Company Profile
ToolsCorp Corporation is a thriving business entity situated in Tennessee in the United States of America. It has a branch in Canada that is also doing very well economically and has established a lasting customer base in the region. The corporation is involved with building power tools, lawn mowers, lawn furniture, microwaves and ranges. Its produces its products locally. The products are then sold through large retailers by placing sales papers in every Wednesday and Sunday papers. Although it has a thriving business in the United States and Canada, the corporation is trying to enter the global market. It is why the organization is considering different markets that would present a rich investment opportunity and these include the Indian market.
Industry Analysis
Demand for power tools has been forecasted to increase 4.8 percent every year through 2018 to $32.8 billion globally. This is a considerable increase from gains recorded in past years. Improvements will be tremendous in world’s fastest growing areas. Such are the places where massive construction are expected to take place. Generally, power tools use in worlds growing areas is not very saturated, and most sales are to first time buyers. Since India and China are in the process of modernizing their housing systems, they will witness a rapid growth in demand for power tools. In developing areas, sale of power tools will be increased by developed economic activities and highly increasing construction activity by the US and European nations. The U.S is a vital market for power tools because it has various organizations involved in construction, general manufacturing and motor vehicle production and repair (Aghion et al., 2016). India has a relatively low market penetration for power tool. Poverty and availability of low cost labor using hand tools has hindered use of power tools (Bwagati & Echeverri, 2017). Corp Corporation will have to conduct extensive marketing strategies to be able to penetrate the not so saturated industry globally. This will enable the organization to enter the market bearing in mind the major competitors based mostly in the U.S.
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PEST Analysis for Indian Market
PEST analysis is a management method by which an organization can use to assess main factors that may affect its operations from external sources. An in-depth assessment on these four areas covered by the PEST analysis is used to facilitate a functional strategic plan (Will, 2018). It is necessary to carry out an in-depth PEST analysis for ToolsCorp to ensure that the organization is aware of the various aspects of this market before setting shop.
Political Analysis
In the whole world India is the largest democracy. It is a country highly controlled by politicians (Will, 2016). Business operations in the country are greatly controlled and ordered by politics. Corruption is deeply rooted in the country and has become part of the day to day operations. Influential corruption diminishes competition and competence in the Indian economy. India was ranked 134 th out of 183 countries in the world banks ease of doing business in 2011. Starting a business in India is faced with restrictions in construction permits and enforcement of contracts. Foreign direct investment (FDI) is adversely affected by corruption, thus raising the cost of doing business; and difficulties in regulatory certainty. Due to that, FDI entrance in the country is relatively low as compared to other countries and stands at US$24.6 billion in 2010. A considerable amount in tax revenue has been lost due to corruption and India has faced a growing budget deficit which is at US$153 billion or 8.9% of total growth (GPD). In India politics affect the operations of trade unions. Trade union leaders are more interested in the endeavors of their political parties as opposed to those of the workers (Jackling and Johr, 2018). The leaders also have minimal knowledge of the workers and their working conditions. Thus, the workers are affected negatively. Therefore, in India labor-intensive business face the problem of politics being incorporated into the trade unions.
Economic Analysis
According to Tenhunen (2017), India stands in the fourth position in the world’s economy; producing $9.4 trillion in goods and services as per research conducted in 2017. Inspite of the great recession, India had a swift growth of 6.7% in 2017. The phenomenal growth has lowered poverty by 10% in the recent years. Growth rates were higher than 6% between 2014 and 2017 under the leadership of Nahrendra Modiwho was elected the Prime Minister in 2014. Under his leadership, he reduced bureaucracy and regulation and simplified the tax code. Half of India’s labor market depends on agriculture, while a third is in the service industry. India shifted towards a market economy that has deregulated several industries and has embraced foreign direct investment.
The cost of living is lower in India as compared to United States. Its GDP is at $7’200. India boasts of many highly educated workers. English being its official language, has attracted U.S technology. For example, an Indian call center employee only costs $12 per hour. In India the middle class is close to 250 million people; this continues to grow its consumer spending, thus economic growth. Prime minister Modi is against India’s government beauracracy; thus making the implementation of any economic policy difficult. U.S financial policy has affected India’s economy. When the lower interest rates strengthened the value of the dollar through Federal Reserve, the value of the Indian rupee weakened. Thus, the central bank of India was forced to raise its interest rates. Therefore, the Indian economic growth slowed leading to stagflation in 2013. The declining rupee caused inflation (Tambi, 2015). In return slow economic growth came through contractionary monetary policy to curb inflation. When the U.S Federal Reserve started interfering with the quantitative easing program, investors started avoiding India. Climate changes derails plans to better people’s ways of life in India. Most Indians face severe water scarcities. A large percentage of the population is affected by flooding. Thus, economic activities are adversely affected by climate changes.
Social Analysis
Like any other nation, India faces a number of social issues that derails its economic operations. Examples of social factors affecting India is caste system. Caste system refers to a scheme of defining class or giving pilferage to certain persons from the time they were born (Broadman, 2016). In India there are certain jobs that are given to certain people based on their competences. Therefore, such a system has encouraged inequality, increasing the crack between the higher and lower class. Caste system poses a risk to the National Integration of India. Poverty has also greatly affected business operations in India. High level of unemployment and poverty leads to child labor. Due to child labor, children are denied proper education and their mental growth is stunted. It stagnates personal growth and the ways of life remains low.
Child marriage has also adversely affected India’s economic growth with girls being married off at an early age. Out of child labor girls get pregnant at an early age. Since their bodies are not fully developed, it sometimes leads to maternal deaths. Also because of little compatibility and understanding, the married couples encounter many difficulties. In return, this leads to all forms of abuse inflicted on these girls. Over the years women have been confined to inferior positions in the society. Therefore the Indian workforce gets deprived of thoughts of female workers which could contribute largely to the country’s economic growth. India’s dowry system has also greatly affected the economy. The bride’s family is expected to spend lavishly regardless of their financial ability to do so. To fulfil this obligation, most parents have taken bank loans to finance their daughter’s wedding ceremonies. Over the years, India has witnessed many deaths caused by such processes.
Sati system is an act of a widowed woman committing suicide on the burial furnace of her husband. It happens whereby a man of high-caste marries a woman of low-caste. This is an evil and immoral practices being practiced in India today. The practice robs women of their right to live. It brings down women’s self-respect. Poor Sanitation and cleanliness is a major issue in India. Therefore, many people get affected by diseases such as diarrhea, cholera and others. Poor sanitation also affects children growth and development. Religion fanaticism has been a major contributor to violence and war in India. As a result, people get fearful and the development of the country is greatly affected (Carr & Chen, 2014). The whole situation causes disunity. India’s economy has been adversely affected by juvenile delinquency. It has affected many minors driving them to crimes and thus stunting their education. The Indian government has channeled efforts and funds towards ending these harmful social activities, in an effort to grow its economy further.
Technological Analysis
According to Osmond (2019), over the years, India has recorded increased technological activities. India has been ranked the 3 rd largest ecosystem boasting of more than 100 accelerators, 200 active angels, 150 VCs and more than 4,200 start ups operational in the country. India is the second highly connected nation in the whole world with more than 300million people being able to access the internet. The emergence of low cost smart phones and computers, Indians have been empowered to connect with each other. The rural parts of India have not been left behind in these developments. However, India has a long way to go in connectivity with only 23 out of 100 people having technological gadgets. Technological development has increased consumer spending over the years and is expected to 3.5trillon by the year 2020.
Technology has revolutionized the way businesses go about their businesses in by enabling small entities to upgrade to the level of large organizations. Companies use technological devices to develop competitive merits in the market place. Businesses have been able to use technology to lower operating costs (Viswanath et al., 2015). Technology has also helped organizations to secure sensitive information. Over time communication processes has greatly improved for businesses. Companies have recorded increased employee productivity. English language has become more pervasive in India due to technology, thus improving communication system.
According to this study, India has shown tremendous growth politically, economically and technologically. Due to its growth in the areas of analysis, India’s business activities are thriving. It can be seen that, the economy is in much better standing as compared to other nations. However its social standing is still lagging behind and that has in a way derailed its economic growth. Nonetheless, ToolsCorp has a storng potential of making it in the Indian market and gradually establishing a strong market base for its products in this region. The analysis presented acts as a guideline on areas of the market where the organization would adapt well and areas that would need numerous adjustments to ensure that the company is successful.
References
Aghion, P., Burgess, R., Redding, S. and Zillibotti, F. (2016) “The Unequal Effects Of Liberazation: Evidence From Dismantling The Licence Raj In India.” Vol. 98, 4
Broadman H. (2016) “Africa’s Silk Road: China and India’s New Economic Frontier.”
Bwagati, J. & Echeveri G. (2017) “India in Transition: Freeing the Economy.”
Carr, M & Chen, M. (2014) “Globalization and the Informal Economy: How Global Trade and Investment Impact On Working Poor.”
Jackling, B. & Johl, S. (2018) “Board Structure and Firm Performance: Evidence from India Top Companies.” Vol. 17, 4
Osmond, V. (2019) “The Impact of Technological Changes on Business Activity.” February 2019.
Tambi, M. (2015) “Impact Of Mergers and Amalgamation on the Performance of Indian Companies.”
Tenhunen, S. (2017) “Mobile Technology in the Village: Icts, Culture, And Social Logistics in India. Journal of the Royal Anthropological Institute” Vol. 14, 3
Viswanath, V., Hillol, B. & Sykes T. (2015) “Of Information and Communication Technology Implementations on Employees Jobs in a Service Organization in India: A Multi Method Longitudinal Field Study.” Vol 19, 5
Will, K. (2016) “Corporate Finance and Accounting: Financial Analysis
