Pest Analysis


Former India prime minister, Rajiv Gandhi took first step in reforming India economy when he became prime minister. However, the major impetus for was initiated back in 1991 when Manmohan Singh and former finance minister undertook a series of policy in an effort to balance of payment crisis. Some of the efforts are, no industrial licensing required, tariff levels were lowered, exchange rate policy was change and improved, and foreign investor were granted equity by 51 percent in their ventures. Corruption is most common thing in India (Bardhan P., 2009). This is based on multi-veto power of different authorities on a given decision. Thus, even paying bribes to one authority does not confirm the job will be done. Despite that, elections held in India become more expensive for the politicians and urge them to be actively lookout for collecting fund. But, there are solutions to this problem when institutionized efforts to surveillance the corruption sources. For example, Right to Information Act had been established as a result of public activist movement that against practice of corruption.


Both India and China population encompass nearly 40 percent of world's population and their economic performance nearly accounts almost 25 percent of overall gross domestic product (GDP) (Kumar R., 2007). In relation to these facts, there is various consensus that India not only has grand potential, but also has begun to realize the potential. Since 1991, liberalization has continued unabated with economy of India's growth is more than double during this period. This growth is driven by expansion of information technology and domestic consumption which is important for any country. According to research by McKinsey Global Institute (MGI) indicates that in two decades Indian incomes are likely to grow three-fold (Website: India Brand Equity Foundation). As a consequence to this, India will be fifth largest consumer-good market with US$400 billion by 2010 (Kumar R., 2007). With India become economic superpower, thus, many investors organize business strategy to venture into India's market. For example, General Electric, L.G, Sony and Levi's are among the countries that interested in entering India market.


Before foreign investor venture business in India, it is better for them to know the culture that mangers hold when dealing business. Managers in India represents by both collective and individualistic values. As for collectivist, manager in India tends to be sensitive to the needs and wants of their subordinates or group mates. Whereas, manager that hold individualist value in India sometimes can be very aggressive and goal oriented in their management style. As a consequence to this, western manager may find it hard to apprehend the behavior of their business counterpart. Despite this, Indian culture is very hierarchical, which means that, decisions are made at very top thus decision-making process may be very slow.

Communication in India follows the high context (HC) culture. People in India, talks in respectful manner when communicate with an elderly person. Despite this, India English is poetic and formal, and sometimes elegant and imposing forms of speech. Mehrotra (1995) states “It is very polite expression of humility, honorifics and respect terminology”. However Chella (2007) argues that Indians are moving toward low context (LC) culture. It is based on four T's; technology, trade, travel and television. A western manager, who does not aware of these cultures, may face difficulty with some of cultural differences that maybe they confronted with.


With most of the industries threatened by piracy in India, intellectual property (ip) owners are taking caution of this problem by protecting their assets either tangible or intangible. Not only they register their product in respective regimes but also keep eye on their products. The intangible property poses big threat through fake products that overrun the markets. In relation to this, the software industry losses almost 29.28% of total market share. In order to prevent misuse of ip, some of the owners liaise with police to conduct raids. Rising demands from the owner of ip, several bodies such as Federation of Indian Chambers of Commerce and Industry (FICCI) together with the Department of Industrial Policy and Promotion (DIPP) and Ministry of Commerce and Industry have been established to prevent such activities.

Recent studies on innovation in India shows top four technological fields of innovation are audiovisual technology, telecommunications, information technology and semiconductors. Patent count has been chosen as indicator of technological innovation. For instance, India had second highest with 3679 in patent count behind China (Tseng C. Y., 2009).

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