Transcript Costco Case Analysis - team

COSTCO CASE ANALYSIS
India
OVER VIEW
Business Model and Customer
Value Proposition
Economy
 Government
 Market Access
 Infrastructure
 Real Estate
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Summary Conclusion
BUSINESS MODEL
CUSTOMER VALUE PROPOSITION
ECONOMY
GOVERNMENT
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India’s government is a Federal Republic. Just like the United States, India has three branches of
government, executive, legislative, and judicial. The three branches help separate powers. The
ruling party is the Indian Congress Party which has been in power since the 1940’s. India has a
stable government, but as with other countries, there are groups who oppose those in power and
want bring about change. The President of India is President Pratibha Devisingh Patil (elected
July 2009). President Patil is considered head of the state while Prime Minister is Manmohan
Singh (elected May 2004).
India is making strides to bring foreign companies into the country. November of 2011, India put
together a package of reforms to help bring foreign investments into the nation. Despite
opposition from small shop owners and political groups, India announced January 10, 2012 that it
will allow foreign companies to sell product under a single company name. Under the new
regulations foreign companies must sell 30 percent of their products which are made by Indian
shops and artisans.
The currency of India is called a Rupee. On average one Indian Rupee is equal to $.0914 US
Dollar. The easiest way to transfer money out of India is through an Indian bank into a bank in the
United States with an International Wire Transfer. Wire transfers are subject to fees from both
sending money and receiving money.
MARKET ACCESS
Regulations and Duties
There are complex license and duties for most goods, some are in excess of 240%. There are special economic trade
zones that do offer some tax breaks. They have been a member of the World Trade Organization since 1995.
Acceptance of Goods
A major concern is their policy on quantity. Some products, normally subject to license, are not authorized to enter
the country when the authorities feel that the quantities bought were too huge.
Distribution
The primary factors here are organization and development for large structures. They are clearly dominated by
small family owned business with the average size of 60 square meters.
Level of Corruption
Corruption seems to be wide spread with the highest being reported in the Police sector. A study conducted by
Transparency International has found that corruption in public services affecting the day to day needs of citizens
is far more serious than is commonly realized
Local Competition
The India market is dominated by small family owned businesses but has seen an increase in franchising. It
Is key to note that on the commercial side the big players such as the US and the European Union are still having
trouble with the governmental regulations.
INFRASTRUCTURE
India’s infrastructure can be broken down into two main types, and each type can be broken down
further into separate categories within those types:
Hard
• Transportation (road & traffic, railways, airports, mass transit, etc)
• Energy (electric, oil, natural gas, etc)
• Water (drinkable water, sewage, drainage systems, distribution systems)
• Communication (postal service, telephone, television, the internet)
Soft
• Governance (governmental systems, emergency services, military)
• Economic (manufacturing, financial sector, imports and exports)
• Social (healthcare, welfare, education)
• Cultural (sports, museums, libraries, language, etc)
INFRASTRUCTURE
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Hard
Transportation: Only 13 million cars exist in India, However annual automobile
production grows by 2.6 million units annually, vehicle volume is expected to rise.
Public transportation remains the primary means of transportation for the citizens.
Energy: India is ranked 3rd for coal producing countries in the world, however about
75% of the coal in the country is consumed in the power sector. poor quality of power
supply and frequent power cuts and shortages impose a heavy burden on India’s fastgrowing trade and industry.
Water: The situation of clean and drinkable water in India is one of the most
concerning issues facing the country. India can still store only relatively small
quantities of its fickle rainfall. Whereas arid rich countries (such as the United
States and Australia) have built over 5,000 cubic meters of water storage per capita,
and China can store about 1,000 cubic meters per capita, India’s dams can store only
200 cubic meters per person. Moreover, India can store only about 30 days of rainfall,
compared to 900 days in major river basins in arid areas of developed countries
Communication: India has the world's second-largest mobile phone users with over
881 million as of October 2011. It has the world's fourth-largest Internet users with
over 121 million as of December 2011. India has come to be regarded as the world's
most competitive and one of the fastest growing telecom markets.
INFRASTRUCTURE
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Soft
Governance: In addition to the usual police and military forces, other special task
groups exist in India; Such as the Central Industrial Security Force, Central Reserve
Police Force, Indo-Tibetan Border Police, and even an Internal Revenue Service.
Economic: Labor force of 473 million. Main industry is textiles, chemicals, food
processing, steel, transportation equipment, cement, mining, petroleum, machinery,
software, and pharmaceuticals. Primary exports include petroleum products,
precious stones, machinery, iron and steel, chemicals, vehicles, and apparel.
Social: 61% of the total population can read and write. The average school lifetime is
10 years, and unemployment is at a total of 10%
Cultural: Bollywood, The Indian film industry produces the world's most-watched
cinema. Established regional cinematic traditions exist in
the Assamese, Bengali, Hindi, Kannada, Malayalam, Marathi, Oriya, Tamil,
and Telugu languages. Indian music ranges over various traditions and regional
styles. Classical music encompasses two genres and their various folk offshoots: the
northern Hindustani and southern Carnatic schools.
REAL ESTATE
SUMMARY CONCLUSION
CITATIONS
(2012, 1 11). Retrieved from fita.org: http://fita.org/countries/indiaportal.html
(2012, 1 11). Retrieved from Transparency International:
http://www.transparency.org/regional_pages/asia_pacific/newsroom/news_archive2/india_corruption_study_
2005
(2012, 1 11). Retrieved from World Trade Organization:
http://www.wto.org/english/thewto_e/whatis_e/what_we_do_e.htm
India agrees to letforeign companies own 100 percent of single brand stores. (2012, January 10).
Retrieved January 12, 2012, from The Republic:
http://www.therepublic.com/view/story/f38870fdd4784fe79d65e3b46e5e0be4/AS--India-Retail/
INR-Indian Rupee. (2012, January 13). Retrieved January 13, 2012, from www.xe.com:
http://www.xe.com/currency/inr-indian-rupee
Petroleum subsidy dangerous as it’s uncapped: Ahluwalia. (2012, January 2012). Retrieved January
11, 2012, from http://www.firstpost.com/economy/petroleum-subsidy-dangerous-because-it-isuncapped-ahluwalia-179090.html
2012, 1 13 – Indian energy sector, an overview: http://www.indiaenergyportal.org/overview_detail.php
2012, 1 13 – CIA world fact book India: https://www.cia.gov/library/publications/the-worldfactbook/geos/in.html
2012, 1 13 – Worldbank.org:
http://www.worldbank.org.in/WBSITE/EXTERNAL/COUNTRIES/SOUTHASIAEXT/INDIAEXTN/0,,conten
tMDK:20668507~pagePK:141137~piPK:141127~theSitePK:295584,00.html
2012, 1 13 – Wikipedia Infrastructure Definition: http://en.wikipedia.org/wiki/Infrastructure