World Sports is a US footwear manufacturing firm and holds market leadership in various sporting activities. The firm was founded in 2001 by a team of engineers with a focus on the production of high-quality footwear. In its endeavor to grow and realize a worldwide presence, the firm seeks to launch its products into the Indian market. This paper seeks to outline the risks associated with establishing and conducting business in India, outline mechanisms of overcoming the challenges and develop a market entry strategy.
Risk assessment
India has one of the highest income disparity figures in the world and nearly “half of the population lives below the poverty line.” (Prabhudesai, 2003) The country has experienced terrorist bombings in the past and continues to be at risk for such attacks from the “terrorist groupings in the Kashmir region.” (Prabhudesai, 2003) India eased its regulatory systems in the 1990s and currently has a relatively straightforward mechanism of providing trade licenses to foreign investments. Foreign firms entangled in legal tussles in India are often faced with difficulties due to the inefficient legal system. For instance, current statistics indicate that there is a “backlog of up to 27 million cases involving US firms.” India has a fixed exchange system that is common in developing countries. (Prabhudesai, 2003) Foreign businesses in India are allowed to repatriate up to US$ 200,000 per annum, moreover, repatriated profits are levied and this may pose a significant risk to businesses. “The Indian product market is highly competitive and most business operates at the narrow margin.” (Prabhudesai, 2003) The risk of double taxation is always present; however, India has signed agreements with various countries to safeguard its citizens from double taxation. “Such countries include the US, China and the United Kingdom.” (Prabhudesai, 2003) The country has the second-highest population in the world and offers a large market for manufactured goods such as shoes and cloths. However, it has a poor infrastructure which interferes with proper supply chain management. The government of India has outlined stringent measures to curb environmental pollution. Manufacturing firms are required to take measures which may be expensive. The measures are aimed at ensuring that the immediate environment has a high standard of air and water quality to protect the plants, animals and preserve land for future use. The Vast nature of the country and poor roads creates challenges to business operations in the country. India has a vast population but lacks adequate skilled labor due to poor education system and cultural influence. The cultural difference often provides a big challenge to foreigners working in India. India’s information technology sector is well developed and offers great advantages to foreign investors.
Risk Management
The risk outlined above cannot be exhaustively managed; however, measures can be taken to mitigate the effects to the current business venture. For instance the risk of terrorist attacks can be reduced by avoiding the areas are mainly targeted by the militant groups. For regulatory and legal constraints, there is no much the firm can do to safeguard itself and therefore the only way out is to abide by the existing laws of the country. Risks associated with the competitive business environment will be addressed through the development of proper strategies to gain a competitive advantage over other market players. It is also important to note that the world sport may be immune to certain risks, for instance, inadequate skilled man power, environmental and cultural constraints. This is due to the fact sporting activities such as football, hockey, basketball among others are often standardized across the globe and are not prone to cultural influences. The world sports intend to train its staff, especially marketing representatives.
Strategic planning Process
The objectives of World Sports venture into the Indian market are as follows; Gaining market share globally, Developing more sustainable footwear, Promoting environmentally friendly products and processes, shifting consumer choice in favor of environmentally friendly products.
The strategies developed mainly focuses on familiarization and thus enhance its competitiveness in the Indian market. The strategy includes advertising, personal promotion, competitive pricing, commissions and training of customers. A technical innovation approach has been designed because world Sports footwear products will be new products to the Indian market. India is a nation with deep cultural and religious influence and this may influence participation in sporting activities. This influences the kind of sporting gear used, for instance, football may be played with bare feet. The company will carry out extensive promotional activities to ensure that people in India realize the importance of proper footwear. This will go a long way in addressing problems associated with inappropriate footwear such as Diabetic foot problems. India is a vast country with a large population, in view of this the company intends to setup stores in various parts of the country to market the products. Franchising option will also be arranged for interested businesses.
The world Sport seeks to utilize all the available ways to ensure a successful entry into the Indian Sports shoes market. The advantage is that India has a vast population that will offer a large market for products. The weaknesses include the cultural influence, poverty and poor infrastructure. Threats are posed by political instability, terrorist groupings in the Kashmir region and competition from other market players. Opportunities include the future prospects of developing sports in the country.
Evaluations will be conducted on regular basis to determine the success of the plan. A fall back strategy will be developed within four months depending on the prevailing market situation.
Reference
Prabhudesai, A. (2003). Risk factors for Investors: The Asian challenges. New Delhi: Wishwa Prakshan.