intangible assets net Property.

current liabilities Trade accounts and notes payable Accrued expenses and other current liabilities Current financial liabilities Liabilities held for sale Current liabilities Total Liabilities and Shareholder’s Equity 128 297 10.121) (1.Other accounts receivable and prepaid expenses Short-term loans Marketable Securities Cash and Cash equivalents Assets held for sale Current assets Total assets 950 26 441 591 546 4.173 1.zhtml?c=95168&p=irol-regulatedAMF 11 .027) 256 13.873 Figure 1.435 208 1.883 26.137 (869) (1.865 162 3.309 5.958 219 937 594 7.702 5.267 2.644 56 8.856 26.024 652 33 4.700 11.407 26.109 515 13.873 Liabilities and Shareholder’s equity Share capital Additional paid in capital Retained earnings Cumulative translation adjustments Treasury stock Net income realized directly in equity Shareholder’s equity attributable to the Group Minority interests Shareholder’s equity Non. Consolidated Balance Sheet 2008/ 2009 13 13 http://finance.255 54 13.current financial liabilities Retirement commitments Deferred taxes Other non.danone.981 1.399 (1.189 2.898 26.596 11.865 645 41 454 644 176 4.225) 166 8.current liabilities Non.

Additionally because of the economic crisis changes in consumer trends of the western 14 15 (2009) Danone_Documentde_ Reference 2009.1.html#daten-fakten 12 .de/danone.31% 1. non-current financial liabilities from € 11. The business couldn’t expect a rapid recovery of the economic crisis in 2010.435 to € 5958 from 2008 to 2009 the Group needed other financial sources to finance new investments.91% 1.220 2.361 € 2. However the Group could strengthen its financial structure through an increase in share capital and the repurchase of company bonds.313 In € millions 2009 14. As the Group was able to reduce its debts. By selling additional stock to currently holding shareholders in two steps in April and June 2009 the Group had increased its share capital by €4.294 15.270 14.15 2. we want to improve our financial position or at least achieve similar results compared to 2008 and 2009.412 1.313 15.562 millions.2 Income Statement: 2008 Net Sales Trading operating income Trading operating margin Current net income (attributable to the Group) Net Income (attributable to the Group) Underlying diluted EPS (attributable to the Group) € 2.0055 millions to € 6.danone. economic and social factors. We have still expected the environment to remain difficult due to financial.html#daten-fakten (2009) Danone_Document_de_Reference_2009. from: http://www.982 2. p 17 from: http://www.609 millions.2 Financial Forecasts In comparison to the recent years.danone.57 Figure 2: Income Statement 2008/ 200914 From 2008 to 2009 the Group had no necessary to mention changes in the assets total.2. The increase in share capital and the repurchase of company bonds enables the Group to decrease its debt levels from € 11.66

p. this should enable us to increase our market share in key countries. After cutting prices in 2009. In 2010 we follow the objective of increasing the cash flow by still at least 10%.html#daten-fakten (2009) Danone_document_de_Referncing2009. Secondary weak currencies in emerging countries and an expected raw material crisis could weaken our financial results16.danone. In 2009 the Group had a turnover of € growth in sales volume in 2009 for all divisions the financial forecasts of Danone for the next years won’t change for worse. from: http://www. The minimum target of an operating cash flow in 2012 is € 2 billion. The third forecast of 2010 is an increase in growth revenue of 5% compared to 2009.107.countries are expected. operating and administrative costs and the reduction of financial expenses through restructuring the company’s debts.html#daten-fakten 18 (2010) Annual_ Report_09. During the year 2009 we were able to increase its free cash flow by 20. In addition the company tries to hold the operating margin at the constant level of 2009. Secondary the growth in cash flows should be achieved by optimizing general. However despite the difficult environment the forecasts of the business for the year 2010 still include growth potential. we have to gain our revenues through the sale of high product volumes.982 billion. By responding to consumer trends. which means an increase of 3. 2%. 19 16 17 (2009) Danone_document_de_Referncing2009.17 Particularly in the dairy products sector we are the world’s leading manufacturer measured in As the price of our Activia product is in Euro 0. we would have a profit margin of 25%.107 from:http://www. despite the economic crisis Danone was able to increase its turnover due to the new developed strategy in 2008. p. 91 for four yoghurts and the cost prices are Euro Additionally the Group has to take into consideration additional costs for investments in new plants or machines. The priority goal of the business is continuing increasing cash flows of 65. The strategy followed in order to achieve these targets is increasing sales volume worldwide. On the basis pf calculations the Groups assumes to achieve a rate of return of the investment of about 16%.html#daten-fakten 19 (2010) Danone company website: http://www.html 13 .danone. from: http://www.18 Through entering the Indian food market we expand our international operations and hope to increase the Group’s profit. responding to the economic situation of its customers. As the company can expect a 5.

For that reason the decision to enter the Indian market with our probiotic yogurt Activia could be a relatively cost effective decision.1% in 2008.562 13. We have already formed a Joint Venture with the Japanese company Yakult to enter the market for probiotic dairy products.055 8.562million € in order to finance its new operations in India.3% 11.700 6. For that reason the debt/ equity lied at 127. This gives the company the ability to invest into new businesses. 14 . as well as the distribution channels of the already existing Joint Venture with Yakult in India.1% 49. as Danone could use the production facilities. the Group could issue additional shares to receive more capital to invest for entering the Indian market.2. Additionally to that Danone could use the income of the year or again increase the outstanding debts of 6. but doesn’t want to make debts again at any bank. During the year Group was able to improve the equity/ debt ratio to less than 50%.3 Financing Decisions: Financial Position In € millions 2008 Net debt Stockholder’s equity (including minority interests) Debt/ equity ratio 127. In case that the Group wants to held its cash made through operations in the recent years.309 million €. During 2008 the debt to finance the operations of the business exceeded the stockholder’s equity used to finance.309 2009 Table 3 Financial Position It is obvious that our Group could reduce its debts from 2008 to 2009 by more than 40%. however it was planned that Danone should follow selling the products on the Indian market. At the beginning only products of the Japanese producer Yakult were offered on the Indian market. Until the end of 2009 the amount of debts could be reduced while the stockholder’s equity increased to 13.

1 General HRM aspects at DANONE Europe We are strongly involved into several campaigns like social operations “Grameen DANONE Funds“ or “DANONE Nations Cup“. 3. the enthusiasm. 3. Our global business strategy is “Bringing health through food to the maximum number of people” this statement shows that social responsibility is indivisibly related with our business operation. and the dedication of every single one. which reflect the corporate culture. When companies begin to enter new markets that strongly differ from their home market. This means that low hierarchies within the organization. According to DANONE’s culture it is the quality of each employee. The values integrated in the corporate culture are lived in practice. Prime principle is a transparent communication. which is also reflected by our HRM policies. DANONE HRM Aspects At this point we want to describe human resource practices and strategies of DANONE and compare them with HRM policies in India. HRM practices often need to be adjusted. Those social operations around the world and the company’s award for “Great Place to work“ show our strong commitment to improve quality of life. being reachable. no ties required and trainees can address their superior by the first name. which makes the difference when it comes to satisfy the demand of our customers. create the path for an open and direct contact among all hierarchies.The advantages of issuing new shares or increasing share capital is that the company doesn’t have to finance new investments with making new debts on which interest cost have be paid. humanity. to support and motivate each other – all these are values. How well the company integrates itself into the new market can strongly depend on adaptation of HR practices. 15 .

We have very good experience with this recruitment form. which could highlight or underline their application.3 Selection method of DANONE Europe: After the candidates CV’s have been read and the information fit the positions criteria. the following steps in the selection method take place: 16 . HR departments follow internal and external recruitment methods to ensure the efficient and effective performance of goals and objectives. External: The external recruitment method consists of two elements. a job description is prepared with the consultation of the HR department. DANONE does not use application forms on their web site because it would restrict the applicants to give out any additional information or skills.2 Recruitment method DANONE Europe: We use a centralized recruitment system rather than decentralized. Then. Whenever there is an open position for a particular job. initial interview and final interview. and e-recruitment.3. we are also using outside agencies to acquire new employees. The referrals are given priority but they also have to go through the whole procedure. press advertisements. It is time saving and employees who are familiar with our culture tend to fulfill the challenges better. The additional information is seen as a support in the selection process therefore. Internal The internal recruitment method is used when the work related activity for the open position is at a higher level and requires a high level of familiarity with the current operations and functions. an external recruitment method would be a second option. like submitting CV. The department head provides all the requirements of the job and this information is used to prepare the essential qualifications to be included in the advertisement. The referral approach and the external search approach which includes. The main reason for referral approach is to find competent and self-devoting employees. Because DANONE is a huge organization with a lot of employees. CVs are preferred over application forms 3. Besides running the recruitment through HR departments.

17 . a conversation regarding salary and future projects round of the selection process at DANONE.4 India’s HR History When companies begin to enter new markets that strongly differ from their home market. -> Committee consists of department head. Sometimes applicants have to go through a second selection phase after they have reached 70% of the required skill in the previous interview. Depending on the position.-> Phone call to applicant. general knowledge and educational skills are checked. HRM practices often need to be adjusted. communication. Additional we use the Selection Tool Kit listed below to support the selection process: • • • • • • • Preliminary selection Employment test Verification of references Medical evaluation Supervisory interviews Realistic job previews Assessment centers 3. before taking interview in front of committee. HR Director or an HR manager In some cases a direct hiring takes place and department head are not involved During the interview various points regarding personality. work-passion. consistency. How well the company integrates itself into the new market can strongly depend on adaptation of HR practices. For some positions there are no further selection steps needed and if the interviewer seems to be confident the applicant gets hired.

titled “Arlhãshastra”. Discriminating against anyone because of his or her caste is against the law. people of all castes meet socially or for business. written three millenniums before Christ. The cast system consists of five levels. Som wanted to know was whether firms that implemented innovative HRM practices did better than those that did not. 3. Brahamin Kashatriya Vaishya Sudra Untouchables For certain cast levels the government is sensitive about reserving seats in colleges and job opportunities. What Mr. One of the first management books. In urban India. contains many aspects of human resource practices in old India and were used in practice in organizational thinking for centuries. He also wanted to know which particular HRM practices were considered the most effective and if 18 . An Indian Professor named Ashok Som has made several surveys on HRM practices in traditional Indian and European companies. To this also belongs the caste system.From a Human Resource perspective it important to know how HRM developed in the country the company is about to enter and what the major key factors were that set the countries vision of HRM There are a couple of key factors that shaped India’s image of HRM.5 Best HRM practices for India with the DANONE Company Considering the cultural aspects and HRM trends to socio cultural roots we need to ask ourselves what human resource practices are the best to reach our goals and objectives for the location in India. In management positions like recruitment. But also values and cultural practices have strongly characterized HRM in India. promotion and work allocation managers have to deal with these cultural traditions and the government regulations. A further powerful effect on the managerial history of India was given by the British system of management.

the research could not find any evidence of synergies between individual HRM practices. However. Som’s survey showed that those organizations that had introduced innovative HRM practices had indeed improved their performance. 19 . DANONE’S European HRM methods could therefore also be used in India and would not collide with India’s HR history. five years ago and now?” The five-year period was 1997 to 2002 • • • • • Innovative role of the HRM department Innovative recruitment practices Innovative retraining and redeployment practices Innovative performance appraisal Innovative compensation and reward policies These practices were judged in the context if the use of innovative HRM practices improved organizational efficiency and output? The results of Mr. we need to realize that innovative HRM practices are becoming much more professional in particular in relation to recruitment and reward strategies and that HRM in Indian organizations is undergoing a change.” As we from DANONE are considering doing business in India. Mr. From the public and private sectors 69 companies participated in survey. how does your organization rate on each of the following.there were any synergies between individual HRM practices. which to western eyes may seem surprising! Although India differs strongly from Europe with its history in Human Resource Management the firms are becoming much more sophisticated in their approach to HRM. The core question asked to these organizations was: “Compared with the performance of best performing organizations in your sector/industry or in your line of activity in India. Som himself says: “Indian firms are using flexible hours. competency-based payment systems and clear remuneration policies to attract and retain talent.

html 20 th 20 . Spring water: a national heritage that must be preserved. Respect of fundamental social principles. business partners and suppliers”20. (2010). Due to the fact that in India still 24% live under the poverty level in slums or bondages Danone could be reached a lot in direction to a better water availability in the mountain regions of the Himalaya and in the north east of the dry regions in Rajasthan and Deccan.php?option=com_content&task=view&id=44&Itemid=83&lang=en 21 th (2010).danone. Corporate Social Responsibility Policy of Danone in India We are already very engaged in protecting the environment and focus on different “labour standards which need to be fulfilled of all business units. One of our strategic issues is to manage water in terms of quantity and quality so that they currently exploit around one hundred springs worldwide. from: http://www.4.danone. from: http://www. The most important standards are: • Prohibition of child labor • Prohibition of forced labor • Prohibition of all forms of discrimination • Freedom of association and the right to collective bargaining • Protection of the physical integrity of employees in the workplace • Application of national law on working hours • Application of national law on minimum wages. These social principles are based on conventions of the International Labour Organization. 15 2010. Danone’s most important environmental activity is focused on the “protection of water resources and reducing their own water consumption”21. 15 Nov. As an example of the green marketing.

Supporting the education of children as well as the further education of their own personnel brings a huge advantage for both Danone and the people in the country. For Danone being consequent with their working conditions is very important. living conditions would became better and easier for many people living in India. Legal Aspects for India In respect to the legal aspect. As we said in our strategic marketing plan our location of retailing would be concentrate on the markets in the big cities. there are many facts. Additionally women are still in an inferior position towards men although they are politically seen as equal. 21 . we focus and act on “positive discrimination”. So. especially in India where also corruption is well known particularly in doing business. for Danone it would be easier to invent “Activia” due to the alliance with Yakult. also the working conditions and terms of payment in the groceries have to fulfill these standards. The employees need to have the chance to move on in their career. Concerning importing and producing those comestible goods. Especially in the working environment women are on a lower level so that men mostly get the precedence. Another important fact is the education. which need to be taken into account. because everybody wants a certain degree of development and change in their life to stay motivated. Due to this. So due to the International Labour Organization. But also for production in Asia they need to import certain products like milk powder or butter oil. We need to use their high knowledge and technology about making water available. Getting into touch with publicity of corruption would have a negative impact on their reliability in general and the relation to our alliance partner Yakult. To support the position of the women we especially try to employ women for each kind of jobs we are offering. 5. especially in the work placement. to which Danone sticks. But obviously there are not enough employments and some of them are additionally paid with dumping salaries.Because of the bad conditions for living and farming on the country side more and more people flee to the big cities with the hope of getting a job.

This PAN is necessary to all documents which are related to financial transactions. or the World Trade Organization (WTO).europa. 2010. Overview of the import procedures. To participate in the international trade India singed several agreements and contracts like for example the Asia-Pacific Trade Agreement (APTA). 17th Nov. “economic operators must obtain a Permanent Account Number (PAN) from the Income Tax Department for tax purposes. the World Customs Organization (WCO).eu/mkaccdb2/viewPageIFPubli.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF-IN1003v001/&imagepath=/egif/prod/MAIF-IN10-03v001/&country=India&page=overview&countryid=IN#kap06 22 22 .htm?datasetid=MAIF-IN1003v001&filename=overview. the South Asian Free Trade Area (SAFTA). Obviously France and Japan are not included in those preferential treatments. may benefit from preferential treatment in India.”22 But of course the different needed documents vary from the product and also to the country that wants to import. which is relevant for any kind of import. Goods. the online magazine “Business Standards” published an article on the 13th Dec (2010). from: http://madb. which are originating products in the sense of a member state from the agreements stated above. Although India and the EU already launched negotiations for a Free Trade Agreement (FTA) in 2006. But since 2004 India became on of the “strategic partners” of the EU. All importers have to apply for a code at the Directorate General of Foreign Trade (DGFT). Furthermore. the South Asian Association for Regional Cooperation (SAARC). the South Asian Preferential Trade Arrangement (SAPTA).• • • • • • • • • • Registration International Agreements Preferential Treatment Customs Procedures Customs Value Requirements for Import Formalities Currency and Payments Packaging and Labelling Requirements Abbreviations Political risks Staring business in India everything started with the official registration.

Till now those tariffs apply also for the EU. Furthermore. 25 Our product Activia would fall into the category of home consumption. Next to the mentioned bill of entry there are nine more general documents required: (2010). partners for growth. subject to tariff rate quota (TRQ) arrangements allowing only certain designated agencies to bring in these goods at nil duty24.000 tonnes of milk powder and 15. The imports are. which may be presented in paper format or as an electronic document. however. But in case of the FTA with the EU in spring 2011 this import barrier will drop. But of course the bill of entry is not the only document that is needed. from: http://madb.000 tonnes of butter oil. Imports into India may be entered under any of the following categories: • • • • • Home consumption Transit Temporary importation Warehousing Use in a special economic zone. This Free Trade agreement between India and the EU would make doing business and trade much easier for both sides. So. another import barrier is described as the customs procedures. this fact requires the presentation of a bill of entry. At the moment the Government of India has permitted duty-free import of up to 30. from: http://www. For the required import documents there is a difference between “general requirements” and “specific requirements”. Overview of the import Anand Sharma & Karel De Gucht: Partners in trade. 17th Nov.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF-IN1003v001/&imagepath=/egif/prod/MAIF-IN10-03v001/&country=India&page=overview&countryid=IN#kap06 23 23 . that “the EU and India expect the FTA by spring 2011” 24 http://www.thehindubusinessline. 2010. so that the huge trade potential of India could be used more efficient.htm 25 (2010). “The customs law of India allows for a number of customs treatments of imported goods. But for agencies which do not refer to countries of the Free Trade Agreements there are import tariffs of 30%. 13th

htm?datasetid=MAIF-IN1003v001&filename=overview. from: http://madb. In case we are producing “Activia” locally with its strategic alliance with Yakult we face some restrictions on packaging which they need to keep in mind for being able to sell “Activia” in India. 17th Nov.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF-IN1003v001/&imagepath=/egif/prod/MAIF-IN10-03v001/&country=India&page=overview&countryid=IN#kap06 24 .• • • • • • • • • Commercial Invoice Pro forma Invoice Packing List Air Waybill Bill of Loading Certificate of Origin Exporter/Importer Code Import General Manifest Letter of Credit Especially for the milk powder and the butter oil the Indian government wants two specific documents before the goods can be imported.europa. 2010. “In general. Overview of the import procedures. the labelling of imports should be done in English using clear and legible these two parts are dependant upon the incoterms and other agreements about law and court that are written in the contract between exporter and importer. Due to the fact that products are produced with animal products we need an “Import Permit for Livestock Products“ and an “Veterinary Health Certificate for Animal Products”. Concerning the aspects of payments and abbreviations.”26 The following details are to be included on each of the small yoghurt packages: • • • • • • 26 Name and address of the manufacturer Name and kind of the product Brand name or trade mark International details and signs which should be observed in the course of transportation and handling Kind and name of ingredients and percentage of each Net content of volume in terms of weight (2010).

6. We analysed our future target market and took external factors as political. But looking to the giant trade countries like the USA. According to Geert Hofstede. However we decided to use the Joint Venture for entering the Indian market with Activia because of financing reasons and experiences with India India is an attractive market. Due to the facts that we already operate on the Indian market and the Free Trade Agreement between India and the EU will be signed in spring 2011 the legal entry into the market becomes easier so that corruption will become less attractive. Russia or some European countries there are also enough corrupt people operating in the business environment.geerthofstede. who ranked certain countries on his five different cultural dimensions. Conclusion We decided to enter the Indian market with one of our probiotic dairy products as it is one of the four fastest growing nations until 2050. Important for the international relations is. First of all our company Danone has already formed a Joint Venture with the Japanese company Yakult. India shows a high level of inequality of power and wealth within the society. from: http://www. that the Indian government sticks to its rules and legislations concerning import and export. Until now we haven’t sold any Danone products in the Indian market. Additionally we analysed the labour market in India and the financial situation of the Danone Group. 27 (2010). Some countries face a certain degree of corruption so that it is may be hard or even impossible to do business.• • • • Country of origin Production date Expiry date Batch number As a last legal point especially the political risk plays a huge role for the question where to import. 2010. India has its Power Distance Index as the highest dimension for their culture.”27 This high Power Index also leads to a conclusion that corruption is involved in day-to-day business.shtml 25 . India seems to be a suitable market to enter for different reasons. “With a ranking of 77 compared to a world average of 56. social or legal aspects into consideration. Geert Hofstede Cultural Dimension – India. 15th Nov.

We are already active in corporate social responsibility issues. since the environment is continuously changing and we need to identify threats and opportunities in order to take advantage of these or reduce their impact on our business. but we still have to import milk and powder for the production of Activia. After informing about the labour market in India and its HRM policies in the companies. For sure we have to adapt or HRM policy in some way to the Indian because of India’s HRM history. In order to guarantee the success of our project in India. When entering the Indian market we have to take as well some legal aspects into consideration.After analysing the Indian market we decided to sell a probiotic product. In order to finance the entry in India we have to alternatives. the investments needed to enter are not that high compared to other investments. we wish to take actions in India as well. As we want to enter the market via our Joint Venture with Yakult. we can increase our long-term debts again or increase our share capital. however if we enter the Indian market. since India is still an emerging country in which more than 24% of the population live under the property level. however we have to make some adjustments to the product mix. For the import of these products we have to consider tariffs or quotas and the documents that are needed for the import. Danone needs to measure the actual sales compared to the targets on a regularly basis. Since we enter the market as Danone Yakult. we can use the facilities of our Joint Venture in India. We need to evaluate the project to see what progress has been made during a specific period of time and to identify weaknesses and strengths in order to improve our weaknesses and use our strength to build up a competitive advantage in the Indian market. but the impact won’t be that high. We decided to support employment of women and exploiting of water. since India seems to get more and more similar to the European HRM. Additionally the external factors influencing our operations in India need to be analysed after a specific period of time. The Group needs to know how 26 . we came to the decision that we don’t have to make a lot of changes to our HRM policies in our European units. Through the regular evaluation we are able to compare our performance and to make decisions about staying in the Indian market or leaving.

27 .profitable the operations in India are and if the projects results justify the projects inputs and investments.

Nov. Chartered Institute of Personnel and Development Kerin. Hartley. 2010.pdf Retail Mantra: “Grocery 1. Internet • • • Wikipedia website. Dec.wikipedia.yakult. 2010. Nov. from: http://danone09.Largest segment of reatil” Dec. T. Marketing 8th edition.html (2010) Business line: “milk powder. 2010 from: http://www. “Facts about India”.asiafoodjournal.php?option=com_frontpage&Itemid=1 (2007)Asiafoodjournal: “ Groupe Danone. 27.htm Danone company website: “Annual report 2009“.retailmantra. butter oil imports liberalised”. 01.nutraingredients. 2010 from: http://www.7. Personnel Practice 4h edition. Literature Books (2005) nutraingredients “Danone. Yakult choose India to expand rapidly”. New York:McGraw-Hill/Irwin.thehindubusinessline. 2010 from: http://www. from: http://de. 27. 2010. Dec. M. 02. (2005). from: Yakult company website. 27. from: http://ageconsearch. 27. from: http://www.danone. 2005. 03. 2010.Rudelius. Dec. 2010. 2010. Yakult Honsha cemet relationship”. “Demographic of India”.wikipedia. 25 2010 from: http://en.pdf (2010) Business-standard: “Danone India sees wealth in health”. and Danone company Wikipedia website. Dairy Markets in Asia: “An Overview of Recent Findings and Implications” Sept. Nov. Pages 42-68. from: • • • • • • • • 28 . from: http://india.

15th Nov. from: http://madb. 17th Nov.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF -IN10-03v001/&imagepath=/egif/prod/MAIF-IN1003v001/&country=India&page=overview&countryid=IN#kap061 (2010). 17th Nov. Geert Hofstede Cultural Dimension – India.html • • (2010)Current trends in HRM. 2010. 18rd November 2010.curtin.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF -IN10-03v001/&imagepath=/egif/prod/MAIF-IN1003v001/&country=India&page=overview&countryid=IN#kap06 (2010).htm (2010).europa.html&hscode=0402&path=/data/website/madb/egif/prod/MAIF -IN10-03v001/&imagepath=/egif/prod/MAIF-IN1003v001/&country=India&page=overview&countryid=IN#kap06 (2010). Anand Sharma & Karel De Gucht: Partners in trade.danone. Respect of fundamental social principles.html Overview of the import procedures. from: http://www.html • (2010).asp ( 2010) Danone Annual Overview of the import procedures. from: from: http://www. 2010.essec. from: http://www.• (2010).thehindubusinessline. 2010.chillibreeze. 15th Nov. partners for growth.php?option=com_content&task=view&id=44&Itemid=83 &lang=en (2010) from: http://www. from: http://humanresource.shtml • • • • • • • • (2010). 15th Nov. Human Resource Management in India: “Where From’ and ‘Where To?”.com/ 29 . http://www.htm?datasetid=MAIF-IN1003v001&filename=overview. Spring water: a national heritage that must be preserved.geerthofstede. 2010.htm?datasetid=MAIF-IN1003v001&filename=overview. from http://www. 13th Dec.danone.europa. How new HRM policies are impacting India’s w-new-hrm-policies-are-impacting-indias-economy-&catid=37:articles&Itemid=97 • (2010). from: from: How new HRM policies are impacting India’s http://www.htm?datasetid=MAIF-IN1003v001&filename=overview.

com/en/company/introduction.• • (2010) Danone_ Document_ de_ Reference.danone.zhtml?c=95168&p=irol-reportsannual (2010) Danone company webside. 28th November 2010.html 30 .danone. from http://www. 3rd December 2010. from