Liberalization Privatization Globalization

- Volvia

Liberalization

Liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities Liberalization refers to the relaxation of the previous government restriction usually in area of social and economic policies. When government liberalized trade , it means it has removed the tariff ,subsidies and other restriction on the flow of goods and services between the countries.

Privatization

Privatization means transfer of ownership and/or management of an enterprise from the public sector to the private sector . It also means the withdrawal of the state from an industry or sector partially or fully. Privatization is opening up of an industry that has been reserved for public sector to the private sector. Privatization means replacing government monopolies with the competitive pressures of the marketplace to encourage efficiency, quality and innovation in the delivery of goods and services.

Globalization

According to IMF: -The growing economic interdependence of countries worldwide through increasing volume and variety of cross border transaction in goods and services and of international capital cash flows, and through the more rapid and widespread diffusion of technology. Globalization is a fairly broad term that describes the phenomena of the local turning into the global, or the coming together of different aspects of the world into a single and identifiable state

Reasons for implementing LPG

Excess of consumption and expenditure over revenue resulting in heavy govt. borrowings. Growing inefficiency on the use of resources. Over protection to industries. Mismanagement of the firm and the economy. Increase in losses for public sector enterprises. Various distortion like poor technological development, shortage of foreign exchange and borrowing from abroad. Low foreign exchange reserves. Inflation

Fashion Franchising Trend in India

After the markets opened up in India, with the famous LPG (Liberalization, Privatization, Globalization) India has been a home to many international brands in apparels, catapulting immense growth in the Indian retail sector. The success of these brands is evident in the fact that, they have created a culture in which wearing branded clothes has become a status symbol. The story does not end here; the global brands are looking to expand operations in India, inspite of anomalies in FDI.

Case Study
Entry Point: August 2006 Stores : 453 across India Products: FMCG, Vegetables Consumer Segmentation: Targeting 2 tire and 3tire Market Marketing Strategy: News Papers, TV etc. Marginal Profitability: The average ticket size is Rs.300/Entry Point: 2002 -2003 Stores: 56 Stores in Maharashtra ,Karnataka, Andhra Pradesh and Gujarat Products: FMCG , Medicines and Vegetables Consumer Segmentation: Targeting 2 tire and 3 tire market Marketing Strategy: Believe in mouth publicity Marginal Profitability: The average ticket size is Rs.550/-

Challenges

The first challenge facing the organized retail sector is the competition from unorganized sector. Organized retail sector has to pay huge taxes, which is negligible for small retail business. The status of the retail industry will depend mostly on external factors like Government regulations and policies and real estate prices, besides the activities of retailers and demands of the customers also show impact on retail industry. Organized retailers have been facing a difficult time in attracting customers from traditional kirana stores, especially in the food and grocery segment.