Table of Contents
The average rate to pay the staff in India.
The attitude of local consumers.
Strategies for transferring fund.
Relationship with banks in the country.
Number of holidays in India.
Strategy to Enter in India.
Bunning group is the leading retailer of hardware in both Australia and New Zealand. The company was founded by 1984 and is owned by the Westfarms. It generated revenue of $13.1 billion in 2019 and thus it is thinking to expand itself in the international market. The assignment aims to identify possible strategies that the firm can adopt for engaging the consumers, if they plan to expand internationally. It is because analyzing strategic opportunity is very important as it helps in making an ethical decision for entering the international market. The entire assignment is thus based on international strategies for entering in India.
The average rate of the salary in India is low in comparison to other countries. The country ranks on 112th of 164 countries in the world. India is known for getting skilled labours at a very low rate. It is due to this reason most of the company hire people from India (Banerjee 2016, pp. 349-358). However, since Bunning group is thinking to expand its business in India. It would be very beneficial for the company as the per capita income of a person should be $1670 per year. India has highly skilled people who can do justice with managerial jobs like being CEO, CFO and so on. Google's current CEO, Sundar Pichai is also an Indian who is currently leading the world’s biggest company.
Local consumers in India rely on foreign companies more instead of local companies it is an impact of colonial mindset. Through research, it was found that people in India have an inferiority complex towards their culture. The reason behind this mindset is the colonial rule of the British for more than 200 years. Despite celebrating 76th Independence the consumer or the local people still have self-loathing Indian mindset. Many of them are affected by the bandwagon effect which states that if someone has purchased an item, the other one also wants the same item. It is because they link the products with status (Sun et al. 2017, pp. 91-109). In India, most of the people believe that having a nice meal at some fancy restaurant and buying a foreign product is status. Moreover, foreign companies in India spend huge amounts of money on advertisement and campaigns. It is also found that foreign companies emphasize more on branding. They even select popular stars for being a brand ambassador for the company so that people get attracted to them. Another concept in the mind of the consumer is that foreign brands provide excellent quality and maintain the high standard which is not available in the local brand thus most of the people are attracted towards foreign brands.
It is easy to transfer fund and use all the amount that has been collected from profit earnings. The company members can take the entire money and can invest in the corporate in Australia after paying a certain amount of tax to India.
Big three banks of Australia operate in India. These include ANZ, NAB and Westpack. Even Indian banks operate in Australia. This indicates that the relationship of India with that of Australia is good (Mohanty and Sarkar 2020, pp. 227-242). It also states that investing in India is worth every penny as it has its advantages. The banks of Australia to convert every opportunity must tie-up with local banks in India.
It is during the festival season when the work gets little disrupted in the country in comparison to normal days. India is a festival of land is it a national or festive holiday. It has quite a large number of public holidays right from the beginning of the year to the end. Some of the festivals on which people get a holiday are Holi, Dusshera, Diwali, Christmas and so on (Barrera and Garrido 2018 pp. 473-485). Generally, during this period, the sale of technological products is seen to get down but the sale of other products like clothing's, sweets increases. It is between these days the work of the company may get disrupted. Also, the 4th and 2nd Saturday of every month is a public holiday for the bank. The work even gets slower during this period of the month.
Statistics states that GDP rate of India has declined by 23.9 per cent during the first quarter of the financial year. GDP rate of the country in 2019 was $2875.14 billion. Sharp declining steep in the graph of the gross domestic product is due to novel Coronavirus 2020. According to Statista, the inflation rate has decreased in comparison to the previous year by 1.20 per cent. It was 4.54 in 2019 and it has reached 3.34 per cent this year (Das and Das 2020, pp. 21-26). It is also observed through the findings that even the interest rate of the country has reduced drastically. Currently, banks are offering the range between 3.50 per cent up to 9.75 per cent to a senior citizen of India. The rates in comparison to the previous year are very low. The chances of things returning to the position by the end of 2020 are very less. It will take a lot of time to get things normal again.
Mode of entry in the country is one of the fundamental decision thus the company needs to analyze on every aspect before deciding for it. The best entry mode of the country right now is to enter with merger and acquisition instead of an independent brand. The situation in India had changed after COVID-19. The prime minister of the country, Mr Narendra Modi has urged people to become vocal for local during the crucial period it would be best if Bunnings group acquire a hardware manufacturer company in India. The biggest advantage of this mode of entry-level is revenue synergy (Moalla and Mayrhofer, 2020 pp. 135-145). Bunnings along with the other hardware company will be able to generate more revenue than it can alone. It will get the benefit of the already maintained consumer base as well as new consumers will also get attached to the company. It is also observed that cross-selling has huge potential. Integration of both companies will result in the cross-selling of the products manufactured in the country. Apart from this, the integration will also help the company to compete with local competitors in India. The merger will also help them to find out new areas where they can compete. From all the above aspects buying a local firm will be the perfect option.
It can be concluded from the above findings that India is one of the best opportunities for foreign companies to expand their business as it is very easy to do business in India. Moreover, the country's local consumers have a craze for the foreign brand which is a plus point for the company. The economy of India is very strong and it has the potential to even overcome the recession that has come due to coronavirus. The best mode of entry in India for Bunning group is to buy the local company. It will help in generating more revenue than an independent company. All the above-mentioned strategies will help the company to overcome the challenges of the foreign market.
Banerjee, M.M. 2016. “We routinely borrow to survive”: Exploring the financial capability of income-poor people in India. Social work, 61(4), pp.349-358.
Barrera, F. and Garrido, N. 2018. Public holidays, tourism, and economic growth. Tourism Economics, 24(4), pp.473-485.
Das, T. and Das, D. 2020. COVID-19 and Economic Loss of First Phase of (21-Day) Lockdown in India. Space and Culture, India, 8(1), pp.21-26.
Moalla, E. and Mayrhofer, U. 2020. How does distance affect market entry mode choice? Evidence from French companies. European Management Journal, 38(1), pp.135-145.
Mohanty, B. and Sarkar, S. 2020. Impact of Bank-Specific and External Factors on Profitability: An Empirical Study of PSU Banks in India. Journal of Asia-Pacific Business, 21(3), pp.227-242.
Sun, L., Zheng, X., Su, M. and Keller, L.R. 2017. Intention–behavior discrepancy of foreign Versus domestic brands in emerging markets: The relevance of consumer prior knowledge. Journal of International Marketing, 25(1), pp.91-109.
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