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Learning Outcomes:
CLO 2: Carry out effective self-evaluation through discussing economic systems in the international business context
Case study
Please readCase 9: FDI in the Indian Retail Sectoravailable in your book International Business: Competing in the Global Marketplace (13th ed.), at page no.637, and answer the following questions:
1. What explains the fragmented nature of Indias retail sector? What are the benefits of this system? What are the costs? (2 Marks)
The fragmented nature of Indias retail sector can be explained by the dominance of small, family-owned businesses and traditional market structures. Many retailers operate on a very small scale due to limited access to capital, low entry barriers, and strong cultural preferences for local shops.
This system provides several benefits. It creates employment opportunities for a large number of people and supports local communities. Additionally, small retailers often offer personalized services and flexible pricing that appeal to customers.
However, there are also costs. Fragmentation leads to inefficiencies in supply chains, higher distribution costs, and limited economies of scale. It also reduces the ability to maintain consistent product quality and limits technological advancement in the sector.
2. How might investment by foreign retailers change retailing in India? What are the potential benefits of such FDI? (2 Marks)
3. Who stands to lose from FDI into Indias retail sector? Who stands to gain? (2 Marks)
4. Why has India been so slow to change its laws regarding foreign ownership of retailers? What, if anything, can foreign retailers do to influence the laws in a way that benefits entry? (2 Marks)
5. Given the political and economic realities in India, what is the best entry strategy for a foreign retailer? (2 Marks)
References should follow the APA citation style.
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