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iMBA 562 Team Synergy India Presentation

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  • 1. India Country Analysis iMBA 562: Global Business Management Team Synergy Jacqueline Lorenzetti, Rizwan Ul Haque, Kris Riegle, Kevin Saar, Kevin Weaver
  • 2. 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
  • 3. 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
  • 4. 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
  • 5. 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
  • 6. 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
  • 7. Business in India Source: India Briefing
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. Trade Balance Source: India Department of Commerce
  • 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. 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. 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
  • 15. 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
  • 16. 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
  • 17. 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
  • 18. 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
  • 19. 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
  • 20. 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
  • 21. 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
  • 22.
    • Strict government regulations for foreign companies
    • Difficult market entry
      • 50% Indian ownership required
    • Significant investment in infrastructure needed
    Disadvantages of Investing
  • 23. Conclusion
    • YES to investment in India
      • Advantages > Disadvantages
      • Look to top imports and exports
      • Investigate culture and customs

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