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BY: SWETA SINGH DEEPIKA JETLY SONI RAI ILA TRIVEDI RIMJHIM BISHNOI AJAY KUMAR
y . y Analyzing the factors that can effect the company while entering the market and along the solutions of the problems faced by the company and how culture plays an integral role for a company starting its business in another country. working on the low wage economy of a country and expanding the business in a less developed country in order to take proper advantage of its developing economy.INTRODUCTION This is a case representation of a company facing the problem of limited market opportunities. taking the example of Singapore as developed economy and India as a developing economy.
Market drivers Govern ment drivers International strategies Cost drivers Compet itive drivers .
There are five modes of entry: Exporting Joint venture and alliances Licensing Foreign direct investment Merger or acquisition .MODES OF ENTRY y y y y y y y The first thing which should be taken into consideration before entering into a market is the entry mode through which the company will enter the market in order to expand the business.
SELECTION OF MODE OF ENTRY As the company wants to manufacture and sell its product at the same time due to which it is very easy to recognize that the company won¶t go for FDI or exporting and licensing is not so beneficial so the company. following the acquisition which can be more costlier hence the company will be going for the easiest way that is joint venture or alliances. y Doing this the company will be having an advantage of having a local partner which in turn will be giving the company a competitive advantage of having a blend of culture and a more understanding of the Indian culture y .
y . a company cannot move further without analyzing the environmental factors which can prevent the company from growing or even to start.ENVIRONMENTAL FACTORS After deciding the mode of entry the next step will be taking a look at the environmental factors effecting the company. y Analyzing the environmental factors through the PESTEL framework: y As stated that the company from Singapore is going to India for the expansion of the market then there will be a lot difference in the political rules and regulations of both the countries. labor laws. y for example the tax laws. barriers to entry etc.
PESTEL FRAMEWORK LEGAL POLITICAL ECONOMICAL ENVIRONMENTAL TECHNOLOGICAL SOCIAL .
y . y For example: the tax rates in India is quite high comparing to Singapore E.g. Income tax is 30% plus surcharge And Education Cess in India whereas it is17% in Singapore.CONTINUED« POLITICAL: the company going from India to Singapore will be first facing the problem whether the Indian government allows it to enter the market for the business purpose once it gets the permission again it will be facing the problem of laws as Indian law is very different from the Singapore law hence making the Company to take some time to adjust with the rules and regulations.
.g.CONTINUED« y ENVIRONMANTAL: the company will next be facing the environmental factors as the Singapore being a very strict in its environmental rules and regulation whereas Indian rules and regulation is quite relaxed in comparison to Singapore. y E. Singapore have different laws and regulation in order to maintain the environment cleanliness like a fine of SGD 250 if a person throws garbage or trash on the road or any public place which hampers the environment whereas in India there is no such rules regarding this.
if a company want to sustain in the Indian environment it has to strictly follow its culture and traditions. y For E.g. when Mc Donald open a branch in India it could not sell beef or pork burger along with its menu because it is against the Indian beliefs and sells accordingly the chicken and vegetarian burgers y SOCIAL: .CONTINUED« next comes the social factors that will influence the company as India being very rigid in its culture and beliefs cannot accept anything against its limits and rules.
The availability of telecommunications within the less developed country and the quality of connections to the highly developed country.CONTINUED« India being an underdeveloped economy don¶t have such a high technology as Singapore and is quite behind it in terms of technology which gives the company an advantage over the other Indian companies which are their would be competitors. y The reliability of electrical power. This will have implications for management control. the firm may decide it needs to provide its own generators as a primary or back-up power source. y TECHNOLOGICAL: .
. as the currency of India is smaller than that of Singapore which reduces the expense of the company and also the wages of the employees will be much less than that of Singapore.CONTINUED« y ECONOMY: the next major factor is the economic as the company is going from a developed to a developing economy which in turn will lead the company towards a benefit in terms of the monetary value of the currency.
CONTINUED« y LEGAL: the company will be facing legal issues as getting into a new country like India from Singapore results into a vast changes in the legal system because the Indian law is much more relaxed than in Singapore. y E. The law related to business and employment in India is quite different from that of in Singapore. Singapore has a very strict rules for the foreign employees and all the foreign employees are on contract basis and there is a fixed salary bar for every category of employee and the employer has to pay that much to the employee whereas there are no such laws in India.g. .
if a person wants to grow its business then the company have to go through the trend and culture in India. CULTURAL FACTOR: culture is a very sensitive factor specially in a country like India. Cultural difference does not only mean the different country cultures but also the different corporate cultures that the company will be facing. . Both the companies will be having a different working style and a different way of doing business which will create a lot of problems and resistance in the company.CULTURAL FACTOR y y y y After discussing the environmental factors which can influence the company we come to the next most important factor affecting the company in terms of its establishment.
CONTINUED« India being a developing country have a different culture in comparison to Singapore culture due to which the company will have to train the employees accordingly in order to update them according to their culture and advance technology so that they can achieve the competitive advantage over others. y . y They will have to train the employees but they will have to follow their own rules and regulation accordingly. taking into consideration their local language so that they can understand what is being taught to them.
y .CONTINUED« y The company will have to take care of the information the technology to the employees as India being developing economy is far behind the technology Singapore and the employees can face the problem due this. of a of to y So the company have to provide them with the proper knowledge of the technology accordingly so that they can work with the technology without any consequences. the company will have to take care of the working hours as well as the working facilities of the employees.
healthcare and education for workers and their families. y This can extend to the provision of other amenities such as clean water. but may increase the amount of capital employed in the project. y These enable the firm to be seen to make a contribution to the local society. This will reduce the travelling time of the workers. it is expected that an employer will provide facilities for the staff. y .PROVISION OF LOCAL HOUSING AND AMENITIES In some countries. safeguard future labour sources and may permit lower wage costs. y It is likely that the employer who provides housing will be seen as µcaring¶ and this may be important for achieving acceptance within the foreign country.
. the company did joint venture with the local company of India which resulted in the better understanding of the Indian market and along with it the strategy of the company to invest in a developing economy which resulted to be a profitable deal for the company. So with this we can say that the environmental and cultural factors play a vital role in a company¶s expansion in another country whether it is developing or developed.CONCLUSION Looking at the whole discussion it is very clear that a company in order to open a business in a developing country like India will have some benefits and accordingly will have to take care of a lot of problems along with it.
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