PROGRAM : MMS Comment Form for Assignments

Section One: Data on the Course and Assignment Subject : STRATEGIC MANAGEMENT Title of Assignment: PESTAL ANALYSIS FOR ATTRACTING FOREIGN INVESTMENT Date of Submission : 17/09/2013 Student Details : Group No. _10
Div. A A A A A Roll No. 010 012 020 041 044 Name DEEPA THAKUR PRIYA DUBEY CHIRAG JAIN ABHISHEK SHAH JIGAR SHAH

BATCH : 2010 - 12

Semester: 03
Div. A Roll No. 046 Name ABHISHEK SHARMA

Section Two: Evaluation

Please note below the comments on the assignment in accordance with your objectives and evaluation criteria.

Professor.... Signature Date returned to Examination Office : ..

GRADE

PESTEL FOR ATTRACTING FOREIGN INVESTMENTS

GEOGRAPHY OF INDIA

INDIA
India, officially the Republic of India is the seventh-largest country by geographical area, the second most populous country in the world, and the most populous democracy. With the Indian Ocean on the south, the Arabian Sea on the west, and the Bay of Bengal on the east, India has a coastline of 7,517 kilometres. It is bordered by Pakistan to the west, People's Republic of China, Nepal, and Bhutan to the north, and Bangladesh and Myanmar to the east. Home to the Indus Valley Civilisation and a region of historic trade area and vast empires, Indian subcontinent was identified for its commercial & cultural wealth for much of its long history. Four major religions, Hinduism, Buddhism, Jainism and Sikhism originated in the country, while the Zoroastrianism, Judaism, Christianity and Islam arrived in the first millennium of CE and shaped the region's diverse culture. The British East India Company entered in the early eighteenth century and colonised much of the Indian sub-continent, only to be later ruled by the United Kingdom from the mid-19 century until 1947. India is a republic consisting of 28 states and 7 union territories with a parliamentary system of democracy. It has the world's 12th largest economy at market exchange rates and the fourth largest in terms of purchasing power. Economic reforms since 1991 have transformed it into one of the fastest growing economies; however it still suffers from high levels of poverty, illiteracy, disease, & malnutrition.

India at Glance
1. Population 2. Area 3. Geographical location : 1,250,000,000 (1.25 billion) : 3.3 million square kilometres : Lies between latitudes 8 4' & 37 6 ' north and longitudes 68 7 ' and 97 25' east : 7600 km : 17 major languages, 844 dialects : Hinduism, Islam, Christianity, Buddhism, Sikhism, Jainism : Jan gana mana written by Rabindranath Tagore : Vande Mataram, composed in Sanskrit by Bankimchandra Chatterji : Replica of the Lion Capital of Sarnath : Horizontal tricolour in equal proportion of deep saffron on the top, white in the middle and dark green at the bottom. In the centre of the white band is a wheel. : Tiger (Panthera Tigris) : Peacock : Lotus : Banyan

4. Coastline length 5. Languages 6. Major religions 7. National anthem 8. National Song 9. National emblem 10.National flag

11. National animal 12. National bird 13. National flower 14. National tree

15. National fruit 16. National currency 17. National Sport

: Mango : Rupee (One Rupee=100 paisa) : Hockey

INTRODUCTION
PESTLE Analysis in Business Environment In any business, PESTLE analysis role is very important. Originally designed as a business environmental scan, the PESTLE analysis is an analysis of the external macro environment factors in which a business operates. These are factors which are beyond the control or influence of a business, however are important to be aware of when doing product development, business or strategy planning. PESTLE stands for: P- Political E- Economical S- Social-Cultural T- Technological L- Legal E-Environmental

POLTICAL FACTORS
India has the distinction of being the largest democracy in the world. The political system of India is very complex, and is diverse in nature. The political system in India is largely governed by two major political parties: Indian National Congress (INC) and Bhartiya Janta Party (BJP), along with a number of regional parties like the Shiv Sena, Janta Dal, Shiromani Akali Dal, Nationalist Congress Party etc. The following are the political factors to be looked at: The Indian Political system is infested with high amounts of beauracracy and corruption, making the decision making process extremely difficult. The legal and judicial system of India is very complex, thus making it extremely slow and time consuming for court decisions, ultimately resulting in delays in getting clearances and certificates. The government is not formed by a single party, but a combination of various parties, resulting in a majority. Thus, a coalition ruling party makes it extremely difficult to govern the entire nation as a whole, as various factors are to be considered by the government, to satisfy the demands of the supporting parties. All these factors have to be examined carefully by a firm before marking its entry in a new country.

ECONOMICAL FACTORS
The economy of a country indicates the financial strength of that nation. Economy is composed of various factors, like the GDP, per capita consumption, the CAD, balance of payments, the per capita consumption and so on. A combination of all of these, in a healthy state, means that the nation, as a whole is doing well. Various factors to be considered to look at the Economic aspect are: Current Account Deficit (CAD): The CAD of any country is the difference between its revenues and expenditures. In economic terms, it is the difference between its imports and its exports. If the imports are higher than the exports, the country has a negative CAD, and vice versa. The CAD of India is negative, which means our imports are higher than our exports. GDP: the Gross Domestic Product of any country is the sum total of all of its citizens incomes during a particular period. GDP growth rates signify the growth of a country. Indias GDP growth has averaged about 6% annually, which is pretty decent as compared to the western world. Regional Growth rates: It may happen that in a country like India, which is geographically diverse, a particular region may grow at a rapid pace and others may not. So, companys investment in India would like to target only the high growing regions, leaving the poor and backward unattended, resulting in unequal distribution of growth. Inflation and Interest rates: The inflation and interest rates of a country reflect its banking and financial system, signifying how strong and robust its banking roots are.

SOCIAL-CULTURAL FACTORS
Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. It describes the characteristics of the society in which the organization exists. Literacy rate, customs, values, beliefs, lifestyle, demographic features and mobility of population are part o the social environment. It is important for managers to notice the direction in which the society is moving and formulate progressive policies according to the changing social scenario. Various socio-cultural factors that a foreign company has to look for are: The attitude and preferences of the local population Demographic factors Caste system Religious differences and sentiments Social security and responsibility Education and literacy Acceptance towards the new brands

TECHNOLOGICAL FACTORS
New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. Technology also has to take into account the infrastructure of the nation, the back end logistics and support systems to supplement the companys existence and operation in India. Though the technological scenario has changed dramatically in India, it still faces some prominent perennial issues like: Inadequate transport infrastructure: Roads in India are at a developing stage, and has not kept pace with the recent economic boom in the country. About 30% of our villages lack direct access to all-weather roads and railways, though one of the biggest in the world does not match upto global standards. The average speed of a freight train is about 70 kmph, far low than China. This increases the time to market goods and produces, a factor which every company looks after before investing in India. Power Supply: Although India is the 4th largest electricity producer in the world, it still faces about 10% of demand-supply gap in electricity. About 95% of villages have electricity access, but only 60% of those villages have 24 hr uninterrupted supply. Electricity forms the backbone of the manufacturing sector and is considered most important by a company to start operating in a new country. The penetration of other technological aspects like cellular series, internet and broadband connections, radio and television etc are also considered while assessing the technological aspects of the macro-economic view of a country.

LEGAL FACTORS
These are related to the legal environment in which firms operate. In recent years in India, there have been many significant legal changes that have affected firms' behaviour. The introduction of discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organisation's actions. Legal changes can affect a firm's costs and demand. It is said that the legal system of our country is one of the most complex in the world, and is bogged by rampant corruption and bureaucracy. This is proved by the fact that for a firm to have its business in India, it required about 18 types of clearances and licences from the government. Also, the legal system in India is different from state to state, prohibiting a unified and effective legal framework to support the business operations. In India many type of legal acts like license permission, copyright permission, and many types of other permissions are required to operate. Some of them are: Employment law Trade and product restrictions Health and safety regulations EU and international laws Monopolies commission

ENVIORNMENTAL FACTORS
Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. Industrialization and urbanization have resulted in a profound deterioration of India's air quality. Of the 3 million premature deaths in the world that occur each year due to outdoor and indoor air pollution, the highest number are assessed to occur in India. Pollution problems Planning permissions Waste disposal Noise controls Environmental pressure groups