International Business Management
Written Case Report
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Table of Contents
2. Country Selection and Comparative Analysis 5
2.1 Country Selection: India 5
2.2 Political, Economic, Social, and Environmental Differences 5
3. Impact of Factors on Market Access 8
3.1 Political and Economic Impact 8
3.2 Social and Environmental Impact 9
4. Cultural Differences and Their Impact on Management 11
4.1 Cultural Differences Analysis 11
4.2 Practical Impact on Management 12
Table of Figures
1. Introduction
This research focuses on the possibilities of diversifying an MNC which is at the moment mainly active in North America (New York) and Europe (London). As the trends of the global market have shifted lately, the MNC is looking forward to venturing into new markets, either in South-East Asia or Africa. The country of choice for this expansion is India which is an emerging economy in South-East Asia with a large consumer base, politically stable with a rich and diverse demographic culture.
The rationale for this expansion is to seize the opportunities of the increased need for new solutions in India and to adapt to the political, economic, social, and environmental challenges that are quite distinct from those in London and New York. Various considerations have been outlined in this report to include the factors that affect market access and the cultural factors that may affect the management of staff.
The report is structured as follows: Section one will compare and contrast the political, economic, social and environmental environment of the current locations with that of India, Section two will assess the implication of these factors on market access and Section three will consider the cultural dimension and its implication on management.
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2. Country Selection and Comparative Analysis
2.1 Country Selection: India
The country of interest for the expansion of the MNC in the South-East Asia region is India. India offers a large market, a young population, a burgeoning middle class and a relatively new receptive FDI environment to MNCs. India is one of the fastest-growing economies in the world with a population of over 1.4 billion people and a GDP of $3.75 trillion (2023 estimate) (Tripathy, 2023). Furthermore, the Indian government’s push for "Make in India" and "Digital India" initiatives make it conducive for international companies to establish a strong presence.
2.2 Political, Economic, Social, and Environmental Differences
2.2.1 Political Differences
India, similar to other major developed countries such as London in the UK and New York in the USA, follows a democratic political style. However, there are some significant variations in the policies of the governments, stability and regulations that affect the operation of the foreign businesses.
Political Stability: In recent years, India has had political stability with the central government promoting economic liberalization and infrastructure. The political environment on the other hand is stable in London and New York where policies supporting FDI are persistent. In context, the liberalization and the pro-business policies including the GST and the ease of FDI policies of the Indian government are all directed towards the FDI (Ghosh, 2023). However, problems like the complexity or instability of regional legislation, or excessive bureaucracy may cause threats to businesses compared to the clear and easy-to-compare legal systems in the UK and USA (Hill and Hult, 2021).
Ease of Doing Business: India ranks 63rd on the World Bank’s Ease of Doing Business Index (2020), while the UK ranks 8th and the USA ranks 6th. India has made significant strides in improving its business environment by digitizing bureaucratic procedures and reducing the time required to set up businesses (Sharma, 2019). However, complexities in land acquisition, regulatory approvals, and contract enforcement remain as barriers when compared to London and New York, where business operations are streamlined and transparent.
2.2.2 Economic Differences
India presents a vastly different economic landscape when compared to London and New York, with diverse opportunities and challenges related to GDP, income levels, consumer behaviour, and economic stability.
Economic Growth: India's GDP growth rate stood at 7.2% in 2022, which is higher compared to the 4.0% growth rate in the USA and the 3.6% rate in the UK during the same period (Biswas, 2023). This rapid economic growth, driven by domestic consumption and services, presents significant opportunities for MNCs to capture an expanding market base. However, India's per capita income of $2,300 (2023) is considerably lower than that of the UK ($52,000) and the USA ($80,000) (timesofindia, 2023). This lower income level suggests that product pricing strategies must be adjusted to accommodate price-sensitive consumers.
Economic Policies: India's recent economic reforms, such as the Production Linked Incentive (PLI) scheme, have encouraged sectors like electronics, pharmaceuticals, and automotive to expand their production capabilities. This provides foreign companies an opportunity to benefit from government incentives (Deodhar, 2021). On the other hand, the economies of London and New York are highly developed with a focus on services, technology, and finance. Established infrastructures, whereas India still requires considerable improvements in its supply chain and infrastructure development.
2.2.3 Social Differences
India's socio-cultural landscape is complex and diverse, presenting distinct differences compared to London and New York.
Demographics: Currently, India has a young population in which over 65% of the population is under the age of 35 (Deo, 2023). This is unlike the three countries of the UK, the USA, and Canada where the median age is 40.6 and 38.5 years respectively. Consumers in India: The younger population is also a favourable factor for the companies that operate in the technology sector and try to sell their innovative products or services to the population that is willing to experiment and upgrade its consumption. For instance, industries having high growth include education, fashion, and fast-moving consumer goods (FMCG) because of this population change (Nancy et al., 2022).
Cultural Diversity: India is a culturally sensitive country with many languages, religions and often geographical variations. This diversity plays a large role in consumers’ behaviour and marketing. In contrast, London and New York’s cultures are rather homogeneous where the first language is English and the cultures of different regions are nearly similar, India is a different ball game where businesses have to market their products according to the preferences of each region (Lopez Jr, 2020). For example, while promoting products through advertisements that were effective in large cities such as Mumbai, the same techniques may not be effective in Bhopal, where people have different customs.
2.2.4 Environmental Differences
Environmental policies and concerns differ significantly between India, the UK, and the USA, particularly in terms of regulatory enforcement and climate challenges.
Environmental Regulations: The UK and USA have strong environmental laws that require adherence to sustainable measures, carbon emission of carbon, and waste control. India has similar regulations, but implementation is hampered by organizational issues and inadequate infrastructure (Percival et al., 2021).
Pollution and Climate Change: It was also revealed that India has major environmental issues such as air pollution and water crisis. For instance, some cities like Delhi have received a poor rating for being some of the most polluted cities globally, issues that may influence operations and employee health (Hill and Hult, 2021). London and New York are more privileged in a way since their air is cleaner and they get to use more resources that are cleaner. The firms in India will have to incur costs in implementing mechanisms to address the negative environmental impacts and also follow the provisions of CSR policies (Samantara and Dhawan, 2020). For example, developing clean sources of energy and bettering disposal of waste will help a company to gain the confidence of a green consumer.
3. Impact of Factors on Market Access
3.1 Political and Economic Impact
Political Stability and Government Regulations: The political environment of India offers both opportunities and threats to foreign firms. Political risks have been reduced in the past years, and the current central government has ensured steady policies, which enable foreign investment. The government has implemented several policies like GST, which combined the burden of multiple taxes and created a single market in India. The objective of this measure is to facilitate market entry for enterprises by simplifying the question of tax compliance, which is a constructive comparison to the various tax regimes in states across India prior to GST (Rao et al., 2019).
In addition, the FDI policy of India has been liberalized, especially in the following sectors: 100% FDI in sectors like retail, automotive and e-commerce under the automatic route without any prior government approval (Investindia, 2019). This is good news for companies interested in gaining a foothold in a new market or setting up a joint venture. This can be compared to the London and New York markets, in which the environment is clearly defined and rather stable, while in India there are still problems with bureaucratic and regulatory obstacles and with the unpredictability of the situation at the state level.
For instance, the time taken to secure permissions in India is longer than in the UK or the USA. For instance, in the Ease of Doing Business Index by the World Bank it costs up to 18 days to register a business in India while in the UK it only costs 5 days and in the USA 6 days (wolterskluwer, 2020). Although the Indian government has implemented several reforms to improve efficiency, the complex regulatory framework still presents a hurdle for MNCs unfamiliar with navigating the bureaucratic processes.
Economic Conditions and Market Opportunities: India’s economic landscape is characterized by its high growth potential and a large, diverse consumer market. The country’s GDP growth rate of 7.2% in 2022 reflects robust economic progress driven by an expanding services sector and strong domestic consumption. This contrasts with the more mature, slower-growing economies of the UK and USA, whose GDP growth rates were 3.6% and 4.0%, respectively, in the same year (Biswas, 2023).
India’s rising middle class, projected to grow to 580 million by 2030, represents an attractive market segment with increasing disposable income and a growing appetite for consumer goods and services (Rajora, 2023). However, it is important to note that India’s per capita income of $2,300 (2023) is much lower than the UK’s $52,000 and the USA’s $80,000, which means the company must adopt a pricing strategy that caters to a price-sensitive market.
3.2 Social and Environmental Impact
Social Trends and Cultural Expectations: India's social environment is complex and culturally diverse, presenting both opportunities and challenges for MNCs. One key trend is the rapid urbanization and the growth of the digital economy. By 2025, it is estimated that 40% of India’s population will live in urban areas, providing an expanding consumer base for MNCs focusing on metropolitan markets (Chaurasia, 2018). The growth of digital platforms, supported by the Digital India initiative, has facilitated increased internet penetration, with about 60% of Indians having access to the internet as of 2023. This growth creates significant opportunities for companies to leverage digital marketing channels to reach tech-savvy consumers.
Regional language, religion and customs of the people differ from one part of India to another part. India is different from London and New York as the number of official languages is 22, and there are hundreds of dialects (Castillo, 2019). This means that there is a need to market differently to the various segments due to cultural differences. For instance, the use of local language and culturally sensitive images has worked well for most companies in India. Management also needs to consider religious issues—are some products and services admissible in one country considered blasphemy in another
Environmental Regulations and Sustainability Challenges: The environmental structure of India is dissimilar to London and New York in many ways, especially in the area of compliance and environmental issues. India is facing some of the acute pollution challenges, especially in air pollution. Delhi and Mumbai are among the most polluted cities globally, and air pollution affects the health of employees and the stability of supplies (bbc, 2024).
Sustainability has also become a critical factor for market access, particularly among urban consumers. Recent surveys indicate that 70% of Indian consumers prefer environmentally responsible brands (prnewswire, 2023). This trend aligns with global preferences in cities like London and New York, where consumers are highly aware of environmental issues and demand accountability from companies.
4. Cultural Differences and Their Impact on Management
4.1 Cultural Differences Analysis
When expanding into a country like India, understanding cultural differences is crucial for the successful management of staff. Theoretical frameworks like Hofstede's Cultural Dimensions provide insights into the cultural dynamics that may differ significantly from those in London or New York. Hofstede’s model identifies six key dimensions that can help analyse cultural differences between India and Western countries like the UK and the USA (Huang and Crotts, 2019).
Figure 1: Hofstede's Cultural Dimensions
(Source: ?emojtel-Piotrowska and Piotrowski, 2023)
Power Distance Index (PDI): India scores high on the Power Distance Index (77), indicating that it accepts and expects unequal power distribution. Hierarchies are deeply rooted in Indian society, and employees may be accustomed to a top-down approach, where leaders are expected to make decisions without much consultation from subordinates (Helnarska, 2024). In contrast, the UK and the USA have lower power distance scores (35 and 40, respectively), where a more egalitarian approach to leadership is common, and employees are encouraged to participate in decision-making.
Individualism vs. Collectivism: India is a more collectivist society (score of 24) compared to the highly individualistic cultures of the USA (76) and the UK (60). In India, loyalty to the group—whether it is family, community, or organization—is highly valued. Personal relationships play a significant role in the workplace, and there is an emphasis on teamwork and collaboration. In contrast, the individualistic cultures of the West prioritize personal achievement, autonomy, and self-reliance ?(Triandis, 2018).
Masculinity vs. Femininity: India scores moderately high on the Masculinity index (56), which suggests a competitive, success-driven culture, where achievement and material rewards are valued. The UK (66) and the USA (62) also exhibit masculine traits, but in India, competition often intertwines with a desire for harmony and balance. This means that while ambition is present, maintaining relationships and avoiding open conflict is also a priority (Hsu et al., 2021).
Uncertainty Avoidance Index (UAI): India has a relatively moderate score (40) in terms of Uncertainty Avoidance, suggesting a tolerance for ambiguity and flexibility in processes. This contrasts with the higher scores of the UK (35) and USA (46), where structured procedures and well-defined rules are preferred. In India, a certain level of unpredictability in day-to-day activities is common, and people tend to adapt easily to changing circumstances (Tang and Zhou, 2022).
Long-Term Orientation vs. Short-Term Orientation: India scores high on Long-Term Orientation (51), indicating a strong emphasis on perseverance, future rewards, and long-term planning. In contrast, the UK (60) and the USA (50) are relatively more similar, focusing on final results and huge returns (Hsu et al., 2021). Indian employees may value stability, planning, and sustainable growth, which requires a long-term approach to strategy and development.
Indulgence vs. Restraint: India scores low on Indulgence (26), indicating a culture of restraint, where gratification of desires is often regulated by social norms, and there is a sense of control over personal behaviour. On the other hand, both the UK (69) and the USA (68) are more indulgent societies, where people freely pursue leisure activities and personal happiness (Sun et al., 2019).
4.2 Practical Impact on Management
Communication Style: The mentioned cultural differences have far-reaching consequences for communication processes within the organization. Indian communication style can be considered more contextual and nonverbal and the focus is generally on holding balance and preserving relationships. Subordinates may not go against what their superiors say, this is because it is considered impolite out of respect. On the other hand, the British and American people are more likely to be frank and straightforward and avoid indirect language and gestures (Ting-Toomey and Dorjee, 2018).
Leadership Style: This is true since India has a high-power distance, meaning that employees expect a strict boss who is solely responsible for decision-making. Employees may be more comfortable when leaders provide clear instructions and demonstrate their authority through their actions and decisions. Conversely, in London and New York, employees expect a participative leadership style, where autonomy is granted, and open dialogue is encouraged (Goleman, 2021).
Team Dynamics and Motivation: Given the collectivist nature of Indian society, teamwork is often more cohesive when there is a sense of community and shared purpose. Unlike in London and New York, where individual achievement is highly valued, Indian employees may derive motivation from contributing to the collective success of the team or organization (Bisbey and Salas, 2019). Building a sense of belonging through group activities, collaborative projects, and team-based incentives can enhance productivity and morale.
Conflict Management: Conflict management is another area where cultural differences have a major impact. In India, avoiding direct confrontation is common, as maintaining harmony is important. Conflicts are often resolved through mediation or informal discussions rather than open debate (Rahim, 2023). In contrast, in the UK and USA, direct and constructive confrontation is more accepted as a means of resolving differences.
Training and Development: The long-term orientation in Indian culture means that employees value opportunities for career growth and skill development. Unlike the short-term focus seen in the UK and USA, Indian employees appreciate a steady and structured path for advancement. Companies should invest in training programs that provide continuous learning opportunities and demonstrate a commitment to employees’ long-term career growth (Gyansah and Guantai, 2018).
5. Conclusion
In conclusion, expanding into India presents both significant opportunities and unique challenges for the multinational corporation. The political, economic, social, and environmental landscape in India differs considerably from those in London and New York, requiring a nuanced approach to business operations. Cultural differences, such as high-power distance, collectivism, and long-term orientation, necessitate tailored management practices that emphasize hierarchical leadership, collective achievements, and indirect communication. To succeed in India, the company must understand and adapt to these factors, ensuring that business strategies align with local cultural expectations and regulatory requirements. By effectively navigating the complexities of the Indian market, the MNC can leverage the country’s economic growth, youthful population, and expanding consumer base, thereby achieving a successful and sustainable expansion.
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