International Business Essay Example | Topics and Well Written Essays - 2250 words

global Business - Essay Example1. Introduction The French food retailer Groupe Auchan S.A. (Auchan) is one of the worlds top retail and distri merelyion groups and the fourth largest food retailer in France with a market partake in of about 12 percent (Standard & Poors, 2011). It competes with European giants such as Carrefour and Casino. Auchan has a steadfast position in the hypermarket segment which contributes about 80% of the groups revenues. In addition to desirous competition, rising inflation has been holding back consumer spending in Western European markets. Auchan has expanded into several(prenominal) Asian countries and also in Central and Eastern Europe. India has a immense retail market but it has FDI restrictions and does not permit foreign companies into multi-brand retail. Auchan has been attempting to enter into India through a franchise agreement with Dubai-based turning point Group. The confines Group, founded in Bahrain with a single shop, has invoken into one of the largest retail organizations (Landmark Group, 2012). Currently, the Landmark Group operates the SPAR hypermarkets and supermarkets in India but their agreement with SPAR is set to come to an end. Auchan Groupe intends to enter into a franchise agreement with the Landmark Group until India amends its FDI polity. As of now India does not permit FDI (Foreign Direct Investment) in multi-brand retailing. 2. Rationale for choosing India India offers huge potential for the retail vault of heaven as the disposable income of the middle-class has been growing. FDI in different sectors has been increasing in India and the Indian currency (Rupee) has become strong in the international market. However, PEST analysis would help in evaluating if Auchans decision to enter India is a viable proposition. Political The political situation in India is wobbly as it has a coalition government since no single party has clear majority. The industrial sector also faces opposition and the grow th in agriculture has been slow. However, the role of the central government as the go-between of the state governments is now ending (Mohan, 2006). This indicates that states now have autonomy while the growing middle-class favours liberalization. The commerce conglomerates in India have turned their attention to retailing (Deloitte, 2008). The Ministry of Commerce and Industry, Government of India, is the nodal agency for monitoring and reviewing the FDI policy in India on continued basis (Tyagi, 2010). Economic The Indian miserliness has undergone tremendous change. The Indian economy has recorded high growth rates and is an attractive destination for investments (IBEF, 2011). The Indian economy is evaluate to grow at 7.5% and is expected to contribute to the recovery of the world economy. The Gross Domestic Product (GDP) was 8.5% during 2010-11 against 8% in 2009-2010. Over the adjoining two years India is expected to attract FDI worth USD 80 billion harmonize to a research report by Morgan Stanley as cited by IBEF. Indias retail sector is expected to grow to $635bn by 2015 (Sengupta, 2008). At the same time, food retail is expected to grow to $1.6bn over the next five-year period (Srivastava, 2008). Social The modern cities such as Delhi, Mumbai and Bangalore show evidence of modernization and adaptation to westward standards under the influence of globalization (Pick & Dayaram, 2006). Growth and development in communications technology, development of transport infrastructure, far-flung availability of western