Sample: Implementation of International Business Strategy, MNC operations in Indian markets

2.5 MNC operations in Indian markets

Economic internationalization has gone through the dramatic transformation. What was formerly a world of super powers rules by economic power house countries, has now become a world of large emerging trading blocks. With the fall of the Soviet Union, the United States was left as the world’s dominant economic power-house. In order to exhibit some of their own economic strength, the European Union (EU) was formed so that the collection of smaller European countries could band together and economically compete with the United States. This union is not just a trade agreement but includes an integration of currencies, banking systems, stock exchanges, etc. The formation of the EU has triggered other regions of the world to consider their own economic plight and similar trading blocs have emerged in the Americas and in Asia. The major trading block groups that have emerged are the North America Free Trade Agreement (NAFTA) which initially includes the United States and Canada and later includes Mexico and soon Chile. Apart from these trading blocs several Asian countries have emerged as major attraction for business opportunities of which the most important ones are China and India. Indian markets are essential for European Union (EU) companies, which has already started taking advantage of Indian markets. It is to be noted that Indian markets are large and diverse that are growing with increasing purchasing power and consumerism in the country. Various opportunities have been provided by Indian markets because of the low cost sourcing of products and services and the availability of strong intellectual skills that are helpful to provide a competitive advantage to the MNCs operating in India. The investments made in Indian markets have been yielding good returns. However the road to success has not been easy and companies have to face several challenges to operate in Indian markets in a successful manner. These hurdles or challenges include the bureaucratic hurdles, process of government resulting in difficult environment for business operations, low average disposable income with population which is highly diverse in nature and dispersed along with having wide differences in tastes, nature, beliefs and lifestyle. Furthermore the weak infrastructure of the country also acts as a big challenge for MNCs operating or planning to operate in Indian markets.

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