iMBA 562 Team Synergy India Presentation


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iMBA 562 Team Synergy India Presentation

  1. 1. India Country Analysis iMBA 562: Global Business Management Team Synergy Jacqueline Lorenzetti, Rizwan Ul Haque, Kris Riegle, Kevin Saar, Kevin Weaver
  2. 2. Introduction <ul><li>Occupies 2.4% of the world’s land area </li></ul><ul><li>Supports more than 17% of the world’s population </li></ul><ul><li>Agriculture predominant occupation </li></ul><ul><li>Median age of 25 </li></ul><ul><li>Religion, caste, and language factors </li></ul><ul><li>of social and political organization </li></ul>Sources: CIA Factbook, Wikipedia
  3. 3. History <ul><li>1950: Republic of India independent domain </li></ul><ul><ul><li>Largest democracy in the world </li></ul></ul><ul><li>1950s - 1980s: Socialist-inspired policies </li></ul><ul><li>1990s - Now: Economic reforms transformed India into one of the fastest growing economies in the world </li></ul><ul><li>5-year planning model </li></ul>Source: CIA Factbook
  4. 4. Economy <ul><li>GDP 10 th largest in the world by nominal GDP </li></ul><ul><li>GDP Real Growth Rate – 8.2% </li></ul><ul><li>High Inflation </li></ul><ul><li>Unemployment – 9.4% </li></ul><ul><li>500 million workers </li></ul><ul><li>Below poverty line – 37% </li></ul><ul><li>Top 5 Trading Partners: UAE, China, USA, Saudi Arabia, and Germany </li></ul>Source: CIA Factbook
  5. 5. Government <ul><li>Federal Republic with Bicameral Parliamentary system </li></ul><ul><li>28 states and 7 union territories </li></ul><ul><li>Head of State – President </li></ul><ul><li>Head of Government – Prime Minister </li></ul>Sources: CIA Factbook, Wikipedia
  6. 6. Government Restrictions <ul><li>Labor restrictions most restrictive and complex in world </li></ul><ul><li>80 million new entrants to Indian workforce </li></ul><ul><li>Private sector infrastructure investments </li></ul><ul><ul><li>3 rd largest road network in the world </li></ul></ul><ul><li>Critical regional variations </li></ul>
  7. 7. Business in India Source: India Briefing
  8. 8. Market Potential Indicators (MPI) <ul><li>Eight dimensions analyzed on scale from 1-100 </li></ul><ul><li>Looks at 26 countries considered “emerging markets” </li></ul><ul><ul><li>Market Growth </li></ul></ul><ul><ul><li>Market Growth Rate </li></ul></ul><ul><ul><li>Market Intensity </li></ul></ul><ul><ul><li>Commercial Infrastructure </li></ul></ul><ul><ul><li>Economic Freedom </li></ul></ul><ul><ul><li>Market Receptivity </li></ul></ul><ul><ul><li>Country Risk </li></ul></ul>Source: Global Edge <ul><ul><li>Market Consumption Capacity </li></ul></ul>
  9. 9. India’s MPI <ul><li>Positive Rankings </li></ul><ul><ul><li>Market Size (2 nd ) </li></ul></ul><ul><ul><li>Market Growth Rate (2 nd ) </li></ul></ul><ul><li>Neutral Rankings </li></ul><ul><ul><li>Market Consumption Capacity (11 th ) </li></ul></ul><ul><ul><li>Country Risk (13 th ) </li></ul></ul><ul><ul><li>Economic Freedom (18 th ) </li></ul></ul><ul><li>Negative Rankings </li></ul><ul><ul><li>Market Intensity (24 th ) </li></ul></ul><ul><ul><li>Commercial Infrastructure (25 th ) </li></ul></ul><ul><ul><li>Market Receptivity (20 th ) </li></ul></ul>Source: Global Edge
  10. 10. India’s MPI Take-a-ways <ul><li>Ranked 9 th overall among 2010 countries </li></ul><ul><ul><li>Ranking consistent since 1996 </li></ul></ul><ul><li>Market size and market growth rates huge potentials for foreign firms </li></ul><ul><li>Private consumption of GDP low compared to other countries </li></ul><ul><li>Significant investment needed in infrastructure </li></ul><ul><li>Risk in country moderate </li></ul>Source: Global Edge
  11. 11. Trade Balance Source: India Department of Commerce
  12. 12. 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)
  13. 13. 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)
  14. 14. Trade with the United States <ul><li>Trade grows as relations between the countries grow stronger </li></ul>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
  15. 15. Exports to the United States <ul><li>$29.5B in exports to US in 2010 </li></ul><ul><li>$4.7B in early 2011 (Jan-Feb) </li></ul><ul><li>Primary exports: </li></ul><ul><ul><li>Precious Stones and Metals (24.3%) </li></ul></ul><ul><ul><li>Textiles (20.8%) </li></ul></ul><ul><ul><li>Pharmaceutical Products (9.1%) </li></ul></ul><ul><ul><li>Organic Chemicals (5.6%) </li></ul></ul><ul><ul><li>Machinery (5.2%) </li></ul></ul><ul><ul><li>Mineral Fuel, Oils (5.1%) </li></ul></ul><ul><ul><li>Electric Machinery (4.6%) </li></ul></ul><ul><ul><li>Vehicles (3.2%) </li></ul></ul>Source: US Department of Commerce, Bureau of Census,
  16. 16. Imports from the United States <ul><li>$19.2B in imports from the US in 2010 </li></ul><ul><li>$2.8B in early 2011 (Jan-Feb) </li></ul><ul><li>Primary imports: </li></ul><ul><ul><li>Precious Stones and Metals (21%) </li></ul></ul><ul><ul><li>Mineral Fuel, Oils (11.9%) </li></ul></ul><ul><ul><li>Machinery (11.8%) </li></ul></ul><ul><ul><li>Electric Machinery (8.7%) </li></ul></ul><ul><ul><li>Optical Instruments and Equipment (6.2%) </li></ul></ul><ul><ul><li>Organic Chemicals (5.4%) </li></ul></ul><ul><ul><li>Aircraft and Spacecraft (4.4%) </li></ul></ul><ul><ul><li>Miscellaneous Chemical Products (3.3%) </li></ul></ul>Source: US Department of Commerce, Bureau of Census,
  17. 17. Foreign Direct Investment (FDI) <ul><li>50% Indian Ownership to enter without approval </li></ul><ul><li>Restricted/Capped Industries </li></ul><ul><ul><li>Energy, Telecom, Mining, Pharmaceutical, Railways </li></ul></ul><ul><li>Anyone can enter except Pakistan (result of ongoing conflicts) </li></ul><ul><li>Reputation of being difficult </li></ul><ul><li>First major reform in 1997; Most recent reform in 2007 </li></ul>Source: Business Maps of India, The Independent, Invest in India, India Department of Commerce
  18. 18. FDI Inflow to India <ul><li>Liberalizations have recently increased flow </li></ul><ul><li>Total FDI: </li></ul><ul><ul><li>2008-2009 - $34.6B </li></ul></ul><ul><ul><li>2009-2010 - $23.7B </li></ul></ul><ul><ul><li>Slow world-wide economies explain 2010 decline </li></ul></ul><ul><li>2010 FDI inflow ranked 2 nd (2 nd to China) </li></ul><ul><li>2000-2010 </li></ul><ul><li>FDI Contributors </li></ul>Source: IBEF, Wikipedia, Times of India
  19. 19. FDI Outflow from India <ul><li>Total FDI: </li></ul><ul><ul><li>2008-2009 - $16.2B </li></ul></ul><ul><ul><li>2009-2010 - $10.3B </li></ul></ul><ul><li>In 2010: </li></ul><ul><ul><li>9 th in number of foreign projects </li></ul></ul><ul><ul><li>10 th in foreign job creation </li></ul></ul><ul><li>Largest Outflows: </li></ul><ul><ul><li>Manufacturing (43.1%) </li></ul></ul><ul><ul><li>Finance, insurance, real estate, business services (28.1%) </li></ul></ul><ul><li>Largest Beneficiaries </li></ul><ul><ul><li>Singapore, Mauritius, Netherlands, US, British Virgin Islands – (67% of outward FDI) </li></ul></ul>Source: Deccan Herald, Wall Street Journal
  20. 20. America & FDI <ul><li>Inflow from America </li></ul><ul><ul><li>Total projects up 60% since 2003 </li></ul></ul><ul><ul><li>Primarily Information, Manufacturing, Automobile Sectors </li></ul></ul><ul><ul><li>$16B worth of inflows through 2008 </li></ul></ul><ul><ul><li>2009 - Obama reduced tax incentives for companies moving jobs abroad </li></ul></ul><ul><li>Outflow to America </li></ul><ul><ul><li>60,000 jobs created since 2005 </li></ul></ul><ul><ul><li>$26.6B through the last 5 years </li></ul></ul><ul><ul><li>372 acquisitions worth $21.0B </li></ul></ul><ul><ul><li>127 greenfiled investments worth $5.5B </li></ul></ul><ul><ul><li>Mostly Mining, Manufacturing, Software, Bio-tech </li></ul></ul>Source: Invest India,,, Ernst & Young
  21. 21. Advantages of Investing <ul><li>Rising market size and market growth rates </li></ul><ul><ul><li>Possible customer base of 1.21 billion </li></ul></ul><ul><ul><li>Young median age </li></ul></ul><ul><li>Opportunities to build infrastructure to start new industries and further develop existing ones </li></ul><ul><li>Relaxing of government restrictions on direct foreign investments </li></ul>
  22. 22. <ul><li>Strict government regulations for foreign companies </li></ul><ul><li>Difficult market entry </li></ul><ul><ul><li>50% Indian ownership required </li></ul></ul><ul><li>Significant investment in infrastructure needed </li></ul>Disadvantages of Investing
  23. 23. Conclusion <ul><li>YES to investment in India </li></ul><ul><ul><li>Advantages > Disadvantages </li></ul></ul><ul><ul><li>Look to top imports and exports </li></ul></ul><ul><ul><li>Investigate culture and customs </li></ul></ul>