INDIA

India's Business Environment



India's Business Environment

Introduction

Samsung Electronics Co. Ltd. (SECL) is an international leader in semiconductors, telecommunication, digital media and convergence technologies. The company is a market leader in more than 13 different products (www.samsung.com). Samsung has an employee base of more than 100,000 in 46 countries. The company is distributed into six essential business units. These include: Digital Appliance Business, Corporate Technology Operations, LCD Business, Semiconductor Business, Telecommunication Network Business and Digital Media Business (www.ibef.org).

Samsung India initiated its operations in India in 1995. In 2004, Samsung India was designated as the regional headquarters. The purpose is to integrate Samsung's South West Asian markets through India. This bloc of Asian countries include: Sri Lanka, Bangladesh and Nepal. Samsung already understands the significance of India and thus classify the country amongst the 6 most strategic markets in the World. The other major markets include: China, US, Germany, Russia and Thailand (www.ibef.org).

Samsung India established its manufacturing base for the TV segment in 1997, microwave ovens in 2001, Air-conditioners in 2002 at Noida, located in the state of Uttar Pradesh. Furthermore, two state of the art Research and Development facilities have started its operations in the cities of Bangalore and Noida (www.ibef.org).

With growing demands of smart phones, Samsung has displaced Indian market leaders in the category such as Nokia and Apple in 2012 (Aulakh, 2012).

The aim of this research is to provide a comprehensive guideline regarding further investments by SECL in the Indian markets. The paper would reason through the political, economical, cultural and other market related dimensions of Indian economy to access and conclude the viabilities of future investments in the country.

Main Text

Political Factors in India

A 2012 report published by Standard & Poor's, term their new research on India as “Will India be the First BRIC Fallen Angel?” Amongst the BRIC nations include Brazil, Russia, India and China. These countries are considered as the new heavyweight economies in the 21st Century. With abundance of resources both human and natural, these countries have witnessed an outstanding growth in the annual GDP rates year on year. The increasing growth trend was irrespective of the recent global financial crisis that hit the world economies. Though, Standard & Poor's 2012 research report indicate that the GDP growth in India is slowing. Coupled with political hindrances to economic policymaking, India could well suffer a setback in terms of downgrade in Standard & Poor's 'Investment Grade' rating. The outlook on India's long term 'Sovereign Credit' rating of 'BBB-', is adjusted to negative from stable in April 2012. Furthermore, the assigned rating is only one position above the speculative grade. The bases for such changes were formed due to reduced GDP growth forecasts, threats of decline in external liquidity and investments, and lack of fiscal flexibilities (Mukherji & Ogawa, 2012, pp. 2). This negativity in outlook also demonstrates the risks associated with expected action of Indian policy makers. These expectations suggest inadequate and timely reactions to imminent economic shocks by the policy ...