Challenges that indian businesses are going to

encounter in their drive for internationalization

a) Intellectual property rights
Most of the pharmaceutical companies which are operating on India
have been reverse engineering the drugs faced this problem because
of the product patent regime in other countries. The solution is to
enhance the research and development. E.g. Dr. Reddy’s
b) Local Regulations imposed by governments
An example of this kind has been the venturing of SBI into Singapore
market. The regulations regarding banking sector was stringent in
Singapore and they asked for a security from Indian government for
SBI’s operations.
c) Specific problems related to locality
As the political climate, cultural aptitudes are different in different
countries this can cause problems depending upon the locality.
d) Problem of ethnicity
It is clear from the Arcelor controversy that Indian firms may
experience problems related to ethnicity because of the mindset of
targeting market, although Arcelor is not an Indian company.
e) Management problems of the organization will go difficult
Since the organization is growing more and more complex and the
communications between parent and their subsidiary companies
becomes difficult, it is possible that management problems can arise.

Cultural integration issues have troubled the Tatas since their buyouts
of Jaguar and Corus in Europe and similar global acquisitions by
other Indian companies have encountered several obstacles.
A good understanding of all regulatory issues involved not only in the
deal, but also those, which crop up after any acquisition. Each nation's
government has its own compulsions, and nationalism could be a
major deterrent to a foreign company taking over a local brand. Legal
experts say that this time Bharti and Zain got in touch with regulators
early on to understand the possible issues in detail before they signed
the deal.  
The autocratic ways of Indian businessmen have been responsible for
a number of their problems on foreign shores. Indian promoters have
the tendency to get excited with their ventures abroad and have, in the
process, shot themselves in the foot by trying to turnaround their
buyouts in a quick time. Indian companies need to learn the art of
managing labour and work councils in Europe. These are very strong
lobbies and are very well connected politically. 

When Clutch Auto acquired US-based clutch component distributor

Pioneer in 2006-07, it faced similar problems. Since they had
acquired a company they had been dealing with for the last 20-30
years, they did not consider the cultural integration aspect actively
initially. The staff at Pioneer did not want to leave Meridian,
Mississippi where the plant was based. Deciding not to disturb the
established setup, Clutch Auto decided to let them continue at that
plant. If they had moved, the operations would have been disturbed,
as many of the senior management executives would have left the
organisation.