India is a developing nation which needs to utilise its natural resources in an optimal fashion in order to create wealth for the nation . As a nation our major strenghts are skilled manpower , technical skills , access to modern technology & ecenomical costs of labour . However we also have certain inherent weaknesses like poor infrastructure , lack of literacy & a great number of people living below the poverty line.
International Entrepreunership will benefit our country in the following ways
- It will develop industrially with some infrastructure a part of India where the project will be set up.
- It will aim to generate employment amongst the local people & the functioning of this firm will benefit the community at large.
- Its products & services will add to the GNP /GDP & will be a source of tax collection for the government besides contributing to increasing the basic standard of living & per capita income.
- It will earn valuable foreign exchange will India badly needs to reduce its balance of payment position . The future commercial strength of India will depend on the ability of its entrepreuners & other established companies to take advantage of markets outside the countrys borders.
Suggestions for building Indian MNC
Before an entrepreunership organisation thinks of doing buisness on foreign soil it should first consolidate & have preferably leadership foot hold in the domestic market. It should have encountered any of the following conditions
- Saturation in local market
- Declining market size in India ie de-growing markets for its products
- Has core competency in existing field of business with spare capacity & hence looking to expand in terms of geographical boundaries .
Under such conditions a producer of goods & services should look forward to cross boundaries into other nations to sell his goods & services . They should start off by tapping neighbouring countries before expanding to further areas.
Before an Indian entrepreuner thinks of doing business abroad he must understand how international business differs from his local business . The key to his success lies in being able to understand the above & respond accordingly. International entreprenuerial decisions are more complex due to the following factors
- Economics – Creating a business strategy for a multi country area means dealing with differences with levels of Economic development, currency valuations , government regulations , banking , systems as well as market /distribution systems . The extent of the quality of these factors significantly impacts the ability to succesfully engage in international business .
- The countries balance of payment (BOP)- differenec between imports versus exports effects the valuation of its currency & hence effects its ability to do business with developed countries.
- Political enviornment – The difference in political & legal environments across international markets pose different cahllenges in doing business in foreign markets.Each element of the business strategy of the inmternational entreprenuer can be effected by political/legal
- Culture – The impact of culture on Entrepreuners is significant with respect to the strategies that they intend to employ. Each element of the business plan has to have some degree of congruence with local culture . Understanding local culture is essential to development of the entrepreuners worlwide strategy plan, the degree of adaptation & standardisation would vary in each country.
- Technology – Like culture varies significantly across countries & industyr standards vary from country to country .
Hence the major steps should be
- Stage 1 – make initial movements into international business following a highly centralised decision making process. Tread carefully & start up operations through direct or Indirect exports. In this stage the entreprenuer & his organisation undergo the learning & experience curve effects which will help in the long run
- Stage- 2 – Once the business is succesful & the organisation ahs managed to transfer its competencies across borders into many countries, the decision making process has to get de-centralised. The firm could employ a multi country strategy by tailoring its producst to suit each countries preferences & culture or go in for high degree of Integration & standardisation.
- Stage- 3- Once decentalisation is carried out the HQ should retain tight control overr strategic decisions & tactical implementation of corporate strategy.
Trade barriers
- Import quotas particularly imposed by developed nations on goods allowed from developing nations .
- Local tariffs / import duty in developed nation making indian goods non-competitive.
- Subsidies to local manufacturers makes imports unviable
- Trade blocks & free trade areas between developed nations & their neighbours encourages trade between them For e g EU countries , NAFTA etc. which reduces indias chances of doing business in these sectors.
Trade barriers increase an entrepreuners cost of exporting products & hence such incrased cost will force entrepreuner to establish the manufacturing base in those countries to surmount such barriers .
Favourable Conditions
The indian government is encouraging international entrepreunership by offering the following initiatives.
- Tax sops on export earnings
- Setting up of export processing zones close to ports
- Waiver of import duties on essential RM meant for processing export goods
- Waiver of sale tax, octroi & other govt. levies on export goods
- Providing for cheaper land to 100 % EOUs