MARKET ENTRY INTO INDIA
INTRODUCTION
The following is a business plan for UK based company WHSmith to expand into the Indian market. WHSmith is known to be among the most successful booksellers in the UK. In the high streets in the UK WHSmith have more than 500 outlets with more than a hundred of them in train and bus stations as well as in the airports of the UK. Apart from books WHSmith also sells a variety of magazines and newspapers and also boasts a good collection of DVDs (Worthington, 1998). In the outlets that are situated in the railway stations and airports around UK snacks and confectionaries are also sold. This branch of its business accounts for a lot of business for WHSmith making it very profitable for the organisation. There are millions of travellers that pass through the train stations and the airports each and every day and these stores offer travellers the things they need to sustain themselves during their journey. WHSmith has a strong brand name not just in the UK but also other countries due to the advent of globalisation. The world has become a much smaller place and brand awareness is at a high due to this reason. WHSmith is seen as a very successful and reliable brand when it comes to buying books and stationary in general. Because of the brand name that WHSmith has built for itself over the years it is possible that WHSmith expand their business to other nations and be successful (Worthington, 1998). One of the key markets for developing business is India which has one of the fastest rates of economic development in the world. In particular since WHSmith has its travel outlets as one of its more successful venture, this proposal will aim to highlight the possibility and feasibility of the company targeting the Indian travel sector as its target for expansion. A strong business strategy is required in order make this move a success as a lot of factors influence foreign businesses in India. These factors that will determine the success of WHSmith in India will be discussed in the following report.
COMPANY PROFILE
WHSmith is based in a small town called Swindon in England. WHSmith has significance in the fact that it is one of the first companies in the world to open up a chain of its outlets. The company was formed by Henry Walton Smith in the 1992 partnering with his wife Anna (Worthington, 1998). Presently though the management board do not have any of their descendents making it a solid corporate venture with massive expansive capabilities. It is also the first company to introduce the system of bar coding books for referencing with something called as ISBN or the International Standard Book Number (Worthington, 1998). Although the only foreign venture by the organisation until now is in Paris, the company managed to create brand awareness and brand image through its milestones such as being one of the first companies having chain stores and also by the introduction of ISBN to the books and stationary market. There are more than 17000 employees in the company among all its stores that is spread in various important centres in the UK. In the year 2009, the company recorded revenue of �1,340 million with a profit of �63 million which is a proof in itself of the success of the company. A major chunk of this business was operated through the retail stores placed in airports and train stations and it turned out to be top gross earning wing for the company. One of the main reasons for its success is the novelty of the whole idea of catering to the needs of travellers that come and go in humungous amounts every day. This success of the firm in travel outlets could be reciprocated in the travel market of India which boasts of one of the longest railway systems in the world with many key destinations falling all through its range.
THE INDIAN RAILWAY NETWORK
The Indian railway system is one of the busiest and the longest railway networks in the world. The Indian railway system has a total of around 7000 railway stations that are divided among 16 zones. Everyday there are close to 9000 trains that operate to every nook and corner of the nation carrying an estimate of around 20 million passengers. Since it is also the cheapest mode of transport it is also the most widely used and the busiest. Also the network connects even the outskirts of towns and cities thus leaving very little space of inactivity. The middle class which constitutes the major portion of the population uses train as their mode of journey for both long and short distances (Agarwal & Ramaswami, 1992). The available service at stations in Indian cities provides basic necessity products and commodities but is not great on customer satisfaction and finesse in its business. This could prove as an opportunity for WHSmith to provide that efficiency in their business and build their success on developing business suiting traveller’s needs to its potential. People travelling are always in need of services and products right from food to newspapers and books that are essential for an average traveller (Dreifus, 1992). The wide network of the Indian railway industry is a huge potential market to develop such a business opportunity with relative ease and without a lot of undue pressure on the organisation.
BUSINESS OPPORTUNITY
Initially the business plan for WHSmith should be to look into investing into the major cities of India. These are Delhi, Mumbai, Calcutta, Chennai, Bengaluru (formerly known as Bangalore), Pune, Ahmedabad, Hyderabad and Jaipur. These nine stations are the busiest in India, having tens of thousands of people travelling and using these stations daily. The people in these cities are working class and have a high population of youth who read a lot. Also the present culture in Indian cities is such that people are up to date with global developments due to a high amount of reading newspapers as well as magazines and other books (Agarwal & Ramaswami, 1992). A lot of this reading is done while travelling to work or college in trains. Like UK people read the daily newspaper every morning while going to work. Therefore, WHSmith could use this culture that is prevalent in these Indian cities to good effect by setting up travel stores in the stations located at these cities.
The primary target for WHSmith has to be all the major cities that are registered on the global map. The major Indian cities are Mumbai, Delhi, Kolkata, Chennai and Bengaluru and other smaller cities such as Pune, Hyderabad, Cochin among others. Millions of people pass through these stations on a daily basis (Dreifus, 1992). A major attraction in these cities is the fact that the demographics show an astoundingly high number of the youth when compared to all other age groups. This is a very important factor as the youth in modern India have high standards when it comes to educational prospects as well as their knowledge of the global economy and their pursuit for a better standard of living. A lot of this knowledge is due to the amount of reading that is found in this young population. Everyone is keen on garnering world knowledge and reading newspapers, magazines, novels and even journals is on the rise each day. The fight to survive in the highly competitive world puts people on their toes and people are aware of the power of knowledge in such times. This present state of affairs should be seen as a boon for growing and expanding business and WHSmith could bank on these factors and be successful in the Indian market owing to this sector of the population in these cities.
PROSPECTIVE SERVICES
Newspapers can be a major source of revenue for WHSmith in Indian stations. Like in the UK the busy working class rarely get time to get their daily quota of news at home. Therefore most of the working class that use the railway system as their primary means of transport read their news in the train. The percentage of the population that indulge themselves in newspapers every morning is every high. The fast pace of life in cities like Mumbai and Delhi forces people to buy newspapers from stations while they commute to work. This is very similar to the case of cities like London and Manchester in the UK (Dreifus, 1992). Every Indian takes a liking to one particular newspaper, thus with 4-5 publishers in any given city it is important to include sets of all publishers in stalls. Small time agents distribute newspapers and this lacks professionalism and finesse in terms of arrangement. WHSmith could use this to their benefit and supply newspapers in a dedicated section of their stores containing newspapers of different publishers and including all languages depending on the province. The expertise of WHSmith in this area of business will serve them well and it could ward off the all competition coming through much smaller agents.
A major portion of the Indian population uses the rail network to travel long distance. All long networks pass through most of the important cities and towns like Mumbai and Bengaluru and they are focal points that come between most networks (Madsen, 1994). People travelling long always need the company of books throughout their journey. WHSmith sells a large majority of its novels to daily travellers and this is similar in the case of India. It could sell books on religion, information technology, sports, fiction as well as non fiction novels that are all appreciated by the Indian audience. If most of the genres can be covered by WHSmith it can cater to the needs of all sections of travellers (Goyal & Singh, 2007). This chunk of potential customers can serve as long term customers who recognise brand value and confidence in the brand can be developed by WHSmith. This mode of business could be among the most profitable of the ventures for WHSmith if it is able to retain customer for long term benefits. This also increases business through word of mouth and more people will be aware of the presence of a reliable brand and can further enhance business.
ADVANTAGES OF BUSINESS IN INDIA
Cost efficiency is one of the most promising factors that lead to foreign firms looking at developed nations like India and China as prospective places to invest in. Start up costs for businesses in India is very meagre when one compares it to starting business ventures in countries like the UK and the US. This could be the main advantage for WHSmith as well if it looks to expand its business into India. Railway networks being solely owned by government setting up business under its control would cost even less when compared to deals with private companies or setting business of private grounds. This advantage will WHSmith set up business at relatively low prices and do cost effective business. As mentioned above, the sheer amount of people travelling through trains makes this move a win-win situation for WHSmith. The company would not have to worry about the lack of customers as it is not a possibility if they manage to get good reviews early on in the starting stages of business. People will always travel and travelling people will always need services provided by companies such as WHSmith.
POSSIBLE BARRIERS TO BUSINESS
As in the case of most businesses that come to India, cultural barrier takes front seat when it comes to barriers to business. India is a country that is known for richness and immense diversity in culture. The cultural disparity between India and the UK is a glaring reality in front of managers and entrepreneurs wishing to explore the Indian market (Elliott, 2005). The Indian cities are particularly sensitive in this area as people come from all across the nation. People from varied backgrounds of culture and religion come to the cities to make a living. Misunderstandings between people of different faith are not a rare issue here. This sensitivity should be taken into account by WHSmith before entering India for business and clear research should be done on this factor before entering to do business in India (Waterschoot, 2008). A thorough study on the different religions and different cultures of the nation should definitely be studied before any proposal is planned. The main points of focus should be how to respond to customer queries, meeting etiquettes and minute details which are of mighty significance.
The next very important barrier to business in India is the barriers in the form of political parties and negotiations with government officials. Different states of the nation may have different ruling parties with different ethics and way of functioning (Elliott, 2005). A study should be done on the complex political scene of the country. Dealing with government officials to get certification for businesses is also a very murky affair. India has a history of corrupt politicians and government officials thus any dealing with either of the two should be done with a lot of care and tact. The right deals with officials could make or break a deal and procedures and notions change from one state to another (Waterschoot, 2008). This should be taken into account and negotiations should be kept transparent to avoid any mishaps later on.
Another very important barrier to business in India is economic in nature. The current economic crunch has not affected India as it has in the west (Elliott, 2005). This is a definite positive sign as far as WHSmith is concerned and it could be utilised well to its benefit. As mentioned earlier a good majority of the Indian population fall under the poverty line. This is the case in rural India and in the outskirts of large cities. Therefore, WHSmith should stick to the cities and stay away from investing in the rural sectors where their products are considered a luxury rather than a necessity. Also the tariffs rules and trade rules may slightly vary between different state governments and this should be taken into consideration. If WHSmith can take proper note of all these barriers and do proper research on how to overcome these barriers then it can look forward to a successful venture in India.
CONCLUSION
WHSmith is among the most successful companies in the UK and aiming at becoming the most popular bookstore in the UK. It is recognised as a good reliable brand all over the world despite of very little presence outside the UK. WHSmith gets most of its earning through travel stores placed at different train stations and airports all over the country. This is where the core competency of the store lies and thus this expertise can be used to expand its business in one of the fastest growing nations in the world, India. The Indian market has always welcomed FDI and foreign businesses in all sectors and it has contributed a lot to India’s recent growth and development. The Indian railway network, one of the longest and most efficient networks in the world is a very profitable option for WHSmith in its investment. It is a highly potential market due to a variety of reasons such as low risk of competitors and high cost efficiency to set up the business. The imminent freshness and novelty of travel stores in India can prove to be the winning factor for WHSmith. Good customer service and an understanding of the Indian mentality can help in long term business with the sentimental Indian population who always appreciate good service. The fact that this particular market is fairly untapped will give an added advantage to the company.
The only concern for this business prospect is the barriers that come in the form of cultural, social, political and economic factors in India. Unstable political scene in India often leads to disappointing results in running any business. It is important to study the politics that run every major part of India and act accordingly. It is vital to know how to tackle corrupt government officials and yet not get on their wrong side. Having a partner in business locally, one who knows the scenario well could help solve these issues for WHSmith. Also the cultural and social situation of the nation should be thoroughly studied to ensure that the company can overcome any barriers on that account. All in all if WHSmith can build on its default advantages of a good brand image, efficient service and innovation it can look forward to do long lasting business in one of the most fruitful markets of the modern highly globalised business world.
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