This is an assignment on International Business, German steel company- Indian Manrket

2. Introduction………………………………………………………………….4

4. Economic Systems,

5. Legal Systems,

6. Educational systems,

8. 900 million square meters of commercial and residential space needed to be built.

9. 91 million households will be middle class from 22 million today.

11. India is member of WTO, World Bank and IMF and their relation to India and particular to steel industry has provided below in the table.

13. Demand for exports, mainly from China.

14. Support from the dynamic economy.

15. Growth in the constructions sectors.

16. Growth in the automobile sectors

17. Mechanical engineering positive stimulus

18. Heavy investments in the infrastructure development.

20. Good marketing expertise

21. High investment in R&D and innovation process

22. High economies of scale

23. Factors of productions are very cheap

25. FDI’s are automatically approved through RBI (Reserve Bank of India).

26. But still unofficial price related barriers, high duty tax and other local taxes are present

27. 5% import duty is placed on steel products. This import duty has been brough down from 100% to 5% by the end of year 1999.

28. Steel products are importable as per government extant policy.

30. Joint Venture

31. Merger and acquisition

32. Exporting

33. Strategic alliance.

34. The above mentioned are the possible market entry strategies for the Smith Ltd, to Indian crude steel market.

35. Direct production through FDI:

37. Two major problems in direct production that Smith Ltd has to analyse for direct production. They are:

38. Requirement of heavy financial assets.

39. Own iron-ore mines. (raw material for crude steel production)

40. Requirement of heavy financial assets:-

41. To compete in the big market and with big player, Smith Ltd has to invest large amount of financial assets in Indian market. Although Smith Ltd is financially strong, investment has to be big as POSCO and Arcelor Mittal companies’ investment, which is nearly, crosses more than 7 billion USD. Then only Smith Ltd can play a key role and become market leader in India, beating Government owned companies such as SAIL, Vizak steel and other big players. Otherwise, competition is very high in sustaining the Indian market.

42. Own iron-ore mines:-

43. To maintain high quality and reasonable or competitive prices in the market any steel company has to use its own mining facility. All the Indian government steel companies and other private companies hold their own mining facilities, which has been leased from the respective state governments. This process of leasing mines in India lengthy and there is need for strong political support.

44. Joint Venture:-

45. There is no separate law in India when setting a joint venture project. But government approval is needed when foreign equity is more than 74%. According to Indian government, to set up joint venture, Smith Ltd has to consider the following for selecting the secondary party in joint venture project.

46. They are:

47. NRI’s – Non Residential Indians

48. People of Indian origin

49. Overseas Economic Bodies.

51. To opt for the merger and acquisition process, Smith Ltd has to consider the two following options in steel market.

52. Public sector companies-

53. Firstly, majority of the shares are withheld by the government and minority of them are trading at high prices at BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).

54. Secondly, it is impossible to merge and acquire public sector company in India, which has to be done only through passing a bill in Indian parliament and has to acquire 2/3 of the majority. This is impossible process and cannot be done.

55. Private sector companies:-

56. Private sector companies with a good brand image in India steel market are :-

57. TISCO (Tata Iron and Steel corporation)

58. Jindal Steel

59. Essar

60. Ismat

63. Indian steel imports are given above on the basis of government policy, but Smith Ltd will not have competitive advantage in exporting crude steel products to the India market as the factors of productions and travelling expenses are very high.

64. Strategic Alliance:

65. There is chance for Smith ltd to form strategic alliance with the Indian public and private sector companies in Indian steel market. To form a strategic alliance, Smith Ltd has to share its technologies which are more sophisticated than the Indian companies. In return Smith ltd can be benefited from geographical expansion and supply chain synergies. As the strategic alliance need more trust between the partners, Smith Ltd has to carefully search for the partners.