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CASE ANALYSIS
Indian business going global
Ramaiah institute oI management studies



















MUZAMIL QUADIR
RIMS
(81108)
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-897,.9
%he Iollowing case basically relates to emerging trend oI Indian companies going global Ior
Iurther expansion and growth. As given in the case that britishers ruled India Ior years and ruined
its corporate culture and thus India was leIt with no option other than Iollowing the policies and
protocols laid down by the Englishmen. %he Iollowing case basically covers some oI the reIorms
and acts which were laid down by the government in the past, but later they were liberalized or
completely abolished, in order to gear up the growth oI Indian Iirms. %he basic Iocus oI the case
is on the Iirms that have made a way to the global markets and what were the opportunities and
threats posed to them in the way oI going global. Certain acts like Ioreign exchange regulation
act, industrial licensing act and L.P.G act i.e. policy liberalization, privatization, and
globalization(1991) was implemented by Dr. Manmohan Singh(Iinance minister at that time). I
will be discussing the global aspects which are to be taken into account by a Iirm prior to going
global and scope Ior current Indian mnc`s in the other untapped countries.















lndlan buslness lrom local Lo global



BeIore 1947when India was a colony oI British, the pattern oI her Ioreign trade was typically
colonial. India was superior oI Iood stuIIs and raw materials to the industrialized nations,
particularly England. %his dependence on Ioreign countries Ior manuIactures did not permit
industrialization at home; rather as oI competition Irom British manuIacturers the indigenous
handicraIt suIIered a severe blow. BeIore Second World War, India was Iorced to export more
than its imports in order to meet the unilateral transIer oI payments to Britain in the shape oI
salaries and pensions oI British oIIicers, interest on sterling loans and dividends on British
capital invested in India. During the Second World War, there was a basic change in nature oI
India`s international trade. She began exporting to Britain large quantities oI goods, but the
engagement oI Britain in the war did not permit her to export to India adequate quantities oI
goods in return.
India has had high growth Ior the past 6-7 years. Even aIter that, it`s per-capita income, PPP
adjusted per-capita income, and per capita GNI (as reported by the World bank) are below that oI
many sub-Saharan AIrican countries. 'Rate oI growth and 'wealth is not the same thing.
More than a decade oI liberalization and continuous eIIorts on part oI Government has opened
new avenues Ior Indian Entrepreneurs. In recent years, Indian companies have started taking
initiative to move into global market.
INDIN BUSINESS GOING GLOBL
More than a decade oI liberalization and continuous eIIorts on part oI Government has opened
new avenues Ior Indian Entrepreneurs. In recent years, Indian companies have started taking
initiative to move into global market.
A.V.Birla Group, operating in 18 countries, recently acquired two copper mines in Australia Ior
US$ 80 million and a Carbon black manuIacturing unit in China.ONGC Videsh Ltd. (OVL) is
investing over US$2 billion in discovered producing oil Iields in Sudan, Russia and Angola and
gas Iields in Vietnam. Besides, OVL has acquired exploration assets in Myanmar, Libya, Iran,
Iraq and Syria. %ata Motors paid $118 million to buy Daewoo, but the venture proved to a
Iailure. InIosys has bought an Australian SoItware Iirm Ior US$ 23 million. Ranbaxy gets 70
oI its revenue Irom its operations outside India with 40 Irom USA. Reliance recently paid $
207 million to acquire Flag %elecom.
O Indian Export: RegionIndian Export: Region-wise (In US $ Million)

5578.834962.15America
1739.561325.66AIrica
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13570.619729.34Asia and Oceania
445.32374.82CIS & Baltic States
7344.065701.95Europe
But there are certain shortcomings that are acting as a hurdle in the path oI Indian companies in
their eIIorts oI being acquiring a global market share. %he shortcomings or pitIalls could be
primarily divided as under:
1. Commercial
2. Financial
3. Legal
For Iurther understanding we have divided global working oI Indian business under Iollowing
two heads:
O In case where investment is made outside India
O In case it is through contract with Foreign Party

In .,80 wh070 inv08920n9 i8 2,/0 ou98i/0 In/i,
Lack oI knowledge about the Country
Lack oI knowledge about the Company
Lack oI knowledge about working culture
Lack oI knowledge about laws, relating to company operations, labor, tax etc.
Lack oI knowledge about investment laws, both in the country oI investment and in India
In .,80 i9 i8 9h7ough .on97,.9 wi9h Fo70ign P,79
Lack oI understanding oI perIormance parameters
Lack oI understanding about quality control
Lack oI understanding oI Property Rights
Lack oI understanding relating to costing & pricing
Lack oI understanding about delivery modes
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Lack oI understanding relating to warranty orguarantee
Lack oI understanding relating to governing law
Lack oI understanding relating to mode oI dispute resolution
Lack oI understanding relating to jurisdiction oI Court
Lack oI understanding relating to enIorcement oI Court decision
Lack oI understanding about ethical aspects
Lack oI understanding about third party liabilities.


When a company decides to go global , the Iollowing precaution or we can term it as the
research should be done beIore hand so as to avoid Iuture hardships and bottlenecks in the path
oI the business.
PRECUTIONS
4 Spend time to understand the Country History & Culture.
4 Involve proIessionals, with international exposure to assist.
4 %ake personal interest in acquiring knowledge oI corporate laws on macro level.
4 Rationalize tax planning with the help oI proIessionals Irom these countries.
4 Work closely with proIessionals on various aspects oI agreement.
4 Undertake due diligence beIore entering into business relationship.
4 Express your opinion about mode oI payment beIore closing the deal.
4 Be careIul about third party exposure
4 Be careIul about governing law, jurisdiction oI Court, mode oI dispute resolution.


Th0 .on806u0n.08 of going glo-,l
%he implications oI globalisation Ior a national economy are many. Globalisation has intensiIied
interdependence and competition between economies in the world market. %his is reIlected in
Interdependence in regard to trading in goods and services and in movement oI capital. As a
result domestic economic developments are not determined entirely by domestic policies and
market conditions. Rather, they are inIluenced by both domestic and international policies and
economic conditions. It is thus clear that a globalising economy, while Iormulating and
evaluating its domestic policy cannot aIIord to ignore the possible actions and reactions oI
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policies and developments in the rest oI the world. %his constrained the policy option available to
the government which implies loss oI policy autonomy to some extent, in decision-making at the
national level.%he various negative EIIects oI Globalization on Indian Industry are that it
increased competition in the Indian market between the Ioreign companies and domestic
companies. With the Ioreign goods being better than the Indian goods, the consumer preIerred to
buy the Ioreign goods. %his reduced the amount oI proIit oI the Indian Industry companies. %his
happened mainly in the pharmaceutical, manuIacturing, chemical, and steel industries. %he
negative EIIects oI Globalization on Indian Industry are that with the coming oI technology the
number oI labor required decreased and this resulted in many people being removed Irom their
jobs. %his happened mainly in the pharmaceutical, chemical, manuIacturing, and cement
industries.



In the above table we can clearly see the india`s targeted companies which india is planning to
acquire.


"u089ion , wh,9 I woul/ /o if giv0n 9h0 9,7g09 of Ach|eve an acce|erated growth beyond
10 per year
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Answer a) I would provide tax beneIits to the emerging Iirms which are planning to go into the
global market and I would impose more taxes onto the existing Indian companies that are
operating abroad, because that would increase the revenues oI the country and thus preventing
Iiscal deIicit.i would encourage the business into the area oI medical tourism ,as current trend
shows that Ioreign residents have too much inclination towards medical services provided by
India and thus I Iind this sector to be lucrative to pace up the Ioreign exchange reserves oI the
country.. I would even encourage investment in government Iunds by providing more returns to
the public. Another measure I would take is to encourage new emerging entrepreneur to ponder
into service sector and I would Irame policy that would encourage start-up capital assistance to
the such businesses in their nascent stage. I would encourage the policy oI out sourcing i.e.
providing job opportunities to the citizen oI the host country which are operating in the home
country. By doing so the doors would be more open Ior the Ioreign multinational companies to
come in india. And in some time we can achieve the growth rate oI 10 or more, iI the economy
moves in the prescribed manner.


"u089ion B B7ing infl,9ion /own 9o l088 9h,n 5
Answer B) %o bring the inIlation level down, I would suggest to cut down the prices oI the
commodities oI basic necessity and raising the prices oI the products oI indirect nature, because
products like steel and cement though have an indirect impact upon the inIlation level but in
short run iI the burden oI basic commodities is transIerred onto these products then that may
prove to be beneIicial Ior the common man and thus bringing down the rate oI inIlation. I would
even go Ior the restrictive policy like price ceiling which restricts the producers to charge a price
not more than the prescribed limit. I would direct the central bank to cut down the money supply
Irom the market, which will reduce the purchasing power oI the people and the demand Ior the
products would come down and ultimately the prices oI the products would also come down due
to low demand.
"u089ion C In.70,80 ,g7i.ul9u7,l p7o/u.9ivi9 - 50
Answer C) %o increase the agricultural productivity, I would introduce schemes such as
providing Iertilizers, urea, seeds and agricultural equipment`s at subsidized rates or even at hire
purchase basis. I would preIer to increase the prices oI commodities like petrol so that the hike in
the diesel prices can be controlled or counterbalanced because petrol is a commodity basically
used by urban people whereas diesel is a commodity that is used by rural people in irrigation and
transportation purposes and a hike in the prices oI diesel may have adverse eIIects on the
agricultural output. I wouldIix up Iair prices Ior the agricultural products which is in interest oI
the Iarmers so that they are not cheated in the market Ior this I would advise the Iarmers to sell
their output at government agricultural outlets iI possible. I would even announce in advance that
the areas that would suIIer Irom drought will be subjected to get compensation on individual
basis.
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"u089ion D In.70,80 in/u897i,l p7o/u.9ion ,n/ 0ffi.i0n. - 25

n8w07 D In order to increase the industrial productivity , I would reduce some tariIIs imposed
upon them and even liberalise some oI the licencing and other bureaucratic procedures involved
in getting into the industry. Being the prime minister I would provide Iinancial assistance to
some oI the sick industrial undertakings. Government Iinancial institution may be directed to
provide short term loans to the industries so as to meet their working capital requirements. I
would introduce schemes which will provide monetary assistance to industrial under takings to
Iormulate training programmes Ior the workers working in the industries.