Before opening an enterprise in a international country we have to analyze the market in which we will enter. We have to understand how country variables have an effect on our business whether in positive or negative ways. The first part of this paper includes market success evaluation in which I will discuss market size, resources, regulations and procedures, and risks. The second part will touch after the problem of market entrance analysis. And the 3rd part will move ahead with a conversation of market accessibility execution strategy.
II. Market success analysis
Market size (potential to earn a living by providing the service), Resources (educated or no educated laborers, professional services, raw materials), Regulations and Strategies (authorities red tape, tasks, and fees), and Hazards (financial, protection, and competitive).
Indian market has a huge potential and this is discussed by the actual fact that India is the second most populated country on earth. In India, there are 7-8 million internet users (including 2 million - readers of ISPs). Total human population of India is 1 billion people. In Indian companies, there are 5 million personal computers. Thus, two thousand Internet cafes are an important way to get access to the Network for Indian users. The amount of Internet cafes in India is increasing constantly. Specifically, for example, the business Satyam Info way Ltd is likely to open a string of 500-600 and cyber cafes in the united states. This is a very significant part of the popularization of the Internet, because until just lately such a cafe located only in the four major Indian metropolitan areas - Delhi, Mumbai, Bangalore and Madras. Further improves the significance of the step, the fact that other options for usage of the Network for the Indians, almost sealed. For instance, home Access to the internet, in reality, still a aspiration for these people, because even today for the 100 residents of the united states accounts for no more than three phones. All in all, I consider Internet cafe in India to be very attractive. The fantastic number of population involved in this sector will influence my business only in an optimistic way.
Resources (educated or non educated laborers, professional services, raw materials)
The labor force in India is one of the cheapest on earth. In India there are a large number of British qualified employees. This escalates the size of the Indian market and allures foreign companies to determine organizations there. India is the greatest exemplory case of countries that suffer from the situation of child labor. In my own judgment it is obvious to all or any that in India children without education are being exploited and obligated into labor. You will find about 60 to 115 million working children in India - the best number on earth (Human Rights Watch 1996, 1). In a single way the fact that Indian labors will be the cheapest it can be an advantage to hire children without education for food service staff and underpay them. But there is a disadvantage too. For instance, I can't retain the services of uneducated IT experts, administrators because they're the crucial part of my business. AM I GOING TO prosper or lose generally it will be based upon them.
There are many Internet cafes in India which provide different services. Almost all cafes provide more than access to the Internet. Also Internet cafe serves with food, drink, playing room for children and perhaps it is crucial factors to be one of the most notable cafes. Moreover there's a professional cafe in Delhi for companies and businessmen.
Another very essential requirement is raw materials. As concerns Internet cafe I need to hire a building, buy dining tables. Also I want cordless Internet and food & drink services. So My Internet cafe will have an opportunity to get recycleables right in India.
Regulations and Procedures (authorities red tape, obligations, and fees)
India has well-establishes rules of law, secure political environment. As I discussed in prior paper for establishing business in India I have to obtain authorization from the Reserve Loan provider of India to conduct any activity in India, trade, office or other office. To set up application for such authorization I must go to the Office of the Reserve Bank or investment company in Mumbai. Bureaucracy and corruption impact business in India. Starting an enterprise with agreements in India is very difficult. India has the worst levels of red tape. It takes lots of your energy to run the company whenever there are many regulations. Similarly it is negative impact on my business but if we will think in another way we come up with a thought that government regulations and laws and regulations protect modern culture. And it appears to me a country that cares about people attracts foreign firms regardless of its rules, restrictions, and obligations.
Local companies in India are taxed on income from all resources in India. However with an accordance of the TAX Act overseas companies are taxed on income gained through business connection in India or from other Indian resources. If a international company does not have any business with India, and the income is not taxable. Duty rate for local companies is 33. 22% as well as for overseas companies is 42. 23%.
As I will create a foreign company of course I am going to pay taxes. Fees are very high. But duty rates were lowered in recent years with the government's goal to broaden the duty base and ensure higher observance. In my opinion, India can be an appropriate spot to set up an enterprise. Actually, the taxation is very high; however the political environment is stable and well-established.
Risks (financial, protection, and competitive)
In fact there are good and bad sides establishing business in the country where the human population is seemingly at its maximum. Everyone understands that India continues to be facing scarcity of skilled workers and therefore it is high-risk for my cafe to employ residents. To raise the production of the company I would like to own good qualified workers.
Today India is one of the quickest growing economies. Federal government urges foreign firms to invest in the business enterprise and by this to lead the progress of economy. Monetary reforms are directed to modify the current economic climate. The question comes up if to purchase the business?? In any case, each company has a risk that either it'll be burned up with the money or the reverse part to climb up. As India is a quickly growing economy, I believe that it minimized the potential risks of Internet cafe.
India founded by the judicial system, complex legal and accounting systems and convenient infrastructure offers overseas companies the possibility to feel in a safe environment that ensures safe long-term marriage. Vibrant and highly competitive private sector in India offers great opportunities for international companies, developing a competition among companies. As mentioned, there are many Internet cafes in India, and because of this we need to learn some market entry strategies to be able to succeed in this business.
III. Market Accessibility Analysis
Each folks would like to flourish the business enterprise. In order not to fail in the original stages we must select the right market entry strategy. You can find main market admittance strategies: immediate investment, joint ventures, licensing, franchising, exporting and importing, turnkey job, and management deal. I'll create my business in India and therefore I have to choose the best strategies considering culture of an chosen country, consumers and so on. I think the best entrance approaches for my business are Franchising, direct Investment, and JV.
Franchising is a widespread-known online marketing strategy. Let's discuss what does Franchising mean? Franchising can be an agreement between organizations that one firm make an arrangement with a different one firm to market its products. The second firm has the right to obtain the brand and the brand of products. You can find disadvantages and advantages of this market strategy access. Advantages are that franchising provides an opportunity for the second firm to grow rapidly and to be widespread-known. Also this company is sure that the product will be in demand since it is brand. The benefit of the first company is that it makes more cash by providing its products to another company, franchisee. Investing in a franchise you will get a support from franchisor-advices, training support, and help for jogging business. Down sides are constraints from the franchisor in working the business; you have to share with a earnings with franchisor and also franchisee can ruin the good reputation of the brand. I think using franchising strategy Internet cafe will endure and prosper because my business will operate on proven ideas.
The second entrance strategy is Foreign Direct Investment. Foreign immediate investment (FDI) is now an increasingly essential aspect in economic development. In recent years increasingly more of an increase in foreign immediate investment is discovered. Foreign immediate investment (FDI) occurs when a company invests in facilities to create the product internationally. The creator of the business is the owner.
Invested money stimulates economic growth
Domestic producers can become more efficient
Country has more stakeholders
If local companies uncompetitive they may suffer
Rrequires a higher level of resources
The immediate investment strategy has more advantages than disadvantages and thus this plan is the right strategy for my business that may increase our efficiency.
The previous strategy is a joint venture. A joint venture between foreign companies is a favorite strategy today for both companies to attain their goals. Each spouse has the chance to get their advantages from the comparative benefits of others. Local companies can provide knowledge about home and overseas companies may offer know-how and usage of foreign clients. Like other strategies jv has advantages and disadvantages. When developing a joint venture company comes with an opportunity to gain new experience and advanced knowledge in technology. Also, the company has an usage of important resources, staff and technology. Furthermore companies share the potential risks with somebody plus they become adaptable. Companies can sell the business to another mother or father company. Approximately 80% of all joint ventures in the end are sold. So, these are advantages of jv and let's take a look at disadvantages. It needs a lot of time and effort to build a proper and strong relationship and cooperation with other business and so there could be some problems if the target of the business is not communicated to all parties or incorrectly communicated.
There can be an imbalance in the level of knowledge, opportunities or property are detailed in the company by various companions. Different cultures and management styles contribute to deterioration of co-operation. To be able to succeed you will need to carefully analyze the targets. I think that this strategy is an befitting my business I will set up. But I really do not want to share my business with someone else even though with somebody operating business would be easier.
After all research that was provided by me I have chosen that the best market accessibility for my business is Foreign Direct Investment (FDI). WHEN I discussed it earlier, this plan is appropriate for my business than another two. Because using FDI strategy you can be the owner of the company and this is what I mainly want to. Another reason I decided to choose FDI strategy is the fact that I can control all procedures, to know consumers needs. Furthermore FDI strategy has legislation political hazards because India is politically stable country. That's the reason I settled on this decision.
Market Accessibility Implementation
To become successful in my business I made a decision to choose FDI market entrance strategy. I have to decide how I will implement this plan. At the original stage of opening an online cafe, I should control all activities that will be designed to create my business. Personnel performs an important role in my business and to attract people to my cafe, I have to carefully choose informed, very skilled and courteous people. Also I'd like to possess employees whom I could trust. Each of us understands that the success and prosperity of the business is our clients and to attract them it is vital to select staff that will meet all the needs of clients. Since I am not the citizen of India, I have to understand that for me there are specific rules that I need to follow. I have to determine the budget, control all costs also to be certain that I possibly could pay all charges. Also I will have start-up capital that would help me to open a company in a international country.
In order to move in advance my cafe I have to create a online marketing strategy that is totally new, something that no-one has it. Developing a Marketing Strategy will save me lots of money. Many business owners don't want to do it because they don't really know where to begin and they feel they don't really have the time to spend on it. I want everyone in India to learn about my Internet cafe and have a vivid impression.
Summing up I'd like to state that India is the best option to run my business. There are a few positive (political, legal environment) and negative aspects (taxes, red tape etc) that will impact my business. But I am aware easily want to accomplish my goal it is necessary to work very difficult and make an effort to success.
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