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    iMBA 562 Team Synergy India Presentation iMBA 562 Team Synergy India Presentation Presentation Transcript

    • India Country Analysis iMBA 562: Global Business Management Team Synergy Jacqueline Lorenzetti, Rizwan Ul Haque, Kris Riegle, Kevin Saar, Kevin Weaver
    • Introduction
      • Occupies 2.4% of the world’s land area
      • Supports more than 17% of the world’s population
      • Agriculture predominant occupation
      • Median age of 25
      • Religion, caste, and language factors
      • of social and political organization
      Sources: CIA Factbook, Wikipedia
    • History
      • 1950: Republic of India independent domain
        • Largest democracy in the world
      • 1950s - 1980s: Socialist-inspired policies
      • 1990s - Now: Economic reforms transformed India into one of the fastest growing economies in the world
      • 5-year planning model
      Source: CIA Factbook
    • Economy
      • GDP 10 th largest in the world by nominal GDP
      • GDP Real Growth Rate – 8.2%
      • High Inflation
      • Unemployment – 9.4%
      • 500 million workers
      • Below poverty line – 37%
      • Top 5 Trading Partners: UAE, China, USA, Saudi Arabia, and Germany
      Source: CIA Factbook
    • Government
      • Federal Republic with Bicameral Parliamentary system
      • 28 states and 7 union territories
      • Head of State – President
      • Head of Government – Prime Minister
      Sources: CIA Factbook, Wikipedia
    • Government Restrictions
      • Labor restrictions most restrictive and complex in world
      • 80 million new entrants to Indian workforce
      • Private sector infrastructure investments
        • 3 rd largest road network in the world
      • Critical regional variations
    • Business in India Source: India Briefing
    • Market Potential Indicators (MPI)
      • Eight dimensions analyzed on scale from 1-100
      • Looks at 26 countries considered “emerging markets”
        • Market Growth
        • Market Growth Rate
        • Market Intensity
        • Commercial Infrastructure
        • Economic Freedom
        • Market Receptivity
        • Country Risk
      Source: Global Edge
        • Market Consumption Capacity
    • India’s MPI
      • Positive Rankings
        • Market Size (2 nd )
        • Market Growth Rate (2 nd )
      • Neutral Rankings
        • Market Consumption Capacity (11 th )
        • Country Risk (13 th )
        • Economic Freedom (18 th )
      • Negative Rankings
        • Market Intensity (24 th )
        • Commercial Infrastructure (25 th )
        • Market Receptivity (20 th )
      Source: Global Edge
    • India’s MPI Take-a-ways
      • Ranked 9 th overall among 2010 countries
        • Ranking consistent since 1996
      • Market size and market growth rates huge potentials for foreign firms
      • Private consumption of GDP low compared to other countries
      • Significant investment needed in infrastructure
      • Risk in country moderate
      Source: Global Edge
    • Trade Balance Source: India Department of Commerce
    • Source: India Department of Commerce Imports and Exports Share of Top 5 Commodity Groups in India’s Exports 2010-11 (Apr-Sept) Share of Top 5 Principal Commodities in India’s Imports 2010-11 (Apr-Sept)
    • Source: India Department of Commerce Imports and Exports, contd. Major Sources of India’s Imports 2010-11 (Apr-Sept) Major Destinations of India’s Exports 2010-11 (Apr-Sept)
    • Trade with the United States
      • Trade grows as relations between the countries grow stronger
      Source: US Department of Commerce, Bureau of Census India-US Bilateral Merchandise Trade (US $ Millions)   2008 2009 2010 Jan-Feb 2011 India's Exports to US 25704 (6.8) 21166 (-17.6) 29531 (39.5) 4762 (18) India's Imports from US 17682 (18.1) 16441 (-6.9) 19223 (16.9) 2850 (12.6) Total Trade 44429 (11.1) 37638 (-13.3) 48754 (29.5) 7612 (15.9) Percentage change over previous period, mentioned in parenthesis
    • Exports to the United States
      • $29.5B in exports to US in 2010
      • $4.7B in early 2011 (Jan-Feb)
      • Primary exports:
        • Precious Stones and Metals (24.3%)
        • Textiles (20.8%)
        • Pharmaceutical Products (9.1%)
        • Organic Chemicals (5.6%)
        • Machinery (5.2%)
        • Mineral Fuel, Oils (5.1%)
        • Electric Machinery (4.6%)
        • Vehicles (3.2%)
      Source: US Department of Commerce, Bureau of Census, www.indianembassy.org
    • Imports from the United States
      • $19.2B in imports from the US in 2010
      • $2.8B in early 2011 (Jan-Feb)
      • Primary imports:
        • Precious Stones and Metals (21%)
        • Mineral Fuel, Oils (11.9%)
        • Machinery (11.8%)
        • Electric Machinery (8.7%)
        • Optical Instruments and Equipment (6.2%)
        • Organic Chemicals (5.4%)
        • Aircraft and Spacecraft (4.4%)
        • Miscellaneous Chemical Products (3.3%)
      Source: US Department of Commerce, Bureau of Census, www.indianembassy.org
    • Foreign Direct Investment (FDI)
      • 50% Indian Ownership to enter without approval
      • Restricted/Capped Industries
        • Energy, Telecom, Mining, Pharmaceutical, Railways
      • Anyone can enter except Pakistan (result of ongoing conflicts)
      • Reputation of being difficult
      • First major reform in 1997; Most recent reform in 2007
      Source: Business Maps of India, The Independent, Invest in India, India Department of Commerce
    • FDI Inflow to India
      • Liberalizations have recently increased flow
      • Total FDI:
        • 2008-2009 - $34.6B
        • 2009-2010 - $23.7B
        • Slow world-wide economies explain 2010 decline
      • 2010 FDI inflow ranked 2 nd (2 nd to China)
      • 2000-2010
      • FDI Contributors
      Source: IBEF, Wikipedia, Times of India
    • FDI Outflow from India
      • Total FDI:
        • 2008-2009 - $16.2B
        • 2009-2010 - $10.3B
      • In 2010:
        • 9 th in number of foreign projects
        • 10 th in foreign job creation
      • Largest Outflows:
        • Manufacturing (43.1%)
        • Finance, insurance, real estate, business services (28.1%)
      • Largest Beneficiaries
        • Singapore, Mauritius, Netherlands, US, British Virgin Islands – (67% of outward FDI)
      Source: Deccan Herald, Wall Street Journal
    • America & FDI
      • Inflow from America
        • Total projects up 60% since 2003
        • Primarily Information, Manufacturing, Automobile Sectors
        • $16B worth of inflows through 2008
        • 2009 - Obama reduced tax incentives for companies moving jobs abroad
      • Outflow to America
        • 60,000 jobs created since 2005
        • $26.6B through the last 5 years
        • 372 acquisitions worth $21.0B
        • 127 greenfiled investments worth $5.5B
        • Mostly Mining, Manufacturing, Software, Bio-tech
      Source: Invest India, USDR.gov, State.gov, Ernst & Young
    • Advantages of Investing
      • Rising market size and market growth rates
        • Possible customer base of 1.21 billion
        • Young median age
      • Opportunities to build infrastructure to start new industries and further develop existing ones
      • Relaxing of government restrictions on direct foreign investments
      • Strict government regulations for foreign companies
      • Difficult market entry
        • 50% Indian ownership required
      • Significant investment in infrastructure needed
      Disadvantages of Investing
    • Conclusion
      • YES to investment in India
        • Advantages > Disadvantages
        • Look to top imports and exports
        • Investigate culture and customs