Marketing assignment on: PESTEL Analysis of the Republic of India

 India at a glance:

                                                     (Source: Map of India, 2011)

General Relevant Facts

• Consists of 28 states and 7 union territories
• Total Area: 3,29 million sq. km. – 7th largest in the world (CIA, 2011; US Department of State, 2011 )
• Major Cities: New Delhi (capital) 21.72 million; Mumbai 19.695 million; Kolkata 15.294 million; Chennai 7.416 million; Bangalore 7.079 million (2009) (CIA, 2011)
• 7000 km coastline (CIA, 2011).
• Bordered by Pakistan to the West, Bhutan, Nepal and China to the north and Bangladesh and Myanmar to the east
• Natural resources: Coal (fourth-largest reserves in the world), iron ore, manganese, mica, bauxite, rare earth elements, titanium ore, chromites, natural gas, diamonds, petroleum, limestone, arable land (CIA, 2011)
• Origin of four major religions Hinduism, Jainism, Buddhism and Sikhism. Judaism , Zoroastrianism, Christianity and Islamism arrived later and added to the cultural diversity.

Political factors

These refer to the policy of government or the degree of intervention of the government which can have its impact on many important or vital areas of the business:

• India has stable political system in form of a Democratic Republic with 28 states and 7 union territories (CIA, 2011; US Department of State, 2011)
• Ruling coalition since 2009: United Progressive Alliance (UPA) headed by the Indian National Congress (INC)(Foreign and Commonwealth Office, 2011; CIA, 2011)
• President Pranab Mukherjee is the 13^th President of India. He is the titular head of the state and he enjoys certain power and performs a variety of ceremonial functions(Hindustan Times,2012)
• Executive Power centered in Cabinet led by prime minister Manmohan Singh (US Department of State, 2011)
• Singh initiated reforms for economic liberalization in the 1990’s when he was finance minister and is a former official of the International Monetary Fund (BBC, 2011)
• Proclaimed aims of current government are to reduce poverty, crack down on corruption and continue to pursue market-friendly economic policies (BBC, 2011)
• India ranks 19th out of 28 on the 2011 bribe payer index of the leading exporting countries (with 1st being the cleanest) (Transparency International India, 2011)
• Accusations of having failed to fight corruption put pressure on the current government and PM Singh (Economist, 2011a; Economist, 2011b, The Guardian, 2011)
• Entry mode regulations (DoingBusiness, 2011):

• Starting a business rank 166 out of 183
• Very high minimum capital has to be deposited within the country beforehand
• High costs for setting up business
• Many procedures required
• Average set-up time of 29 days
• Multinationals are forced into joint ventures with Indian partners (Anand & Delios, 1996)
• Currently debated retail reform (Bahree, 2011; BBC News, 2011d):
  • Multibrand retailers can own up to 51% of joint ventures, but need invest at least $100 million and face restrictions on where to put up their business. They are now allowed to set up supermarkets instead of only wholesale joint ventures.
  • Single-brand retailers can own 100% of their Indian business

• Tax regulations (Doingbusiness, 2011):
  • India ranks 147th out of 183 in the ease of paying taxes

• High number of payments per year and accordingly much time required for filing
• High tax rate amounting to 24.7% of profit

• Trade regulations:
  • Complex tariff structures and an extensive licensing and permit system hamper trade (DoingBusiness, 2011; WTO, 2011)
  • Generally declining tariffs as result of ongoing trade liberalization (WTO, 2011)
  • India aims at achieving economic growth by providing a stable trade policy environment (WTO, 2011)
  • Use of trade policy to contain inflation harms stability (WTO, 2011)
  • Most sectors are only partially open to foreign direct investment (FDI) and subject to caps or specific conditions, several sectors remain entirely closed to FDI (WTO, 2011)
  • Rank 123 out of 179 in the Heritage Index of Economic Freedom (Heritage, 2012)
• Privatization:
  • The need for privation arises to
    • To control deficit in budget
    • To mobilize Resources
    • To reduce tax burden
    • To increase flow of fund to public
    • To increase production
    • To increase competition in domestic and international market
    • Privatization in India has helped in
      • Releasing the large amount of Public resource which is locked up in non-strategic PSEs, public resources are deployed in basic health, education, social infrastructure, family welfare etc.
      • Reduction of Public debt
      • Transferring the commercial risk of taxpayer’s money (Preservearticles,2011)

Economic factors

These include GDP, economic growth, inflation,FDI,FII ,exchange rates etc. that can have an impact on the firm’s decision:

• India has a diverse economy which consists of traditional village farming ,modern agriculture, modern industries and range of services. More than fifty percent of the work force is in agriculture however, major source of economic growth is services accounting for more than half of India’s output(Indexmundi , 2012)
• Fifth Best country in the world for dynamic growing business as per Grand Thornton Global Dynamism Index
• India is expected to be the second largest manufacturer country in next five years according to Deloitte Touche Tohmatsu Ltd.(Deloitte)
• GDP (PPP) 2010: $ 4.06 trillion (CIA, 2011)
• GDP (PPP) per capita 2010: $ 3,500 (CIA, 2011)
• Average economic growth of 8% per annum between 2000-2008 (Euromonitor, 2011)
• After a strong post-crisis rebound growth has slowed to a more sustainable pace and is expected to pick up in the future (OECD, 2011)
• Inflation: Remains high at 9.73% in October 2011 despite strong monetary policies (BBC News 2011a; OECD, 2010)
• Annual disposable income: US$ 1.5 trillion (Euromonitor, 2011)
• Interest Rate: 7.5% (Trading Economics, 2011) (Current European key interest rate: 1.25% (ECB, 2011)
• Ease of getting credit rank 40 out of 183 economies (Doing Business, 2011)
• Cumulative Foreign Direct Investment (FDI) equity inflow were worth US$ 179,025 million between April 2000 to August 2012.
• Total exports from Indian services sector were recorded at US$ 11.94 billion( September 2012), rise of 6.3% from September 2011.
• Foreign Institutional Investors (FIIs) showed a positive trend and there is an investment of over US$ 13 billion so far in 2012.
• Increase in Mergers & Acquisitin(M&A) and private Equity(PE) deal with cumulative vale worth US$ 3.1billion.
• FIIs made a net investment of Rs 11,364 crore (US$ 2.05 billion) in equity market and their investment in Debt market was Rs 7,851.70 crore (US$ 1.41 billion)
• India is expected to receive remittances of close to US$ 70billion(IBEF;2012)

Social factorsThe social trend of a country has an impact on the demand of the product and its availability:

• Population: Second most populous nation in the world with population of 1.21 billion (BBC, 2011b; CIA, 2011)
•  Racially diverse population having elements of  six main racial types viz,the Nagrito the proto Australoid ,the Mongoloid, the Mediterranean, the western Brachycephals and the Nordic.
• Age structure (CIA, 2011)
•  0-14 years: 29.7%,
• 15-64 years: 64.9%
• >64 years: 5.5%
• Population growth rate: 1.3% (World Bank, 2011)
• Overpopulation: Covering 2.4% of the world’s land area, India supports over 15% of the world’s population (US Department of State, 2011)
• Birth rate: 20.6 births/1,000 population (2012 )
• Death rate: 7.43 deaths/1,000 population
• Sex Ratio:
  • At birth: 1.12 male(s)/female
    Under 15 years: 1.13 male(s)/female
    15-64 years: 1.07 male(s)/female
    65 years and over: 0.9 male(s)/female
    total population: 1.08 male(s)/female (2011 est.)(Indexmundi 2012)
• Ethnic Diversity: Indo-Aryan 72%, Dravidian 25%, other 3% (2000) (CIA, 2011)
• Languages: 16 official languages, most common is Hindi 41% of pop. English enjoys the status of subsidiary official language and is used in political and commercial communication (World Business Culture, 2011)
• Mixed religions: Hindu 80.5%, Muslim 13.4%, Christian 2.3%, other 3.8% (CIA, 2011, US Department of State, 2011)
• Education expenditure: 3.1% of GDP (129th in world, out of 163 countries) (CIA, 2011)
• 61% Literacy (Male: 73%; Female 48%) (CIA, 2011; US Department of State, 2011)
• 40% of Indians attend secondary school (World Bank, 2011)
• 10.5% unemployment (CIA, 2011)
• Poverty: 25% of population live below poverty line (CIA, 2011)
• High inequality in wealth: Gini Coefficient of 36.8 in 2004 and still rising (World Bank, 2011; Euromonitor, 2011)
• Inequality gap is far larger in urban than in rural areas (UN, 2011)

 Technological factors

Stronger and better technologies create new product and new process which can benefit consumers as well as the organization that is producing it: Strong information technology clusters in the larger cities (Khomiakova, 2007)

• Strategic Review of 2011 published by NASSCOM(National Association of software and Servce Companies says that the IT-BPO industry of India has crossed US$ 88 billion of revenue in year 2011 with major contribution coming from IT software and services contributing to US$ 76.1 billion and rest of it coming from the hardware(Deloitte;2011)
• Infrastructure cannot keep up with huge demands and creates bottlenecks that negatively affect India’s competitiveness (World Bank, 2011)
• Weak but rapidly growing telephone and internet networks (weaknesses in rural areas) (CIA, 2011; WEF, 2011)
• India ranks 98th out of 183 in the ease of getting electricity, but major investments are the energy infrastructure are made to keep up with demand (DoingBusiness, 2011; Euromonitor, 2011)
• 86th out of 139 countries in a ranking on infrastructure (WEF, 2011)
• Insufficient access to good basic and higher education, ranked 85th out of 139 in a ranking on higher education and training (CIA, 2011; WEF, 2011)
• Seven major ports
• 88% of population have access to improved drinking water source (CIA, 2011)

Environmental factors

Environmental factors mainly include the weather and climate change, these factors have a direct impact on industries such as farming ,tourism ,insurance etc. Environmental factors include the weather and climate change.

• Strong environmental degradation due to overpopulation and rapid economic growth (CIA, 2011)
• High risks of droughts, flash floods, severe storms and widespread and destructive flooding from monsoonal rains (CIA, 2011)
• Water pollution from raw sewage and runoff of agricultural pesticides; tap water is not potable throughout the country (CIA, 2011)
•  As far as 65% of India’s land is polluted of destroyed in one or the other way due to human contamination.
• Close to 30% of India’s gross agricultural output is lost every year due to degradation of soil, poor soil management and counterproductive irrigation.
• Individual Sites, States and central government are implementing different kind of programs to remedy the disastrous environmental conditions in settlement zones(isp203, 2012)
• Activities that conserve natural resources are being promoted and incentivized at national level . In case of rural areas there are policies which are being adapted to bring in and curb the threats posed by climate change(Giz, n.d.)

Legal factors

These are related to the legal environment in which a firm operates There is a common law system which is based on English model.

• There are separate codes that apply to Muslim, Christian, and Hindus(Indexmundi;2012)
• Indian government at federal and state level ensures a high degree of protection when it comes to its workers.
• India stands at 182 in a ranking of 183 economies on the ease of enforcing contracts; on average enforcing a contract requires 46 procedures, takes nearly 4 years and costs 40% of the value of the claim (DoingBusiness, 2011)
• Increasingly more safeguards for intellectual property rights (US Department of State, 2011)
• World Bank has criticized the complexity, poor modernization and lesser flexibility of Indian regulations in 2008.

If you want Marketing Assignment Help study samples to help you write professional custom essay’s and essay writing help.

Receive assured help from our talented and expert writers! Did you buy assignment and assignment writing services from our experts in a very affordable price.

To get more information, please contact us or visit www.myassignmenthelp.Com