STRATEGIC MANAGEMENT

ENVIRONMENTAL ANALYSIS FOR MAKE

IN INDIA INITIATIVE
Submitted by

GROUP NO 9
 MAKE IN INDIA

■ Make in India, a type of Swadeshi movement covering 25 sectors of the economy,

was launched by the Government of India on 25 September 2014 to encourage
companies to manufacture their products in India and also increase their
investment.
1. PESTLE ANALYSIS

■ PESTLE is acronym for Political, Economic, Social, Technological, Legal and

Environmental.
■ It is a part of the general external analysis when conducting a strategic analysis and
gives an overview of the different macro-environmental factors that the company or
a campaign has to take into consideration.

■ Political Factors
■ These factors determine the extent to which the government can influence ‘make in
India’ campaign.
■ To increase the Ease of Doing Business the following policies were enacted under
the make in India campaign.
– Improved business processes and procedures
– Incorporation of a company reduced to 1 day instead of 10 days
– Power connection provided within a mandated time frame of 15 days instead
of 180 days.
– No. of documents for exports and imports reduced from 11 to 3
– Validity of industrial license extended to 7 years from 3 years.
■ FDI stimulates country’s economic development and creates more conducive
environment for the industry to grow. Under the ‘make in India’ campaign 100% FDI
in various sectors such as Pharmaceutical, Banking, Railway construction were
approved.
Economic Factors
■ The following are the Economic factors affecting Make in India campaign
■ Lack of Funds/ availability of cheap credit - Here biggest problem for Indian firms and
startups have been access to credit. Attracting investors to fund ventures or getting
loans from banks are perennial problems for smaller Indian firms. Many times,
despite raising sufficient initial capital, startups find it difficult to survive as they can’t
match revenue and burn rate mostly because of changed economic factors.
■ Inflation – Retail inflation has declined to a six-year low of 3.3 per cent in 2017-18,
with the economy moving towards a more stable price regime. This can help the
manufacturing sector by keeping the prices stable.
■ Skilled Labour - Finding right skilled human power is another biggest challenge before
Indian firms and startups. India’s need of skilled labour is so huge that National Skill
Development Corporation (NSDC) has been mandated to skill 150 million Indians by
2022.
Social Factors

■ First factor is the spending pattern amongst Indian customers with regards to
manufactured goods. It’s harder to make rural India buy manufactured goods in
large quantities when compared to Urban India.
■ Second factor among all social factor is nature of Indian markets. Huge, diverse
demographics makes it really hard to capture consumer’s mindset. Literally after every
30-40 km region, one can find change in taste, traditions and habits.
■ Third factor: India’s demographic dividend. India as the youngest nation in the world
and huge overall population has one of the largest consumer base in the world. For
every unique need of every segment of population there is opportunity for new
venture.
Technological Factors
■ .According to S&P Infrastructure is the biggest hurdle to the ambitious Make in India
program.
■ The infrastructure deficit is costing up to 5 per cent of the GDP and an improvement
will boost export competitiveness
■ India is witnessing significant interest from international investors in the
infrastructure space. India need sufficient investment in Infrastructure for Make
India program to be a success
Legal Factors
■ The Government of India has started to reform the business regulations in order to
create the hassle-free experience for the emerging businesses to grow and evolve.
■ The following legislation were brought in by government which could have an Impact
on Make in India campaign.
■ Bankruptcy Code 2015 – New bankruptcy law, providing for simple and time-bound
insolvency process to be operational by 2017
■ Goods and Services Tax – Single tax framework for entire country
Environmental Factors

■ These factors include all those that influence or are determined by the surrounding
environment. Publics are an important environmental factor.
■ Some environmentalists have raised concern about the adverse impact ‘Make in
India’ campaign is going to have on the already polluted regions in India.
■ Some environmentalists are advocating that India should avoid being a
manufacturing hub and should instead focus on the service sector. Small and
Medium manufacturers associations are worried about the negative impact to their
business caused by entry of large MNC’s into the manufacturing foray.
■ These association has the ability to negatively effect progress of ‘Make in India’
program.
Competitor Analysis
■ To better understand the global competitiveness of manufacturing in India, a
comprehensive analysis was undertaken, benchmarking select manufacturers
against their peers around the world. There was a correlation between operational
excellence and industry, with automotive manufacturers typically leading the field,
followed by large series manufacturers of consumer goods.
■ Since geographic comparisons are influenced by distribution differences for industry
types across regions, an analysis a sample of sites that feature similar types of
manufacturing and are represented evenly across all major manufacturing regions.
The findings were validated in one-on-one interviews with industry leaders and
subject-matter experts.
■ The results of this study are sobering (see figure 1). Leading manufacturers in India,
excluding pharmaceuticals, typically rank in the fourth quintile, which means more
than 60 percent of global manufacturers fare better than Indian ones overall.
■ In addition, because of the comparably low labor rates, no significant operational
improvements have been observed over time. This might change as neighboring
countries such as Malaysia, Vietnam, and Thailand are attracting more
manufacturers with even lower wages.
■ The good news is that Indian manufacturers fare better than global averages for
cost control despite low capacity utilization, primarily because of lower wages and a
focus on reducing costs.
■ However, compared to those in the top quintile, Indian manufacturers face more
quality complaints and fulfillment delays. The pace of innovation is much slower
(with Indian manufacturers requiring two to three times longer to launch new
products), and Indian players’ agility to scale up or down is much lower. In short,
manufacturing in India lags global competition in vital areas.
■ The analyses point to four elements that contribute to India’s limited manufacturing
competitiveness:
■ Low productivity. Manufacturers are held back by poor workforce productivity,
primarily because of a lack of automation, outdated manufacturing processes,
limited use of design-for-manufacturing, and numerous non-value-added tasks.
■ Talent and skill shortage. Rigid labor laws force companies to hire casual workers.
Vocational schools are not well-equipped to train workers. Companies fail to focus on
intermediate-level manager or foreman grades that can provide on-the-job training to
direct labor, and Indian academics stress simulation and Excel modeling for
engineers over kanban and kaizen processes.
■ Inefficient supply chains. Infrastructure bottlenecks and structural impediments
attributed to state-level taxation policies have contributed to longer lead times and
excess inventory across the value chain.
■ Lower levels of supplier competence. Many Indian tier 2 suppliers have been part-to-
print suppliers that have not invested in improving their product development or
quality control capabilities. This has made rework and returns routine, further
reducing productivity.
While these challenges seem daunting, best practices can help manufacturers address
the issues and be globally competitive.
INDUSTRY ANALYSIS – PORTER’S FIVE
FORCES ANALYSIS
The Make in India campaign
focuses on various sectors like
Pharmaceuticals, IT, defense,
automobile, Semiconductors etc.
Here we are taking IT sector as
an example while focusing on
Porters five force analysis.
■ Power of Buyers: The Indian manufacturing sector has a large number of players and
few entry barriers for new entrants. Thus, the buyer has many options to choose
from and can clearly articulate the needs. However, the bigger companies also enjoy
the advantage of switching costs. It means that once a particular client selects a
particular company as its partner, it becomes dependent on that company for all its
upgrades and technology requirements, making it difficult for the client to switch.
Thus, the buyers have a MEDIUM bargaining leverage.
■ Power of suppliers: Knowledgeable human resource is the largest requirement for
the manufacturing sector. Large supply of this human resource, at low cost is
available from around the world. Also, a lot of matured education and training is
easily available. As there exists many competitive suppliers in the market the
supplier has very LOW or NO POWER in the manufacturing sector.
■ Competitive Rivalry: No huge capital investment is required to start a new company,
leading to vary large number of small and medium-size companies. It is becoming
increasingly difficult for player to differentiate, which has led to a decrease in
margins. However, a few top and niche players still enjoy pricing power. Thus, the
competition in the sector is HIGH.
■ Availability of Substitutes: Certain countries like China, Korea, Taiwan have started
to develop an environment required for the growth of manufacturing sector and are
emerging as suppliers of these products and services. Indian companies need to
continuously innovate to have an edge over the others. Thus, the availability of
substitutes id MEDIUM.
■ Threat of New Entrant: Set up cost is almost negligible. Further the government
policies also promote the entrepreneurs by providing benefits in terms of tax
holidays and building Software Technology Parks. Apart from this, there are many
venture capitalists who are ready to fund new start-ups enabling them to scale up
with increased demand and higher margins, the threat of new entrant is HIGH.
Example: Entry of Reliance JIO Telecommunications.
INTERNAL ANALYSIS

■ An internal analysis provides the means to identify the strengths to build on and the
weaknesses to overcome when formulating strategies.
■ The internal analysis process considers the firm’s resources; the business the firm is
in; its objectives, policies, and plans; and how well they were achieved.
SWOT ANALYSIS
■ STRENGTHS
■ A stable, committed, progressive, innovative & supporting democratic government.
■ A most awaited perfect political & business environment.
■ All under one roof- availability of different resources to run a business at single place
■ Availability of huge domestic market & global export market.
■ Indian economy is one of fastest growing economy in world.
■ Good international relationship.
■ Favorable talent pool across globe in different MNC to influence decision to invest in
India.
WEAKNESS
■ Internal
■ Developing infrastructure – still infrastructure like roads, transportation, and energy are developing
and could not match to global standards.
■ Environment – business & political environment still need to become more transparent, mature &
speedy.
■ Time taken in execution of decision & bureaucratic system.
■ Multi-layer processing system. Differences in State government & Central government interest
synchronization process.
■ This is just a start, maturity may take time.
■
■ External
■ Dependency for oil & few other things on other countries.
■ Dependency on private firm’s decisions to invest in India or not rather than on government of few
related countries.
■ OPPORTUNITIES
■ For internal & external business world
■ India as emerging global economic / political power.
■ Second largest domestic market with potential of 1.2 billion consumers with growing
purchase & consumption capacity.
■ Competitive mfg., operating global cost due to domestic & neighboring market
availability.
■ Availability of all positive business environment required by organizations.
■ THREATS
■ Established & developed competitor in neighborhood i.e. China.
■ Counter campaign by other countries i.e. China, Taiwan, Russia, Brazil etc.
■ Poor global ranking for “ease of business doing index” i.e.100 due to which foreign
bodies hesitate to invest.
■ Internal & across border political instability.
■ Changing global political / economic scenario and their impact on India.
■
VALUE CHAIN ANALYSIS

■ PRIMARY ACTIVITIES
■ Inbound/ Outbound Logistics
■ India adopted a uniform goods and services tax (GST) nationwide.
■ Analysts estimated that the GST could add 1.5 percentage points to India's already
fast-growing economy by eliminating inefficient tax avoidance practices, including
those costly, decentralized, state-by-state distribution networks. It will be much more
feasible for companies to pursue DC network strategies that use larger regional
hubs instead of multiple smaller ones. And that, in turn, will help improve their
overall India logistics efficiency.
■ Operations
■ India was linked with cheap processing and outsourcing work. An increasing amount
of the work is in big data and analytics, mobility, artificial intelligence, machine
learning, internet of things, blockchain and robotics.
■ Marketing and Sales
■ Marketing of goods made in India inside our country was conducted in order to
promote growth of our economy. Exports were increased and imports were reduced.
High quality goods were manufactured within India and thereby dependence on
foreign goods were reduced. Technology was bought and manufacturing was done in
country limits.
Support Activities
■ Firm Infrastructure
■ Infrastructure is integral to the growth of any industry. The government intends to
develop industrial corridors and build smart cities with state-of-the-art technology
and high-speed communication. Innovation and research activities are supported by
a fast-paced registration system and improved infrastructure for Intellectual Property
Rights (IPR) registrations. Along with the development of infrastructure, the training
for the skilled workforce for the sectors is also being addressed.
■ Human Resource Management
■ Growth in Sales: When good quality products will go into the hands of the consumer,
the satisfaction of consumer will result in increase in demand of the goods. Hence,
the sales will be boosted which in turn will boost the production and hence the
manufacturing unit will flourish.
■ Cost Reduction: Up to date trained and knowledgeable work force will decrease and
automatically omit the defects for the production system which will in turn bring the
cost of production down.
■ Focus on Organizational Goal.
■ Reduction of time taken in creating strategic or operational changes by
communicating the changes through a new set of goals.
■ Organizational development.

■ Technology Development
■ Because of make in India the availability of raw material and machinery have gone
up we have started doing a lot of backward integration (which was not possible
earlier) with the help of new technology, and we will see more backward integration.
Earlier TV cabinets and speaker were also imported from other countries now with
all these raw materials we have started manufacturing in India which is a big step.
 CRITICAL ANALYSIS ON THE BELOW PAR
PERFORMANCE OF MAKE IN INDIA
CAMPAIGN
■ To make a product and capture a significant market share is not an easy task. There
may already be one or more persons making the same product.
■ To make the product, the intending manufacturer must make it better or cheaper or
reach it to the consumer sooner or be able to offer something which makes his
product more attractive to the consumer. It is here we face the hurdle of ‘FACTOR
COSTS’.
■ Land, labour, electricity, technology, transport, cost of capital, cost of borrowing,
and many others are factor costs.
■ Factor cost are not in India’s favour
■ The CSO has released the quarterly growth rates of Gross Value Addition (GVA) of
manufacturing at constant prices (2011-12).It is placed alongside the growth of
overall GVA.
■ Between Q1 and Q4 of 2016-17, the growth rate of manufacturing GVA had halved.
The weakness of the manufacturing sector is reflected in the steady drop in the
growth rate of overall GVA.
■ The conclusion is that apart from the announcement of ‘Make in India’, there has
been little policy or administrative support.
■ Another factor is that in India the only thing that is cheap is labour but the labour in
India is largely unskilled.
■ All unskilled jobs (even skilled ones) are now being automated. If you go to an
automobile manufacturing or steel manufacturing plant there is little room for
humans.
■ Now the objective of the government in supporting Make in India is to create more
jobs. The government cannot be seen to be supporting enterprises that enrich their
investors and destroy the jobs created by their competitors.
■ Every innovation that is being rewarded today and which is seen as having potential
for the future is one which destroys thousands of jobs
■ Ultimately job creation cannot happen because the government snaps its fingers
and decides that there should be jobs or through an administrative order that
requires companies to employ more or prevent job destroying technology from
coming in.
■ It needs strong regulators and strong institutions to ensure that businesses do not
create monopolies, crony capitalists or adopt unfair practices.
■ Another factor decreasing the efficiency of Make in India campaign is the stalling
Economic projects.
■ As of September 2017, the value of stalled projects stood at US$204.26 billion (Rs
13.22 trillion).
■ Also contradicting, policy measures by the government is affecting businesses’
ability to plan their processes in advance.
■ For instance, frequent changes in the GST rules is causing an environment of
confusion and uncertainty in the economy. In another recent example, the luxury
auto industry was blindsided by the government when the maximum levy was almost
doubled, immediately after GST rates were set.
■ India cannot rely on big-ticket industrial units alone to transform into a
manufacturing hub.
■ It must create a positive environment for small and micro businesses to function
and grow in. Policies for these businesses must include flexible credit instruments,
good industrial linkages, relaxed labor norms, and provision of some managerial
assistance for scaling up businesses
THANK YOU