Executive Summary
Rogers Communication is one of the leading Canadian telecommunication firms. It is proposed that it should consider expanding its operations to the Indian market because of the size and increasing purchasing power of the population. The country analysis shows that India’s population, socio-cultural and political environment and good relations with Canada are some of the factors that make it attractive as a target market.
Economic analysis reveals that India has had impressive economic growth over the past years. Low cost of labor and the increasing size of the middle class are some of the forces that make it an attractive market. The statistics also show that it is currently the world’s leading destination for foreign investors, a sign that it has a supportive environment for foreign firms. These are some of the factors which strongly suggest that India is an appropriate target market for this firm.
Market audit and competitive market analysis shows that the telecommunication market in India is highly competitive. There are local and international players fighting for market share in the populous country. However, this does not mean that Rogers Communication cannot find its way into this market. With proper strategies, it can create its unique niche within this market.
Risks and barriers to market entry have also been critically analyzed in this paper. It has been revealed that stiff competition is one of the major risks that this firm must be ready to manage. Cases of interferences of the political class in the business sector are another threat that may affect the operations of the firm. The language barrier may also affect this Canadian firm. However, some issues can be addressed with proper management strategies.
Import and export analysis shows that India is currently a net exporter in its balance of trade. The country exports sugar, textile, and automobile spare parts to various global markets such as Africa and other Asian countries. However, it also imports electronics and other technology-based products. Most of its imports come from China and the United States.
The paper also looks at the issue of corporate social responsibilities and strategies that should be employed by Rogers Commerce when it finally makes an entry into the Indian market. The firm will need to engage in programs that focus on environmental protection such as tree planting and protecting both natural and exotic forests in the country. It should also be actively involved in promoting education, improved healthcare, and youth empowerment.
After reviewing the products that this firm plans to offer in the market and the external environmental forces in India, the researcher recommends that Rogers Communication should consider having a large customer base by charging market-friendly prices on its products. The reduced profitability per customer will be compensated by a high number of purchases of their products.
Introduction
Rogers Communications is one of the leading Canadian firms with a highly diversified portfolio of products. Founded in 1925 as CFRB by Edward Rogers, this firm has experienced massive growth to become one of the leading communication firms in Canada. Some of the major products currently available in this company include wireless communication, telephone services, internet connectivity, and cable television. In Canada, the target market for this firm is very wide. Its products are used by people from different social classes. However, each social class has a unique bouquet that suits their needs. The company has achieved impressive growth in the local Canadian market. However, the time has come when it would be necessary to explore international markets.
According to Carraher and Welsh (2015), the world is fast turning into a global village with technology helping in the elimination of geographic and communication barriers. Foreign firms are already operating in the Canadian communication sector. It will be necessary for Rogers Communications to consider expanding its operations to other countries as a way of expanding its market share. India will be one of the most attractive markets that it should consider making an entry into shortly. In this paper, the researcher will look at how the firm can successfully enter the Indian market, some of the external environmental forces that should be expected and how to manage them, and issues about the corporate social responsibility that the management will need to put into consideration.
Phase One
Country Analysis
India was chosen as the most appropriate country for Rogers Communication because of some of its unique characteristics. This is the second-most populous country in the world with an estimated population of about 1.276 billion people. In this section, the researcher will conduct a critical analysis of the country to determine if indeed it is an appropriate target country for Rogers Communications’ products.
Political stability and business climate
Indian is one of the leading democracies in the world with a presidential system of leadership. After gaining independence in 1947, the country experienced several political problems that threatened the country’s stability, especially the assassination of Indira Gandhi in 1984. However, the last three decades have seen the country achieve political stability that has created a good business environment. The country has generally been peaceful with no major threats to the business community. According to Chambers (2011), it is common for politicians to make utterances that may be viewed as inflammatory against the business community during the electioneering period, but the government has been consistent in supporting the business community.
Trading relationship/agreements with Canada
According to Carraher and Welsh (2015), Indian and Canada have enjoyed a long period of economic relations since India gained independence. Although the two countries are not each other’s major trading partners, they have maintained diplomatic ties over the last half a century. In 2008, Indian and Canada signed a nuclear deal to help India expand its nuclear energy production. This is a sign that the two countries still maintain close trade ties. Hisrich (2010) argue that most of the Canadian firms are yet to take advantage of this huge market. The friendly relationship between the two countries means that any Canadian firm wishing to venture into the Indian market may not face unfair business practices that may jeopardize its operations.
Geographical issues
Rogers Communications will primarily offer cable television, internet, and wireless communication products. Issues about the country’s geography may not affect its operations much as long as its satellite dishes are properly installed. However, issues such as storms may destroy the infrastructure put in place by this firm. India has not been experiencing extreme climate-related conditions such as storms. The geography of the country about the population distribution is very suitable for this firm given the products it will be offering.
The legal system as it applies both to doing business in the country and protection of intellectual property
A firm cannot survive in a business environment that lacks a proper legal system governing the relationship between a firm and various stakeholders. India has a clear legal structure that defines the processes that a firm has to follow to be fully registered to conduct business locally. It has laws governing consumer protection and the relationship between various stakeholders in the business environment. The country has a legal system that is meant to protect intellectual property, but as Chambers (2011) notes, the enforcement of these laws is not as effective as would be expected. Compared to the legal system in Canada, it is apparent that the Indian legal system is relatively weak in terms of protecting intellectual property. Since cases of copyright infringement are not as common as it is in neighboring China, the authorities in India still have work to do in protecting intellectual property. It is important to note that Rogers Communications may not be affected by this problem given the nature of the products it will be offering in the Indian market.
Regional cultural variation
Culture is one of the most important factors that affect business environments. The Indian culture is very different from that in Canada. Indians still value family ties so highly and it’s common to find them living in large families (Carraher & Welsh, 2015). This cultural practice may be used as an advantage for this firm when entering the country. In such large families, the purchasing power for family products such as the internet and cable television is significantly improved. The firm can take advantage of this cultural practice to position its products as being appropriate for a family setting. With its wide variety of products, all members of the family will be covered. Young children can have their time watching cartoons, teenagers and young adults can spend time on the internet, women can have time to watch their favorite soap operas, while men can watch news or football. When packaged this way, the products can become very appealing to these families.
Business customs and practice
Indians all over the world are known to have unique business customs and practices that easily make them highly desirable trade partners. They are patient, resilient, and committed to whatever they are doing. These unique characteristics of most of the Indians mean that Rogers Communication will not struggle to find appropriate employees to work in its new branches in the country. The firm may only need to come with a few parent country nationals to help the host country nationals understand what is expected of them as employees of this firm. The wage bill is also relatively low in India as compared to Canada. The cost of operations in Indian will be significantly lower than what it is in Canada. Employing more locals will mean spending less on average.
Religion and culture
The dominant religion in Indian is Hinduism, which makes up about 80% of the total population. Islam is the next popular religion, with about 14% of the total population professing this faith. Christianity, Buddhism, and Sikhism make a minority of the population (Chambers, 2011). Religious beliefs define culture practiced that given population practices. It also influences the purchasing pattern of a given group by stating what to eat, how to dress, and how to relate with other members of the community. Concerning the products that Rogers Communication will be offering in the market, religious and cultural practices may not be an issue of concern. However, the firm must understand that the community is very sensitive about the content that is made available either through the internet and cable television. As such, it will be necessary to ensure that censored materials are not made accessible to underage children because that can cause displeasure hence dissatisfaction among the clients.
Language
The official and most widely spoken language in Indian is Hindu. It has two variations which are Indo-Aryan and Dravidian. Among the foreign languages, English is the most common language in the country. The majority of those who have gone through formal education in the country to the college level can communicate in English fluently. However, there are still many Indians who cannot speak English as only rely on native Indian languages. The language will not be a major barrier given that most of the employees who will be hired by Rogers Communications will be multilingual with the capacity to communicate in English and local languages fluently.
Attitude to foreign investment and repatriation of funds
The government of India has created an enabling environment for foreign investors to help fight the growing unemployment. Among the local community, there is a positive attitude towards foreign investors because they offer both direct and indirect employment. For a long time, India did not have any laws governing the repatriation of funds by foreign investors (Chambers, 2011). However, the local politicians have been pushing for regulations to ensure that part of the profits made by foreign investors remains within the local economy to boost growth.
Tax system
The Indian government inherited the tax system that was used by the British colonialists, but it has been adjusted to reflect the needs of the locals. The government has avoided attempts to create a separate tax system for foreign firms. Currently, both foreign and local firms have a similar taxation system. Chambers (2011) says that “a non-resident company is taxed only on income that is received in India, or that accrues or arises, or is deemed to accrue or arise, in India.” Currently, the corporate tax in India is set at 30% per year. This is lower than the 38% rate that the government of Canada charges companies operating in the country. Unlike in Canada where there are federal and state-level taxes, in Indian, there is only a single system that taxes corporate organization at the corporate level.
Economic Analysis
In this section, the researcher will conduct further analysis of the country’s economic environment to determine its capacity to sustain operations of Rogers Communications. This will make it possible to make informed advice for this firm as it seeks to make an entry into this populous country.
Population both growth and distribution
India is the second-most populous country in the world after China. In the 2010 national census, it was determined that the country has 1,210,193,422 people. In 2015, this number was estimated to be about 1,276,267,000 people (Hiremath, 2014). The population density is 386.7-kilometer square. The rate of growth of the country’s population is higher than that of China, which means that in the next two decades it may be the most populous country in the world. There is a high population density in urban centers such as Mumbai and New Delhi.
GNP
India’s gross national product has been in a consistent rise over the past decade due to an enabling socio-economic and political environment. Bednarek (2015) says that “the Gross National Product in India averaged 14869.24 INR Billion from 1951 until 2014, reaching an all-time high of 56738.60 INR Billion in 2014 and a record low of 2786.77 INR Billion in 1951.” The graph below shows the growth of the gross national product from 2006 to 2014.
As shown below, the country has recorded consistent growth in its gross national product, which is a strong indication that it is a lucrative market that Rogers Communication should give serious considerations in its global expansion programs. Even the 2008/2009 economic recession that slowed growth in many major economies around the world did not affect its consistent growth of the gross national product.
Per capita income and family income
The per capita income is often used to determine the purchasing power of individual citizens in the country. According to Kapila (2008), India’s per capita income or average family income has been rising consistently over the years, a fact that is attributed to economic growth that has been witnessed in the country over the past several years. Although the per capita income is relatively lower than that of some of the developed economies such as that of the United States, there are strong indications that the country will soon have one of the largest middle-class families in the world. The figure below shows the growth of the country’s per capita from 1990 to 2013.
Distribution of Wealth
The per capita GDP of India may give the impression that the country has a high purchasing power per family when compared to the world’s average. However, this is not the truth as Joydeep (2006) says that most of the country’s wealth is held by a few super-rich individuals while the majority of the population has very low purchasing capacity. Many Indian families living in rural settings and those in major slums in the country live in object poverty. The uneven distribution of wealth means that there is a huge segment of the market that will not be targeted by this firm because they lack the purchasing power needed to purchase products offered by Rogers Communication.
Transportation infrastructure
The government of India has made significant improvements in the country’s transportation infrastructure, especially in the urban settings and along the routes leading to major economic corridors. However, the huge population in the country is overwhelming, and crowding in buses and trains is a common thing. In urban settings, most of the roads are still rendered impassable during rainy seasons. Train transport is the major means of movement in urban centers. The nature of business operations that Rogers Communication will use and its product offerings will not be significantly affected by the infrastructural problems in the transport sector.
Communication infrastructure
India’s communication infrastructure still needs major improvement despite the recent developments that have been made by both government and private investors. Although most of the Indians currently own and use mobile phones, the network coverage is still poor in some remote rural settings. Rogers Communication may need to make heavy investments to develop the communication infrastructure that it will use to disseminate its products to the target clients. The underdevelopment in this sector means that there is a market gap that this firm can take advantage of if it has proper plans in place.
Working conditions
Working conditions in India are significantly different from those in Canada. In Canada, employees’ unions are becoming increasingly weak as workers get empowered differently, forcing them to negotiate their terms of work individually other than having a collective bargain. In India, unionization of employees is still very common and the unions are very strong in championing the rights of their employees. Rogers Communication must understand how to deal with such unions. Indians are more willing to work for extra hours for additional pay than Canadian workers are. As stated before, the cost of labor in India is way below that of Canada, making it easy for employers to meet the needs of its employees.
Countertrade activities
According to Chambers (2011), direct attacks made against the business community by the political class, especially during the electioneering periods, have been considered counter-trade activities. However, such incidences are increasingly becoming rare as the political class tries to work closely with the business community to combat unemployment.
Foreign aid
Part of the country’s remote locations in the rural settings has been receiving foreign aid to help the locals overcome some of the challenges they face such as limited education facilities, scarcity of water and food, and medical products. However, medical aids available in some parts of the country will not have any significant impact on the operations of Rogers Communications.
Labor force
India has a huge size of the labor force, being the second-most populous country in the world with over 1.2 billion people. The majority of this labor force is semi-skilled. A good number of citizens are unskilled, especially those in rural areas. The country also has skilled labor in the fields of telecommunication that this company can rely on once it starts its operations.
Inflation rate
According to a report by Bednarek (2015, p. 78), “the annualized inflation rate in India is 3.78% as of August 2015, as per the Indian Ministry of Statistics and Program Implementation.” The government has been keen on combating inflation pushed by demand or surplus in the supply.
Available technologies
Technologically, India still has major issues to address especially in the field of information and communication technology. The government and private investors have tried to improve the telecommunication sector, but a lot more remains to be done to ensure that every part of the country is covered technologically. Improvement is also needed to ensure that there is a speedy data exchange that is uninterrupted.
Phase Two
Market Audit and Competitive Market Analysis
After analyzing the country of the target, the next step is to conduct a market audit and market analysis to determine how Rogers Communication can enter this market. In this section, the researcher will conduct an audit of the market to understand forces that this Canadian firm should be prepared to deal with in India.
Principal industries
In India, agriculture-based industries still top as the principal industry in terms of their contributions to the country’s gross national income. Cotton textile is one of the leading industries that employ many people at various levels of production. The sugar industry is another major industry that has been growing rapidly because of the huge local demand and the growing demand in the international markets. The real estate industry has also been growing rapidly over the years. Other major industries include tourism, engineering and machinery, medicine, transportation, banking, and insurance. The IT industry is also coming up as a dominant driver of the country’s economy. It is in this industry that Rogers Communication will be interested in when it comes to this market.
Foreign Direct Investment FDI
According to a report by Bednarek (2015), India is currently the most preferred destination for foreign direct investment. This report indicates that in 2015, the United States and China were overtaken by India as the most preferred destination by foreign investors. It attracted $ 31 billion worth of foreign investment in 2015 compared to $ 27 billion and $ 28 billion for the United States and China respectively. One of the main reasons that are making this country to be preferred by foreign investors is its huge population, low cost of production, and political stability it has enjoyed over the past three decades.
Exports, imports, trade balance
India was a net importer at the time it gained its independence in 1947. It remained a net importer for several years until it started investing heavily in the manufacturing industry. The current statistics show that the country is currently a net exporter, thanks to its expansion of the manufacturing sector (Chambers, 2011). The graph below shows net import-export growth within the year 2013.
As shown in the above statistics, imports to Indian keep shrinking, and exports continue to increase.
Consumer/customer buying habits
Consumer buying habits are influenced by several factors such as the social class, religious and cultural beliefs, the physical environmental factors, and the emerging trends. In India, Hinduism is the dominant religion and it defines the cultural practices of these people. Society values family ties and this influences their purchasing pattern. Before one can purchase a given item, one must consider how other members of the family will react, especially the elder members. This means that there is often wide consultation before a member of the family can purchase a given item. Elders often have the final say when it comes to purchasing some of the household items. When it comes to telecommunication products such as those that Rogers Communication offers, then factors such as purchasing power and availability of alternatives are some of the major factors that influence purchasing habits.
Advertising media availability, costs, types
An advertisement is a powerful tool that cannot be ignored when entering the Indian market. Advertisement in India takes two main forms which are the traditional approaches and modern advertising platforms. Traditional advertising platforms include mass media advertisements in newspapers, magazines, televisions, and radios. They also include the use of billboards and sometimes posters. Social media advertising is increasingly becoming popular in India due to the popularity of mobile phones and personal computers. Facebook, Twitter, and YouTube are some of the most popular social media advertising platforms in India. The cost of advertising on the social media platform is relatively low compared to that of mass media marketing.
Risks and Barriers
When planning to enter a new market, Rosenstein (2014) advises that a firm should understand some of the risks and barriers that may affect its operations. In this section, the researcher will look at some of the barriers and risks that this firm may face in the Indian market.
Country Risks
There are some risk factors that Rogers Communication will need to deal with as it enters the Indian market. One of the risks is the occasional interferences cases by the political class during the electioneering period. They often demand an increase in wages among other benefits for the employees to help them achieve their political ambition. The fact that the average purchasing power of Indians is lower than that of Canadians in itself is a risk in the profitability of this firm. It must find a way of dealing with this risk in an effective manner.
Market risks
The major market risk for Rogers Communication is stiff competition. Several local and international firms are actively operating in this market. They have already created a pool of loyal customers and eating into their market share will not be a simple task. The fluctuating economic forces in India are also another risk that the firm will need to deal with to remain stable. The availability of substitute products in the market is another cause of concern for this firm as it enters a new market.
Product risks
The suggested products that this firm will offer include wireless communication, internet connectivity, and cable television. The risks associated with these products are that they require a heavy initial investment. Putting up proper structures to ensure that the clients are effectively connected to the internet or have wireless communications will require heavy infrastructural investment. It may take several years to recover such investment once it is made.
Commercial risks
It is important to look at some of the commercial risks that this firm may have to face in the Indian market. One of the main commercial risks that it must deal with is hacking. Techno-savvy criminals are now using infrastructures of other firms to pass their products to their unsuspecting customers without having to make expensive investments themselves. In such instances, this firm will be forced to bear all the costs, while a different firm will be enjoying the profits.
Barriers to market entry
Barriers to market entry into the Indian market have been getting weaker as the country opens up to the global society. Currently, the greatest barrier to market entry in India is the stiff competition that the firms have to deal with. Another barrier is the language factor. Most of the Indians speak Hindi. This may affect the operations of this firm in this market.
Barriers to market acceptance
The risk of market acceptance, or lack of it for that matter, is another issue. The spirit of nationalism may create a situation where the locals only consider purchasing products from the local companies. However, this risk is relatively low in the target country.
Import Analysis
According to Gupta (2008), when planning to enter a foreign market, it is often prudent to have a review of imports into the country and how the local economy reacts to it. India currently is a net export economy. However, it still relies on imports from various parts of the world, especially in the field of information and communication technology.
Major products imported
Most of the products imported into the Indian economy are technology-based. Products such as mobile phones, computers, television sets, cameras, and other automotive products are imported. It means that this firm will be in a better position to take advantage of the current situation in the market because it specializes in this area. The locals trust some of the imported products than they do local products. This is another advantage that Rogers Communication should take advantage of as it enters the Indian market.
Historical import performance
As mentioned above, India still relies on imported products in some sectors of its economy. The figure below shows the historical import performance for the last eight years.
From 2008 to 2013, there was a consistent rise in imports. Then the country started experiencing a period of reduced importation from 2014 as shown in the data above.
Principal countries imported from
According to Chambers (2011), most of the imports coming to the Indian economy are from China, especially electronic products. This may be attributed to the economic boom and technological advancement in China, and the fact that the two countries are neighbors.
Export Analysis
Major products exported
Over the past two decades, India has emerged as one of the major exporters in the international markets. Some of the main products that these firm exports include motorcycle, sugar, and textile products. The country is also known to export pharmaceutical products.
Historical export performance
The figure below shows the historical data of India’s exports over the last five years.
As shown in the above figure, there has been a consistent increase in the country’s exports over the last five years.
Principal countries of export
Most of the exports that come from India find their way to African markets. The major market for Indian motorbikes is East and West Africa. Its pharmaceutical products are sold in Africa and the Asian market.
Corporate Social Responsibilities and Strategies
As a company that will be actively involved in the Indian market, the management of Rogers Communication must be ready to be engaged actively in corporate social responsibilities.
Consideration of environmental concerns and trends
The business operations of Rogers Communication will not have a serious impact on the environment given that it is a telecommunication firm. However, it should be actively engaged in environmental conservation programs as part of its corporate social responsibility. It may participate in tree planting or forest protection programs.
Human rights issues
In its operations, the management of Rogers Communication should avoid engaging in unethical practices that may be considered a violation of human rights. The firm’s employees should be properly remunerated, and their working environment made conducive. All employees should be given equal treatment irrespective of their nationality.
Unfair or corrupt business practices
Unfair business practices such as bribery, false advertisement, misleading financial statements among others may not only affect the image of this firm if it is revealed but may also lead to legal actions against the firm. As such, the management should do everything within its powers to ensure that such vices are not tolerated by any of its employees or agents.
Health or safety issues
The management should ensure that issues about the working conditions, working hours, safety, and health concerns of their employees are taken seriously to boost their morale and avoid possible cases of litigation.
Corporate Philanthropy
The firm will need to embrace corporate philanthropy in its host country. It should support educational, health, and sporting programs within the host country. It should also be actively involved in charitable programs such as supporting children’s homes to help eliminate or reduce the number of street families in major Indian cities.
Conclusion and Recommendation
Rogers Communication is one of the most successful companies in the Canadian telecommunication market. To ensure that it experiences continued market growth, it will need to expand its operations to the international market. India is one of the countries that it may consider. There are several benefits and challenges that this firm will face. The following are the main recommendations this firm should consider:
- Given the high population in India and low purchasing power, this firm should strive to lower its prices to make small profits from numerous clients.
- The management should take advantage of the low labor cost to lower its overall cost of production
References
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