International Business Environment of India Research Paper

Excerpt from Research Paper :


Socio-Cultural Environment

Home to the world's tenth largest economy and second largest population, India defies swift generalization. It includes a vast range of developmental situations, cultures, languages, and climates. The country remains largely rural, with just 26% of its people living in cities. Yet in 1995 it had over 30 cities of one million or more residents, including three of the world's 20 largest cities -- Bombay, Calcutta, and Delhi -- according to United Nations estimates (The Anguish of India, 1997).

Currently Indian labor laws, regulations, and workforce standards are very outdated. India is plagued with corruption. India has been ranked 9th in a list of 75 countries where dishonest practices are common, which is indeed an uncertain distinction. The corruptions, delays, bureaucratic red tape, and archaic labor laws are ingrained in India's business culture. These pitfalls have deterred foreign investors from investing in India (Stokes, 2003).

From the market standpoint, people of India make up different segments of consumers, based on class, status, and income. An important and new development in India's consumerism is the appearance of the rural market for several basic consumer goods. It is thought that about three-fourths of India's population lives in rural areas, and contribute one-third of the national income. This rural population is extended all over India, in close to 0.6 million villages (Chennai, 2005).

The Indian consumers are well-known for the high degree of value orientation. Such orientation to value has tagged Indians as one of the most discriminating consumers in the world. Even, lavishness brands have to design an exclusive pricing strategy in order to get a foothold in the Indian market. Indian consumers have an elevated degree of family orientation. This direction in fact, extends to the extended family and friends as well. Brands with characteristics that support family values tend to be popular and accepted easily in the Indian market. Indian consumers are also linked with values of nurturing, care and affection. These values are far more overriding than the values of ambition and achievement. Product which converse feelings and emotions are often received well with the Indian consumers (Chennai, 2005). The Indian economy had been thriving for the past few years. The country has held great promise for the future. Liberalized foreign policies have unleashed the entrepreneurial spirit of its people and many multi-national firms (Doing Business in India: A Cultural Perspective, 2004).

Availability of resources

The major natural resources of India are iron ore, bauxite, and copper ore. India is one of the main producers of iron in the world. Iron ore is located all over India, the major places being the states of Bihar and Orissa. A quarter of all mining is done in the southern part of Orissa. Gold, silver, and diamonds make up a tiny part of additional natural resources that are available in India. The gemstones are found in Rajasthan. Major segments of the energy in India are produced from coal. It is thought that India has about 120 billion tons of coal in reserve, this is thought to be enough to last for around 120 years. Huge assets of petroleum have been established off the coast of Maharashtra and Gujarat (Natural Resources, 1999).

Electrical energy generated by hydroelectric power, coal, and nuclear energy. Half of the hydroelectric power is formed by snowfield reservoirs high up in the Himalayas. Huge dams have also been built across many major rivers to produce electricity and water for irrigation. In villages throughout India, people use wood or dried cow-dung cakes as fuel for cooking and heating water. The command for firewood and the increasing population is moving the existing forests. It is expected each year 3.7 million acres of forest are cut down in order to provide timber, paper pulp and firewood (Natural Resources, 1999).

India is home to a large collection of human resources that is made up of educated, English speaking, tech-savvy workers. Every year, there are about 19 million students are enrolled in high schools and 10 million students in pre-graduate degree courses throughout India. Furthermore, 2.1 million graduates and 0.3 million post-graduates pass out of India's non-engineering colleges. These figures give the idea of human resources accessibility in India (Human Resources, n.d.).

Concern for Ethics and social Responsibility

India has a long rich history of close business involvement in social causes for national development. In India, CSR is thought to be from ancient time as social duty or charity which through diverse ages changing its nature in broader aspect, now normally known as corporate social responsibility (CSR). From the source of business, which leads towards excess wealth, social and environmental issues have profound roots in the history of business. Over time four different models have appeared all of which can be found in India concerning corporate responsibility. India has had a long tradition of corporate philanthropy and industrial welfare has been put to practice since late 1800s. Philanthropy is practice of doing well to one's fellow men. It is not a relationship, and therefore corporate philanthropy often does not have stakeholder's interaction and responsibility as a focus, unlike CSR. CSR on the other hand is under taken by the company not along charitable lines or with the "intent to do good" but also building of a good public image. It is transnational corporations under global ideological influence, and the need to engage with all stakeholders that introduce the concept of CSR on to the India horizon (Das Gupta, 2007).

In a diverse and complex country like India, it's difficult to impart generic conclusions that could be used by those wanting to do business here. Regionalism, religion, language and caste are all factors that need to be taken into account when doing business in India. Behavior, etiquette and approach are all modified depending on whom you are addressing and the context in which they are being addressed. Unlike western societies, in India religion, fatalism and collectivism are all components of daily life and they need to be respected for healthy and successful business relationships. Despite the traditional caste system being dismantled, remnants may still be witnessed in the Indian hierarchical structure of business practices and decision-making. There is a strong sense of tradition tied into daily business practices. Yet, signs of change are becoming more evident. Ever since the economic reforms began in 1991, India's market is growing rapidly. With its geographical positioning in the Indian Ocean, a major international trade route, and with its rich mineral and agricultural resources, India's economy is witnessing increased inflows of foreign investments. India is also recognized for its competitive education system and vast pool of highly skilled laborers, making it an attractive market for foreign businesses. No matter what the industry is, foreign businesses should expect some degree of differences in business norms in India. Included below are some basic business etiquettes that the U.S. companies should follow when developing and maintaining relationship with Indian businesses (Doing Business in India, 2010).

Doing business in India involves building relationships. Indians only deal favorably with those they know and trust, even at the expense of lucrative deals. It is vital that a good working relationship is founded with any prospective partner. This must take place on a business level, i.e. demonstrating strong business acumen, and at a personal level, i.e. relating to your partner and exhibiting the positive traits of trustworthiness and honor (Doing Business in India, n.d.).


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Online Sources Used in Document:


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Cite This Research Paper:

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