India is the third largest economy in the world as regards to its purchasing power. If effective measures are taken it can be the third largest economy after the US and China. Although India has much potential in terms of economic advancement there are vital issues that need to be addressed for instance overpopulation, environmental degradation, ethnic and religious strife as well as extensive poverty.
This paper will provide general information about the country for instance it’s political, economic, social and culture organization, economic and trade indicators, specific reasons why its market is attractive, potential and pitfalls in international management, and contemporary issues that may support-impede international management. A brief history. India is located in the southern Asia and it borders the Arabian Sea as well as the Bay of Bengal. It is between Burma and Pakistan. Its early history dates back to the 19th century when Britain had the political control of all the Indian land.
During the first and the second world wars the Indian soldiers played a significant role. The Indians resisted the British control over their land and this led to their independence in 1947. Significant leaders that led in the non violent resistance include Mohandas Gandhi and Jawaharlal Nehru. (www. state. gov). The region was divided into two comprising of the secular Indian state and the Muslim state of Pakistan. The two countries went into war in 1971 and the Eastern Pakistan became a separate nation of Bangladesh. The state of Kashmir is however a cause of dispute between the two countries up to date.
Political organization. India declared itself a republic in January 1950 and it set a constitution that would guide its undertakings. The constitution was keen in ensuring justice, liberty and equality. It was also made flexible enough to incorporate the social as well as economic changes should they arise. In ensuring democracy prevailed it first held its general elections in 1952 and since then election are held after every five years. India is a Union that comprises of 28 States and seven centrally administered Union Territories. (www. state.
gov). Every one above eighteen years of age and is an Indian citizen has the right to vote according to the provisions of the constitution. Fundamental Rights of every Indian citizen include the freedom of speech, expression, belief, assembly and association, migration, and choice of occupation or trade. Discrimination on grounds of race, religion, creed or sex is consequently avoided through the above provisions. India has a form of parliamentary democracy, it has a bicameral parliament and the sovereignty rests ultimately with the people.
The elected officials in the parliament are responsible in making important decisions regarding the country. India has a Council of States which consists of not more than 250 members. 12 members are nominated by the President of India while the rest are elected. The vice president oversees the Council of States which is also known as Rajya Sabha. An important aspect regarding the Council of States is that it is not subject to dissolution and a third of its members retire at the end of every second year. Nominated members have a special knowledge in areas for instance literature, science, arts as well as in social services.
There is also the Lok Sabha or House of the People which consists of 545 members. 530 of these are directly elected from the 25 States and 13 are from the seven Union Territories. Two of the members are nominated by the President and they act as representatives of the Anglo-Indian community. The President of India is also the Head of the State and the Commander-in-Chief of the Armed Forces. (www. state. gov). He is elected by an electoral college composed of members of both the Houses of Parliament that is the Rajya Sabha and Lok Sabha and the legislatures of the nation’s constituent States.
The President holds office for five years term but he can be re-elected. However, the President does not on his own initiative exercise any constitutional powers. The Council of Ministers which is headed by the Prime Minister is the one responsible for that. Election of the vice president is between the members of both houses and the one with majority support in the Lok Sabha becomes the prime minister. The prime minister advises the president on the ministers to appoint and as long as the minister has support from the parliament he can continue to enjoy his term in the office.
The judiciary is independent of the executive and it has the role of safe guarding the constitution of the land. The Supreme Court is the highest judicial tribunal but each state has its own high court. The current head of state who is also the president is Mrs Pratibha Devisingh Patil and the head of government or the prime minister is Manmohan Singh. (www. state. gov). Economic. The GDP or the purchasing power parity as at 2007 was at $2. 965 trillion while the GDP per capita was at $2,700. The composition of the GDP according to the sectors was as follows; agriculture contributed to 16.
6%, industry 28. 4% and the services sector was 55%. The labor force was 516. 4 million with agriculture registering the highest percentage at 60% the service sector was second at 28% and industry contributed 12%. The unemployment rate in 2007 was 7. 2% and the population below poverty line was 25%. The inflation rate or the consumer prices in 2007 was 5. 9%. The government budget was as follows; revenues were $145. 2 billion while expenditures were at $182. 4 billion. The public debt both the federal and state debt accounted to 58. 8% of GDP.
Agricultural products that are produced in India include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes; cattle, water buffalo, sheep, goats, poultry and fish. Relevant industries include textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery and software. (CIA). In terms of trade India has been fluctuating for instance from 2005 to 2008 goods and services in terms of the percentage of GDP has shifted from 20. 2, 22. 7, 21. 2 to 20. 6. Likewise the inflation in this period was 4. 2, 6. 2, 6. 4 and 5. 2.
Australian trade relationship in 2007 was as follows; exports to India accounted to a tune of 5. 5% of the total share recording a growth of 5. 4. Imports from India were 0. 8% of the total share which was a 14% total growth. In total the trade accounted for 3% of the total share with a growth of 6. 5%. Major exports to Australia include non monetary gold, coal, copper, ore and wool. India imports pearls and gems, electric plants, jewels and medicaments. The services exported to India from Australia include education related as well as personal travel and they attribute to 3. 8% of the total share while the imports are 0.
9% of the total share and the include computer services and personal travel. Other export destinations include the US which account for 15. 4%, United Arab Emirates 9. 5% and China 6. 4%. (CIA). India can increase its GDP by increasing the production of the goods and services that it has a competitive advantage in. The population as at July 2008 according to CIA was at 1,147,995,898. The age structure was as follows 0-14 years attributed to 31. 5% of the total population with 189,238,487 males and 172,168,306 females. 15-64 years were 63. 3% of the total population of which there were 374,157,581 males and 352,868,003 were females.
Those aged 65 years and over comprised of 5. 2% of the total population with 28,285,796 males and 31,277,725 females. The population growth rate is 1. 578% with a birth rate of 22. 22 births/1,000 and a death rate of 6. 4 deaths/1,000 population. The total infant mortality rate was 32. 31 deaths/1,000 live births with males comprising 36. 94 deaths/1,000 live births as females comprised of 27. 12 deaths/1,000. Life expectancy at birth for the total population is 69. 25 years and males register a life expectancy of 66. 87 years as that of females is 71. 9 years. The total fertility rate is 2.
76 children born per woman. (CIA). Among the significant activities that have an impact in the country’s economy is agriculture which is both traditional as well as modern. The service sector and modern industries also have a significant impact on the country’s economy. A large proportion of the labor force is in the agriculture and this is risky as the sector is prone to many fluctuations in the market. To make India attractive to foreigners as an effort of boosting its economy the government has reduced unnecessary controls that would hinder foreign trade and investment.
Allowing foreign investment on key areas like the telecommunications will be critical in promoting economic advancement in India. For the sensitive sectors like agriculture imposition of tariffs has the effect of reducing the number of people venturing in it. The country’s economy has registered a 7% growth within a decade and it has been able to reduce the poverty levels. In 2006 it was able to achieve an economic growth of 8. 5%. The high population can be of positive effects to the economy in the sense that it can be exploited as potential labor that is an important factor of production.
By using the educated labor force it has risen to become a major exporter of software services as well as software workers. Through the economic expansion the country has been able to reduce its federal deficit at a remarkable rate. However the strong growth blended with easy accessibility to credit as well as a booming real estate precipitated inflation that was a cause of inflation. To control the inflation the central bank applied monetary policies like hiking the interest rates to slow down the credit growth.
Social and culture organization India’s culture is unique although it is very diverse for instance there are over 40 languages. Indians are very friendly and this is good as it can have a positive effect on the manner at which they relate with foreigners. They are also very respectful to all and employers have good relationships with their employees. India is a resourceful country especially as it is known to provide its expertise regarding the construction of cement plants to the airports as well as to the railway systems.
It has programs geared to ensuring that developing countries are provided for with feasibility and detailed technical evaluation studies. The program is effective in the sense that it provides support in training personnel in areas like agriculture as well as small scale industries. India is also very committed to ensuring that it promotes unity between the developed as well as the developing countries towards the new economic order. (www. dfat. gov. au). India has been firm in its stand of not interfering with internal affairs of other countries or nations.
It however advocates for the adherence of the dignity of human beings. Regarding its position on disarmament it is highly committed to ensuring that the horrors of terrorism do not cause harm or destruction to mankind. To this effect it has joined other countries in banning nuclear weapons. Potential and pitfalls in international management and solutions. Major pitfalls in the country’s economy include the lack of privatization of government owned industries as that would increase efficiency and accountability.
The populist pressures from the government are a major reason behind the lack of privatization of state owned industries. Major steps should also be taken so that the number of people living below the poverty line is reduced. The issue of unemployment is also an important one that should be well addressed. Encouraging people to be self employed as well as providing the appropriate tools will be a step forward in eradicating unemployment. Another critical issue that should be well addressed is the issue of a balanced rural urban divide.
There is a problem in India where by approximately 70% of the population live in the rural areas or villages and this affects the pace by which rural urban growth takes place. (Panda and Gupta, 2004). A balanced development is what will see the Indian economy thrive. To be successful in business it will be appropriate to enhance the education system in India. This will be a step forward in ensuring that there is improved skill development. It is also critical to focus on skills development, improved governance as well as forging partnership in the private as well as public sector in the provision of infrastructures.
Water is very essential and its scarcity ought to be effectively addressed. The biggest challenge that India faces is the population growth which will have a stressful impact on the countries infrastructures. There is an urgent need to control the population growth as an effort of trying to reduce the adverse effects that it would bring to the economy. To promote sustained growth economic reforms ought to be put in place so that the challenges can be well addressed. Fiscal discipline will be vital. International business is affected negatively by the fluctuations in the markets.
The government ought to focus on those sectors that the economy is worst fairing in like health as well as in education. To further address the issue of unemployment it is critical to reform the labor laws so that more job opportunities are created. (Phansalkar S. 2005). Although agriculture plays an important role in the countries economy there is need to reduce over dependence. Reorganizing it in a manner that will promote the introduction of new technologies that would reduce the over reliance on climate for instance irrigation would also be vital.
In an effort to reform the financial sector it will be appropriate to privatize some public sector banks as such a move will encourage efficiency and effectiveness. (Leung K and White S, 2004). To attract and retain Australian investors in India it has to ensure that its political system does not jeopardize with the investors activities. There have been cases where other foreign investors like US companies have preferred to close down instead of fighting in courts over legal requirement issues. Enhancing the structural systems will be a necessary step if investors are to be preserved in the country.
Irrational tax policies as well as other forms of trade barriers need to be addressed as they act as a disincentive to trade and investment. (timesofindia. indiatimes. com). Advancing the level at which the infrastructure is being developed by increasing the finances put aside for the same will be critical in encouraging Australian investors. Enhancing the political reforms geared towards improving stability, privatization and deregulation as well as land reforms. An Australian based company can find the Indian market attractive or one with many opportunities.
India is modernizing its infrastructure especially the transportation sector like the airports. This implies that there will be huge opportunities in infrastructure development like in roads, constructions, power plants, nuclear plants and air modernization. There is a considerable stable political environment that will not have adverse effects on businesses in India. (Phansalkar S. 2005). It also has a stable currency and the market is one of the biggest democratic markets with a huge middle class and this will be necessary for the company as it will provides for labor as well as potential market.
The skilled labor can be tapped or exploited to provide labor for the foreign based company. There are minimal restrictions of entry to the Indian markets and the Australian based company will not face many challenges when trying to venture. References: CIA. The World Fact Book. India. Retrieved on 31st May 2008 from https://www. cia. gov/library/publications/the-world-factbook/geos/in. html Kwok Leung and Steven White. 2004. Handbook of Asian Management. Birkhauser Publishers. Panda and Gupta. 2004. Mapping Cultural Diversity within India: A Meta-analysis of Some Recent Studies.
Global Business Review. 5: 27-49 Phansalkar S. 2005. Opportunities And Strategies In Indian Business: Preparing for a Global India. Sage Publishers. India. Recent economic indicators. Retrieved on 31st May 2008 from http://www. dfat. gov. au/geo/fs/inia. pdf Swaminathan S Anklesaria Aiyar. 2001. What makes MNCs quit India? Retrieved on 31st May 2008 from http://timesofindia. indiatimes. com/articleshow/1602986123. cms Bureau of South and Central Asian Affairs. 2007 Background Note: India. Retrieved on 31st May 2008 from http://www. state. gov/r/pa/ei/bgn/3454. htm