Group 87 Sophia – Why investors should bet on India

 

India’s prime minister is known for his pro-business policies, and his steady efforts to draw foreign investments could plant the seeds for a more prosperous India.

In a richly symbolic event, India put a spacecraft into orbit around Mars this week, beating Japan and China in the race and doing it at a fraction of what it cost NASA. The timing is propitious, as Indian Prime Minister Narendra Modi landed in the U.S. on Friday for his first official visit and amid highexpectations for India’s economic growth and potential.

Since he took office in May, Modi has begun to execute on the systematic reformation of India’s inefficient and bureaucratic markets to make them friendlier and more open for investors and businesses. So far, his actions seem to be working, with GDP accelerating to 5.7% in the second quarter after a period of stagnation; inflation is trending down and foreign capital is starting to come in.

Modi has also received praise for his recent deals with Japan and China, securing $33 billion of new investments from Japan; he even garnered $20 billion in infrastructure investment from China –India’s historical geopolitical adversary. These numbers may not be staggering from a Western perspective, but they are meaningful for an emerging economy like India’s, and more to the point, a sign of confidence from Asia in India’s economic prospects – a signal that the prime minister hopes to obtain from the U.S. as well.

Underpinning all this is Modi himself, who is proving to be a pragmatic leader. In addition to his loftier ambitions of easing India’s restrictive market regulations and upgrading the nation’s infrastructure, he seems intent on building India’s economic strengths from the ground up, pushing toprovide bank accounts for every Indian household across the nation, standardize banking practices to end exploitation of the poor and illiterate, provide insurance and pension plans for those with no access to them, and to promote the use of technology for education, social innovation, and business activity even in remote areas.

There are many challenges, of course. For one, there is Modi’s past as Chief Minister of the state of Gujarat, home to a notorious incident of Hindu-Muslim riots which he has been accused of mishandling. Combined with the Hindu roots of his Bharatiya Janata Party, political analysts have questioned his moral authority to govern over India’s minority Muslim population.

Another problem is that India’s labor force is skewed toward the agriculture sector, even though itshighest growth industries like information technology, telecom, healthcare, and retail are projected to require millions of new skilled workers which they may not be able to find. While Modi has called for more foreign investments in India’s manufacturing sector, his administration will first need to revamp archaic labor laws and improve education to ensure the pool of skilled labor required for long-term growth. Finally, there is a lack of women in the workforce and rampant government corruption, which the prime minister must also tackle.

Still, solving the economic and social troubles of a country as populous and complex as India isn’t easy, and what is important is that the nation finally has a leader who is willing to take on the challenge. Modi may have a tough road ahead but his disciplined style of governing and clarity of purpose could enable him to succeed.

In this spirit, as he now begins his dialogue with another great democracy and primary role model for free markets – the U.S. – there should be plenty of affinity between the two sides and opportunity to generate mutual prosperity through trade. India can certainly benefit from America’s financial resources and state of the art industrial/technological expertise to modernize its business landscape and national infrastructure, and U.S. investors can profit handsomely in the world’s most vibrant emerging market with the right foundation in place. Bilateral trade between India and the U.S. has reached $100 billion, and by some estimates, could grow to $500 billion by the end of the decade.

Historically, the relationship has been marked by crests and valleys, partly due to a disagreement over how much freedom to allow the private sector and more recently due to the stalling of a key nuclear deal over India’s unwillingness to provide end-user verification for plants and tracking of sourced fuel. The former could change with the advent of the Modi administration’s market-friendly philosophy, and the latter may have become less urgent due to India’s newly minted civil nuclear agreement withAustralia instead. What could also help India’s relations with the U.S. is raising foreign ownership limits in its defense sector from 26% to 49%, potentially creating a windfall for U.S. investors and defense contractors.

Yet another area to watch during Modi’s visit will be the contentious topic of outsourcing, which needs to be resolved in order to maximize the value of human capital in India and bolster the competitiveness of U.S. companies. The keys to success here will be the Indian government’s ability to bring its business policies closer in line with American best business practices and legal framework, and the ability of the U.S. to recognize the benefits, and even necessity, of outsourcing in an age of globalization.

India is reaching for the stars, both figuratively and literally, with an ambitious program of modernization and free market growth that can generate wealth for itself as well as its trading partners. That is a trend worth supporting.

Source: http://fortune.com/2014/09/27/why-investors-should-bet-on-india/

 

SEB’s expansion strategy : French businesses can also conquer the global market – [Paris campus – MSc ISI – group 3]

SEB (Société d’Emboutissage de Bourgogne) is a French company in the sector of small appliances. This firm has a lot of well-known brands such as Tefal, Moulinex or Rowenta and its revenues are up to €4.1 bn in 2013.

SEB is one of the best French success stories regarding globalization. In fact, the company go beyong French borders since 1970 beginning with the United Kingdom, the USA and Japan.

By now, SEB is located in 150 countries and it has succeeded in capturing EMCS demand : 45% of total sales are achieving in emerging markets such as China, India and Africa. Emerging markets represents a big issue for SEB, as the company counts on an increase in demand of roughly 7.00% per year. Thanks to its global strategy, SEB is focusing heavily on urbanised middle-class in EMCS, with an increase of 70 million people every year who are willing to consume more and more in their housing equipment (ie small appliances also !).

SEB’s global strategy is also an example of great thinking and mix between internal expansion and alliances. Instead of settling in the world with only global brands (Rowenta or Tefal), the company goes into partnership and creates joint-venture with local firms in some “exotic” countries. Great examples show how SEB turns into a glocal company, such as Chinese company SUPOR (2007), Colombian company Imusa (2011), AsiaFan in Vietnam (2011) or also in Egypt with the creation of a joint-venture with Zahran company (2013).

SEB’s strategy also relies on global communication to make the most of globalizaton. Even Oprah Winfrey, one of the most powerful women in the world, tweeted in 2013 about one Seb’s innovative and high-qualited product (Actifry) !

References :
http://www.groupeseb.com/fr/content/strategie

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Group 69 @ Sophia : How does the luxury sector benefit from the pitfalls of the globalization ?

Introduction

 1. Which globalization’s downsides weakened the luxury industry ?

o Crisis of 2008

o Temptation of re-location

o expansion of counterfeiting

o Wealth gap

2. How did the luxury sector counterattack ?

o Focus on emerging countries

o New trend : the hyper-luxe

3. The creation of new marketing strategies thanks to the globalization

o Made to measure marketing strategies

- specification of brand management to adapt to local markets

o Focus on Emerging markets (China + India + Middle East + Russia)

Conclusion