We believe the single greatest risk of doing business in India is its bureaucracy. The Indian bureaucracy is often referred to as “babudom.” An Indian bureaucrat is often referred to as a “babu.” Today, babu may also mean “Sir” or “Mr.” The babudom was formed after India gained independence from Britain. It employs many more people than necessary and it is highly unproductive. Each geographic region of the babudom requires specific government permissions and taxes. Making progress in the babudom with limited local support is a difficult task, especially for a small U.S. firm with limited capital.
The babudom wastes your company’s time. It will cause delays in the completion of your goals. It may take years before your company is approved to sell your products or services in India. Instead of selling your products and services, your employees will be spending time trying to get them approved. The babu do not have a vested interest in your company and often do not care how long it takes to make progress. For example, the bureaucracy in India can be compared to getting a driver’s license at the DMV in the U.S.; it takes an excessive amount of time get the license, the employees are not friendly to the customers or to each other, and there is an array of forms to fill out before any progress can be made.
Dealing with the babudom will add costs to your company’s investment in India. These costs may be attributed to various taxes, consulting fees, and permits, among other things. These costs may not be obvious to someone who is not familiar with business practices in India. A company may not have planned for these added costs and may be forced to back out of a project if it exceeds its budget. These costs force companies to spend money that could have been used in more effective ways. For example, students are not always prepared for the many different fees that they will be charged for attending San Jose State. Besides tuition, students pay fees for books, the health center, activity cards, labs, and parking.
India is a collective culture, meaning that individual’s decisions must be in harmony with family, group and social structures. This is not a bad thing, but it can add to the risk of an American dealing with the babudom. American culture typically values individualism and often business is deemed more important than family life...
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...ve Indian that you can trust. This way, he or she can advise you on your decisions when dealing with the babudom or other Indian companies. It will take time to establish these relationships, but it will help you save time and money in the future.
An Indian will have to trust you as a friend before he or she will make a deal with you. Be patient with Indian natives and make an effort to get to know them before doing business with them. Tell them about your family and your background. When negotiating a business deal, focus on more than just legalities. Natives will lose respect for someone that is only trying to establish a business relationship with them.
When doing business in India, you must be patient. Aggression is not appreciated and it is considered to be negative. However, you must also set realistic time frames. Try to fix most of your appointments before you leave, and do not plan a trip close to a major holiday, such as Diwali or Republic Day, when business slows down for days. If you cannot get a confirmation that something will be done or if you believe that someone is stalling, take this as a sign that the company or person you are negotiating with is not interested.
Though the world economy as a whole has grown in recent years, a factor that is not taken into account is that the number “of the poor in the world has increased by 100 million” (Roy 3). In other words, the gap between rich and poor is widening. For India, this has startling implications. Though it is a nation that is developing in many ways, it also is a nation blessed with over one billion citizens, a population tally that continues to grow at a rapid rate. This population increase will greatly tax resources, which can create a setback in the development process. The tragedy, of course, is that the world is full of resources and wealth. In fact, Roy quotes a statistic showing that corporations, and not even just countries, represent 51 of the 100 largest economies in the world (Roy 3). For a country struggling to develop, such information is disheartening. However, there is also a more nefarious consequence of the growing disparity between rich and poor, and power and money being concentrated in the hands of multinational corporations: war is propagated in the name of resource acquisition, and corruption can reign as multinationals seek confederates in developing countries that will help companies drive through their plans, resulting in not only environmental destruction but also the subversion of democracy (Roy 3).
In case of new age Indian businesses this is even more true. Businesses are now fixated on being the next Unicorn, a mythical animal, whose name is also given to companies who are valued at a billion dollars before going public. Unicorns or not, their ambition now presumably is to attract the nth round of funding and access the seemingly endless yet slowly drying supply of dollars to survive in the present with a wishful thinking to dominate the future. The Unicorn here lives the narrative of ‘go big or go home’. And in most cases it represents the glorified ambitions of one-upmanship, market domination being the trophy investment.
By the late sixteenth century the British East India Company had established trade posts in Calcutta, Madras, and Bombay, dominating vast areas in India and southeast Asia . Although traders saw the potential for cheap labor and raw materials India held, they were...
The Harvard Business School case study Silvio Napoli at Schindler India summarizes the various problems and issues facing Schindler India regarding its entrance into the new foreign market, India. Schindler Holdings Ltd. is a Swiss-based manufacturer of escalators and elevators which is looking for potentially entering into the Indian elevator market. Main executive committee members predicted that the Indian industry showed great promise in terms of future growth potential. The company’s objective was to manufacture standardized elevators at a cost lower than current customized elevator market. Silvio Napoli, who is vice president of Schindler in Asia, was chosen to lead the new entry into India. To successfully enter and penetrate the Indian market, Silvio and company needed to consider a variety of factors like but not limited to: mode of entry and type of strategy to implement, organizational structure, outsourcing and logistics approaches, marketing, and domestic and global hiring procedures.
...pport their East India Company. This point of view of the administrator is accurate because he is a member of the office which presides over the trade.
India is one of the countries that this report will cover. Power distance is rather high in India this is evident when observing the rather extreme levels of inequality amongst individuals. It is also apparent in the work place, managers expect their team members to be obedient. Employees also count on being clearly directed when it comes to their tasks and what is expected out of them. Top down communication is employed and negative feedback rarely moves up the ladder. In this society there is no need for justification of an individuals position in the social hierarchy. (Cultural tools, n.d.)
[6] Kripalani, Majeet & Egnardio, Pete. The Rise Of India. Business Week Online. December 8, 2003. http://www.businessweek.com/magazine/content/03_49/b3861001_mz001.htm
Fredric William Swierczek (2006) ‘Dimensions of Success in International Business Negotiations’ Journal of Intercultural Communication 11. Available from < http://www.immi.se/intercultural/nr11/numprasertchai.htm > [ 1 April 2014]
Wilson, Beth Anne, & Keim, Geoffrey N. (2006). India and the Global Economy. Business Economics, 41(1), 28-36.
This practice became even more popular after the dot-com crash of the early 21st century. As many businesses struggled with cash-flow problems, many investors were leary in investing money in high-tech companies, which many felt were still vulnerable to the dot-com effect. Struggling to do more with less, companies looked for less expensive avenues of development and support. For the United States, Indiaseemed like a perfect resource for these needs since most nationals speak english. A company can hire an engineer in India, for example, for US$10,000 a year where an equally qualified engineer in the U.S. could cost $60,000-$90,000 a year.
India is a nation that is on the move towards becoming one of the leaders in the global economy. While the country still has a long way to go, it is making significant strides towards competition with nations such as the United States and England. Indian leaders have been moving towards "a five-point agenda that includes improving the investment climate; developing a comprehensive WTO strategy; reforming agriculture, food processing, and small-scale industry; eliminating red tape; and instituting better corporate governance" (Cateora & Graham p. 56, 2007). These steps are geared to begin India's transformation from a third world nation into a global economic leader. The current marketing environment in India is in transition, with both similarities and differences in comparison to the marketing environment in the US.
Blake, L. J. (2014, 1 1). STARBUCKS AS LATEMOVER? THE STRATEGY BEHIND STARBUCKS’ ENTRY IN INDIA. Retrieved 8 10, 2015, from //.web.a.ebscohost.com: http://web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=3&sid=504e8688-b3ed-443f-98ef-c8afa53837e7%40sessionmgr4001&hid=4101
In this essay,we have seen evidence that corruption leads to instability in the economy,increases the transactional cost,decreases efficiency, hinders the growth of a healthy marketplace and harms the social and economic development.Therefore,it’s fair to say that Corruption has had a serious effect on the Indian Economy.If left unchecked,India is bound to lose FDI investments as investors will lose trust in the economy. “Lost opportunities caused by corruption in regards to growth,jobs and investment; India has lost up to $45-50 billion a year”(Singh 2010).
Globalization is the new notion that has come to rule the world since the nineties of the last century with the end of the cold war. The frontlines of the state with increased reliance on the market economy and renewed belief in the private capital and assets, a process of structural alteration encouraged by the studies and influences of the World Bank and other International organisations have started in many of countries. Also Globalisation has brought in new avenues to developing countries. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard.
I selected an international business article from The Wall Street Journal titled “McDonald’s, Pizza Hut Cook Up New Plans for India” for my article summary assignment. This article is relevant to our course because it covers American fast food companies expanding in India. In order to be successful in foreign markets, it requires adjusting to the foreign country’s culture and customs in order to be successful in a global market. It also requires innovation and adaption to serve the local people in foreign countries, and they need strategies and a vision to address current trends and local competition.