Mncs in India

3667 WordsAug 8, 201115 Pages
MNCs in India By A V Vedpuriswar[1] Introduction With a GDP growth of almost 7 percent1, India is one of the most promising and fastest-growing economies in the world. But despite the huge potential of the country, the performance of Multinational Corporations (MNCs) in India has been decidedly mixed. Many MNCs which have succeeded remarkably elsewhere in the world have yet to make a significant impact in India. The market entry and penetration strategies that have worked so well for these companies in other countries have been for less successful in India. Many MNCs have struggled to understand Indian customers and come up with suitable products and services. At the same time, some MNCs have done pretty well for themselves. Why have…show more content…
For example, MNCs which entered India since the 1990s have in general been more aggressive and proactive in a liberalised business environment, than those which began operations during the license Raj. Hyundai, Samsung and LG are good examples. The older MNCs like Bata have also been handicapped by the baggage accumulated over a period of time. Such companies are often at a disadvantage due to their bloated manpower and inefficient manufacturing facilities. Of the 50-plus[2] MNCs with a significant presence in India, the nine market leaders, including British American Tobacco (BAT), Hyundai Motor, Suzuki Motor, and Unilever, have an average return on capital employed of around 48 percent. Even the next 26 have an average ROCE of 36 percent. The most successful MNCs in India have some common characteristics. Resisting the instinct to transplant to India the best practices of other countries, they have treated the country as a strategic market. These companies have also taken a long term view. They have invested time and resources to understand local consumers and business conditions. They have understood that the price points that matter in India are different from those in other countries. In a country where the middle and lower-end segments are critically important, affordability is a crucial factor. At the same time, some of the successful MNCs have also realised that price is not the only factor driving
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