India Is Not an Easy Market to Understand and Operate in. Essay

1298 Words Nov 23rd, 2011 6 Pages
1. “India is not an easy market to understand and operate in.” Why is the Indian market untenable for Multinational Companies, yet at the same time attractive to global businesses? Discuss.

It is true that India is not an easy market to understand and operate in. MNCs have realized this the hard way as their expectations have remained unfulfilled, and many have either suffered reverses or have had to wrap up their operations. Unable to figure out the reason for their failure, they have chosen to blame the market as erratic and fickle in its behavior.
But this is not true as there is more to India than meets the eye. This country came under the global spotlight only in 1991 when it embraced economic reforms and allowed FDI. Before that
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In addition to this, what further makes India untenable for the MNCs is the fact that while it may have been exposed to modern options only now, there already exists a hybrid market of the traditional and modern as well as the Indianized versions of international options which are available at several price-performance points. For example, the retailing environment which offers street markets of every level of sophistication some of which sell export surplus goods which are outsourced from India and are sold at very low prices which provides competition to foreign brands.
Therefore, while the Indian market was unexplored by foreign brands before liberalization, it was certainly not a virgin market and had a sophisticated distribution network and some well-nurtured brands promoted with the help of very skillful advertising and thorough market research.
Another aspect that makes the Indian market untenable for the MNCs is their lack of understanding of the fact that the emerging markets such as India are not what the developed markets were in their infancy which makes the contention, that Indian consumers are today like what American consumers were 20 years ago, wrong. The Indian market exists in real time, is acted upon by all the forces of today and is a product of its own unique consumer culture and evolutionary history which we discussed earlier.
Despite these disappointing realizations of the MNCs, the

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