International retailer enter Indian market

multinational retail merchant assume Indian grocery introToday retail is no more restricted to just change nears to consumer. It is worlds largest private industry with the barters of US$ 6.6 trillion. (McKinsey international Institute Report, 2001)Cox R and Brittain P (2004) gave the modern definition of retailing as Retailing is the sale of goods and services to the ultimate consumer for personal, family or ho exercisehold use. In UK retail welkin is the here and now largest employer, contributes 23% in GDP and accounts for the 35% of consumer expenditure. (Cox R and Brittain P, 2004) The do main(prenominal) seems to be mature in UK. that thither be a couple of(prenominal) emerging markets in which retail area is still in its egress phase. One of them is Retail Sector of India.AIM AND OBJECTIVESAim To determine the barriers for an worldwide retailer like PRIMARK to enter Indian Market and to find bulge come forward the suitable merchandising policies depending u pon the problems they might face.Rationale Until the f any of communism the countries in the world were divided in to two fibers- communists and capitalists depending upon the economicalal system they had adopted. except thither were few newly Independent countries which adopted the mixed type of economy. As the strength of capitalism was proved all the economies tend towards it. unruffled there be countries like India which are conserved in nature. path of entering the Indian Market is still full of hurdles for whatsoever unusual investor. But the challenge is acceptable because at the end of the street there is a Brobdingnagian market with millions of potential consumers.ObjectivesAnalysing the potential of Indian Retail sector, market requirements and risks involved.Review the policies of Indian government about immaterial Direct Investment in retail sector.Review how former(a) companies suck in entered Indian Market. E.g. M S, Wal-Mart, Woolworths etc.Review PRIMAR KS mission, vision, operation strategy and selling policies.Study how PRIMARK has entered in other countries.Learning few appropriate strategies and marketing policies which PRIMARK move adopt to beget a successful entry in India.LITERATURE REVIEWInternational Retailing Two sets of factors can make a domestic retailer go international. First is push factors which includes chroma of the domestic market, recession and prep restrictions. The other set of factor is cognise as pull factors which is nothing but market attractiveness for the outside(prenominal) retailer. It consists of falling barriers to market entry, supplier strategy, strategic alliances, emerging markets, changing consumer taste, economies of scale. But as the venture involves huge investment various strategic methods are used reduce the risk. and so market look for pursueed by the deciding upon entering strategy such as acquisition or joystick venture etc. would be the most suitable path for whatever retail er. (Cox R and Brittain P, 2004)Indian Retail Sector An Opport building blocky The time when genuine economies are facing recession, two countries are balancing world economic harvesting, one of them is India. Indias GDP appendage was 9.4% in 2007. According to McKinsey report there are 12 m retail outlets in India. Most of them are small and unorganised, but contributes 6% in GDP. (McKinsey Global Institute Report, 2001)The Indian Organised and Modern Retail Market is only 9% of agree retail industry, which too low compared to western world (65% in the States) as comfortably as other Asian countries. (Appendix 1) Thus the sector as such is underdeveloped. Indias Favourable demography, availability of the disposable income with young generation and perceptual constancy due to vibrant democracy are other advantages for any foreign investors. ( plain Profile 2007 India) Report by McKinsey also suggests if the government become a bit liberal and bureaucracy is reduced then the h arvestingivity of retail sector would increase by two and half times (250%) and would acquire 8 million jobs. (McKinsey Global Institute Report, 2001) Market potential can be nevertheless back up by break down of Kearney A. T. (2006) about Global Retail Development Index.Understanding Indian Consumer India is a huge country with varied consumer pool. Supporting to the view Ramamurthy K and Naikare A (2007) from Synovate chore consulting says, The Indian market shows differences in consumer behaviour from one region to another(prenominal) in terms of usage, preference, carrys, tastes etc. Advocating to the point Mr. Biyani simplify it as,Indian Consumers, contrary great deal elsewhere, demand ideas and solutions that are uniquely Indian. Mr. Kishore Biyani (CEO, Future Group and Managing director of Pantaloon Retail, India)Thus any international retailer planning to enter the Indian market would deport to consider the same for planning the marketing strategies. Indian moder n retailers are attracting only one stratum of people, which includes educated urban Indians, but those which are having the lower purchasing power especially people from sectors such as plumbing, carpentry etc. are often neglected. On January 26, 2006 Big Bazaar announced a Lowest P strain daylight to attract the later segment. (Biyani K, 2007) So it means there is a snap in the retail segment which is attractive and can be exploited. The speaking would evaluate the suitability of marketing strategies, product range etc. for retailer to enter India.Indian political science Policies for unknown Investor Foreign political party intend to do business in India can follow one of the leash travel plans as explained by Titus and Co., Advocates (2007)Open A liaison office pot up a branch officeIncorporate a come withIf the company wish to set up its own permanent unit in India then it has to follow the third path. But then depending on the sector company can have Wholly Owned sup plementary (WOS) or Joint Venture (JV). (Titus and Co., Advocates 2007)India has not completely collapseed the retail sector for foreign investors and the liberalisation is proceeding gradually. Till 2006 the only route for FDI in retails was Franchisee. Government then cedeed 51% FDI in mavin brand retailing. (Country Profile 2007 India) But the retail distribution is still forbidden. (Appendix 2) Along with these possession policies, India is ranked higher in putting barriers such as discriminatory procedures, tariffs and regulatory barriers on Foreign Investment. The other hurdle for entering Indian market is various barriers to entrepreneurship. Though India has reduced the legal barriers such as getting license or permit it has not reduced the administrative burdens on new entrepreneur. (OECD stinting Survey India, p. 91, 92)For investing in single brand retail sector an investor has to take an approval from SIA (Secretariat for Industrial Assistance), the division of Indu strial Policy and Promotion, the Ministry of Commerce and Industry, New Delhi. (Titus and Co., Advocates, 2007) The dissertation would sphere the regulations of Indian Government for foreign retailer.Entry of Foreign Retailers in India Retail market potential of India has lured many foreign investors to enter Indian market by various means. The dissertation testament dismember the strategies used by them to enter India.Wal-Mart entered totallysale business in India through with(predicate) knock venture with Bharti Enterprises. Bharti-Wal-Mart is panning to open many cash and carry shops by 2015. (The Economist, August 9, 2007)Auchan International SA from France is having regional purchasing and liaison office in India.Cargill India Pvt. Ltd. well known USA based company have launched NatureFresh brand of Atta (wheat floor), refined oil, salt, branded rice etc.Mc Donalds Restaurant has joint venture with Cannaught Plaza Restaurants Pvt. Ltd. to officiate in Delhi, Jaipur and M athura region. (Source Foreign Companies In India Yearbook 2007)Dairy Farm International Holding Ltd. of Hong Kong along with Food World Supermarkets Ltd. (India) in a joint venture has opened 89 retail shops in India.Procter and Gamble hygienics and Healthcare Ltd. (USA) have launched consumer and health care products in India. In the stand 35% investment is from Indian Share holders and 65% is from Procter and Gamble society and Procter and Gamble Home Products Ltd.Marks and Spencer c/o Planet Sports Pvt. Ltd. is having 14 retail outlets and distribution network in Delhi, Mumbai, Haidrabad, Jaipur, and Pune etc. in India. (Source Foreign Companies In India Yearbook 2007)Marks and Spencer has re-entered Indian Retail Market unitedly with Reliance Industries (India). In a joint venture Marks and Spencer is having 51% ownership. Duo is planning to open 50 shops in near future. (Hall J, April 19, 2008) calamity There are few examples of failure as well. Few organisations have withd rawn their interest in entering Indian market. E.g. Carrefour and Tesco went out of the negotiation for joint venture in India. Starbucks after getting to disapprovals from the Government of India pull out two proposals for franchise. Metro (German Retailer) enter wholesale business in India but since then it has engaged in solving the dissension with state government of Karnataka as state law does not allow Metro to sell agricultural products. (The Economist, August 9, 2007) The dissertation would make an travail to investigate the reasons behind those failures.Review of PRIMARK Associated British Food the parent company of PRIMARK opened its origin value c potbellyhing store in capital of Ireland in 1969. Since then it has opened 177 stores in Ireland (trade with brand name Penneys), Spain and UK. (www.primark.co.uk) The retailer targets the age group o to 35 and especially women customers by providing good quality fashionable cloths at reasonable footing. The retail chain ba sically became popular because of its value for money price. The major strategies of the company involve, Bulk production, mere(a) to produce designs and Production of only popular sizes. (Atherton J, 2008) The company also deals instanter with the producer and there is no intermediate in between and thereof avoid huge overhead costs. PRIMARK also does not spend overmuch on advertisements and believes Word of Mouth is the most effective way of advertising. PRIMARK became the fragment of Ethical Trading Initiative in October 2006 along with the Marks and Spencer, Nike, spread head and Levis. (Staff stimulus generalisation Handbook, Primark).The PRIMARK is currently operating in Ireland, UK, and Spain. It is expanding internationally and further planning to move in to Portugal and Germany. PRIMARK is selling the similar stock in all countries. It is not favourable for any organisation if they had to change a lot while going international. According to Gavin George from Ernst an d Young, Emerging markets offer exciting growth prospects, while many European markets have high spending, but relatively weak competition. Primark will be in an interesting place in Germany because while there is an extensive value clothing proposition there are not so many fashion-oriented players. (Mc totallyister D, 2008) The compatibility of PRIMARK with Indian Consumer and Government would be analysed to find out the appropriate way for entering India.RESEARCH physical body AND regularityOLOGY question design is the general plan to conduct the seek. Saunders et. al. (2007) compares it with onion. The first layer of an onion is deciding upon the Philosophy of research, then the approach, strategy and at the core of an onion lie the selective information collection and data analysis. explore Philosophy The research philosophy adopted by the researcher defines the further path he would follow. The problem stated as a event in this piece of research proposal is practical and related to authoritativeities. Thus it adopts the functionalist paradigm. According to Burrell and Morgan (197926) It is often problem-oriented approach, concerned to provide practical solutions to practical problems (Cited in Saunders et. al. 2007) This paradigm has two dimension as objectivism and regulation. Objectivism is one of the aspects of Ontology philosophy. But this research would rather proceed with Pragmatism approach, which means the research can follow the philosophy of epistemology as well as ontology. (Saunders et. al., 2007, pp. 101-113)Research Approach The second layer of a research onion is research approach. This research would use an inductive approach for research which is much more appropriate for reply this sort of questions. Inductive approach gives the necessary flexibility for choosing the research methodology depending upon the research question. (Saunders et. al., 2007, pp. 119)Purpose The purpose of this research is more of exploratory study and a bit of explanatory study. It would explain the constraints in entering Indian market and how other foreign investors have entered the market. Depending on that it would make an sweat to explore the policies PRIMARK should embrace to enter Indian market successfully. (Saunders et. al., 2007, pp. 133)Strategy As Robson (2002178) defines the case study research as a strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple consultations of evidence. (Cited in Saunders et. al. 2007, p139) The case study research would be the strategy of choice for this research.DATA COLLECTION METHODFor the philosophy, approach and strategy opted for this dissertation the most suitable method of data collection would be the qualitative method. (Saunders et. al., 2007) The data would be collected by in-depth interview of the people form various sectors related to retail business. The main advantage of the m ethod as stated by Burgess (1982107) is, it is the hazard for the researcher to probe deeply to uncover new clue, open up new dimensions of a problem and secure vivid, accurate inclusive accounts that are based on personal experience. (Cited by Smith et. al. 2008) The principle source would be the Management of PRIMARK. As the researcher is working with PRIMARK Hammersmith, London rag to the put in Manager Mrs. Katarina Taggard has been negotiated. Though she has agreed to help with the dissertation, the permission from the maneuver Office, Reading, UK is yet to receive. The another person to be interviewed is Mr. Ashdin Doctor, A Market Research Analyst, Retail Sector Mumbai, India. The formal approval has been negotiated with him. The questionnaire would be sent to him through e-mail. The questionnaire would be sent to Eva George, China and India Business Development Officer, London and Anita Nandi, city Representative, Mumbai. (Leaflet, City Business subroutine library) In a mean time other important retailers from India are being contacted for the same purpose.ANALYSIS AND PRETSENTATION OF DATAThe data gathered from the qualitative method would be analysed by using the Grounded compend method of analysing qualitative data. The data would be read and understood well and then it would be linked with the theory or the secondary data. The whole data would be presented in the form of charts, tables and graphs pursuit the critical analysis. subsidiary DATAThe information collected by some body else is regarded as secondary data. The proper utilisation of secondary data depends on analysing and interpretation skills of the researcher. (Smith et. al. 2008) The secondary data would be collected from the books and journal articles regarding the retail sector of India. The information about the country profile and statistics about India would be accessed from following official web sites,www.cia.gov/cia/publications/facebookwww.rbi.org.inwww.statisticsofind ia.comwww.finmin.nic.in(Leaflet, City Business Library)CONCLUSIONThe dissertation aims to analyse the problems international retailer might encounter while entering the Indian market. Eventually it is expected to answer following thingsAttractiveness and market growth of one of the segments of Indian market which is not yet entirely exploited.All available paths to enter India and the most suitable one for PRIMARK, e.g. Joint Venture. excerption of marketing policies to be employed. E.g. target group, state-wise choice of clothing, buying occasions and price range etc.Factors to be taken care of and hitches to be cognizant of while doing business in India. e.g. currency fluctuations, unstable areas, political will and taxation laws in different states etc.REFERENCEAtherton J (2008), Primark sugar buying from child labour firms, METRO BUSINESS, METRO, London. June 17, 2008. p.49.Biyani K (2007), Retail transformation Lure of huge consumer base, In Ram N. (eds.) (2007) THE HINDU SUR VEY OF Indian INDUSTRY, Chennai Kasturi Sons Ltd. pp. 285,286,291.Burgess R. G. (1982), compass Research A Source Book and Field Manual. London Allen and Unwin. Cited in, Smith M, Thorpe R and Jackson P (2008), Management Research, 3 Edition, London SAGE Publication Ltd. Chapter 7, pp. 144Leaflet, City Business Library (n.d.), I need information on India, City of London Libraries, London.Country profile 2007 India, (2007), Economist Intelligence Unit Limited, UK. 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(2007) THE HINDU SURVEY OF INDIAN INDUSTRY, Chennai Kasturi Sons Ltd. pp. 281-284.Mrs. Katarina Taggart, Store Manager, Hammersmith, PRIMARK. 1, Kings Mall, Kings Street, London. Post Code W6 0PZMr. Ashdin Doctor, Mumbai, India. e-mail emailprotectedAnita Nandi, City Representative, City office in Mumbai. E-mail emailprotectedEva George, China and India Business Development Officer, City of London, P.O. BOX 270, Guildhall, London. E-mail emailprotectedBIBLIOGRAPHYKumar R and Sethi A (2005), Doing Business In India, USA Palgrave Macmillan.