Global Retailers, India, Restricted Entry
Conducting sufficient analysis of the management issues facing organizations facilitates the identification of contextual tenets and cross-cultural factors affecting their entry ambitions in different territories. Blending the contextual analysis with adequate environmental scans generates vital interactions between the management and the prevailing environmental trends. This assists the management to identify with the international business climate and the regulatory frameworks, upon which they design the appropriate business entry strategies to embrace.
Considering that international operations rely upon forecasts drawn from the assumptions held about the future, it leaves performing horizon scans a prudent measure for Wal-mart to spot new developments in the Indian economy. Since Wal-Mart lacks the potential to eliminate all uncertainties attributed to the retail sector in India, a wait and watch approach is the ideal solution before their entry to the unexploited multi-brand retailer segment.
[...] The political atmosphere in India today illustrates that political movements lack the definite solutions to arrest the controversy surrounding whether to allow or prohibit FDIs in MBRT. The situation remains alive as most global multi-brand retailers overlook their entry prospects in India. The claim by that several foreign retailers queued their proposals to invest in India never materialized post Tesco's $110 million partnership with Trent Hypermarket Ltd (Basu, 2014). This illuminates that time is not ripe for Wal-Mart India Private Ltd to initiate its operations in the MBRT segment as it remains unknown of who comes into power and what economic policy will the government enact. [...]
[...] Conversely, there exist numerous value drivers highly compelling for the government to allow global retailers into the organized segment, especially in the organize food retail. It will RESTRICTED ENTRY OF GLOBAL RETAILERS IN INDIA 9 generate an opportunity for farmers and grocers to realize higher and realistic prices for their supplies from the abysmal levels exploited by intermediaries (Chari & Raghavan, 2012). Foreign retailers will stimulate better access to larger markets for contract farming, replicating the elimination of bottlenecks in the poultry and dairy farming. [...]
[...] World Bank Policy Research Working Paper Joseph, M., Soundararajan, N., Gupta, M., & Sahu, S. (2008). Impact of Organized Retailing on the Unorganized Sector. Techinal Report, Indian Councli for Research on International Economic Relations. Krüger, C. (2010). Trade Liberalization and Poverty. München : GRIN Verlag. Lakatos, C., & Fukui, T. (2012, June). Liberalization of FDI in Retail Services: a Fast Death Instrument for India? [...]
[...] Initially, allowing the multinational retailers to operate in the multibrand retail segment triggers increased competition, in the process threatening the existence of dominant small retailers. When the analysis remains limited to aforementioned perspective, the resulting loss of wage income from the previously employed population seems immense. To the contrary, increased competition could drive huge improvements in the retail segments through increased productivity. Equally, global retailers blend their foreign capital inflows with technology and expertise. This combination stimulates productivity and accelerates upstream growth in manufacturing suppliers (Lakatos & Fukui, 2012). [...]
[...] In addition, global organizations utilize their financial power to pursue predatory pricing by selling below the production cost. This translates to a strangling atmosphere for the domestic retailers leading to a RESTRICTED ENTRY OF GLOBAL RETAILERS IN INDIA 7 monopoly situation where foreign organizations can increase their prices at will. The application of aggressive marketing techniques enables them to capture a large market share within a short period. For instance, within a span of 10 years, global retailers gained 40% of Thailand in Poland and 19% of the China market (Mukherjee & Patel, 2005). [...]
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