This is a part of the presentation I made to the executives who are doing MS-MMK in France and visiting ESSEC Singapore campus. The presentation paints only a partial picture of India and therefore should not be used as a guide to do business there. Nor should it be used as a manual to understanding India consumer, culture, legal system, or anything related to India. The standalone presentation is necessarily out of context. A discussion along with this presentation provides a more helpful exercise.
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Doing Business in India ver 2.0
1. Doing Business in IndiaChallenges to Marketers Prof Ashwin Malshe Presentation made to MS MMK Executives
2. About Ashwin Malshe PhD (Marketing), MMS (Marketing), BE (Electronics) Seven years of industry experience Institutional sales Analytics With ESSEC since July 2011 Multiple research interests Marketing strategy Marketing-finance interface Consumer behavior Social media marketing Blogging activities Micro-Positioning Flirting with Finance 2 04/10/2011 Doing Business in India
3. Source of Data I use several sources of data to get the numbers reported in the presentation. Specific instances are noted on the slides. Wherever the source is not identified, the data come from the CIA World Factbook 3 04/10/2011 Doing Business in India
4. The Story of IndiaA BBC – PBS Documentary 4 04/10/2011 Doing Business in India
5. India – A Few Statistics 7th Largest country by area - 3,287,263 sqkm (land and water) 28 states and 7 union territoires 2nd most populous country in the world – 1.2 billion est. Secular country Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8%, unspecified 0.1% (2001 census) 16 official languages! Hindi 41%, Bengali 8.1%, Telugu 7.2%, Marathi 7%, Tamil 5.9%, Urdu 5%, Gujarati 4.5%, Kannada 3.7%, Malayalam 3.2%, Oriya 3.2%, Punjabi 2.8%, Assamese 1.3%, Maithili 1.2%, other 5.9% English is the preferred language for most of the commercial and political purposes Parliamentary democracy Model borrowed from British. Prime Minister is the head of the government 5 04/10/2011 Doing Business in India
7. Economy GDP PPP terms USD 4 trillion – 5th largest in the world Official exchange rate USD 1.6 trillion GDP real growth rate 2010 – 8.8% est. (World Bank) GDP per capita – USD 3,500 7 04/10/2011 Doing Business in India
9. Culture Conservative in several aspects Women, by law, are at par with men. In reality they are treated less than equal Meritocracy is partially practised Caste system is weak in the cities but still manifests strongly in the smaller towns Families matter more than individuals Culture is more collectivistic than individualistic Common to see people taking into account the impact of their decisions on others in the family or even a larger community Many decisions become “family decision.” For example, buying a TV, washing machine, or a car may not be decided by one person alone Group vacations are common too! 9 04/10/2011 Doing Business in India
10. Culture More tolerance towards nonconforming ideals As long as you don’t interfere with their way of life, tolerance to your practices is guaranteed India is perhaps the only country where Jews were not persecuted Zorastrians (Parsis), the original inhabitants of Iran, live in India without facing any pressure to relinquish their culture or religion E.g., on Japanese culture There prevails a general sense of inferiority complex due to British occupation Many cultural aspects change from state to state 10 04/10/2011 Doing Business in India
14. Political Economy Corruption is growing in size A huge wealth transfer has been undergoing from the people of India to the government officials and leaders Corruption at multiple levels Ordinary people have to pay for the services that the government should provide them free of cost Government officials may collect the appropriate fees but then won’t deposit it with the government Ministers grant licenses to businessmen in exchange of partnerships, cash, or both Bribes are paid to cover up irregularities or even crimes Most of the ministers in power are hundreds and thousands of times richer than an average person in India 12 04/10/2011 Doing Business in India
15. Political Economy Government favors rapid expansion of businesses in theory In reality bureaucracy has all but stopped the development in India Very low investment in infrastructure McKinsey Global Institute report identifies the challenges faced by India Weak regulatory enforcement Lack of desire to make sure that the regulations are enforced Corruption thwarts most attempts to enforce regulation Government provides inadequate resources to regulators Uncertain legal structure In modern economies legal protection to various contracts enables trade In India legal system is slow as well as corrupt Courts are overwhelmed by the pending cases Contracts are not easily enforceable 13 04/10/2011 Doing Business in India
16. Characteristics of Indian Consumer Price conscious Rational Usually conducts research before buying Takes into account opinions of others My personal experience is that Indian friends on Facebook as more questions about which computer, phone, tablet, etc. to buy Try to be discreet with large purchases Potentially safety concerns but more importantly trying to avoid getting noticed even by the friends and relatives Tends to save more There is no social security system in India 14 04/10/2011 Doing Business in India