Professional Documents
Culture Documents
Catalina Sandu
Catalina Sandu
Catalina Sandu
BM7033
Student name: Catalina Sandu
Student id: F2206327
EXECUTIVE SUMMARY
When entering a new market abroad, it is crucial for multinational corporations to
do a thorough examination of the local business climate. This research compares
and contrasts the business climates of England and India using the International
Relations Model, the Hofstede Model, and the Porter Diamond. These models have
been crucial in helping a global company learn more about foreign markets like
England and India. This research uses primary and secondary sources to provide an
in-depth analysis of the global business climate. Secondary sources include
periodicals, articles, lecture notes, textbooks, and websites. Two individuals at
multinational corporations (Tesco Plc and Reliance Retail Limited) are interviewed
as the major data source. Based on what we know now, it is clear that for a
company to succeed on a global scale, it needs to know and adapt to the external
business environment.
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Table of Contents
Executive Summary...................................................................................................1
Introduction...............................................................................................................4
Hofstede’s Model...................................................................................................5
Power Index........................................................................................................6
Individualism......................................................................................................7
Masculinity.........................................................................................................7
Avoiding Uncertainty.........................................................................................7
Long-term Outlook.............................................................................................7
Indulgence..........................................................................................................8
England..................................................................................................................9
India.....................................................................................................................13
Analysing the possible Risks and Benefits of doing Business in these Selected
Nations.................................................................................................................17
References...............................................................................................................19
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INTRODUCTION
The purpose of this paper is to examine and compare the worldwide marketplaces
of two different types of countries—one developed and one developing—and to
assess the commercial prospects available in each. In this sense, we might choose
between England as an industrialised nation and India as a rising one (Chatterjee et
al., 2021). The fact that England is the most developed county in the United
Kingdom and the most fruitful market for large multinational companies is a
crucial factor in the country's selection. Further, India is picked because of the
country's allure to investors and its position as the fastest-growing major economy
worldwide. The commercial prospects in these nations were chosen for this
purpose. The demographic and economic realities in these nations present a
number of revenue generation prospects for the organisations. England, the country
with the most people in the United Kingdom, is also the most diverse and
prosperous. Because of these criteria, retail companies are able to grow their
operations successfully (Sharma et al., 2020). India is also the world's fastest-
growing big nation and the second-most populous. Investors at the retail level are
drawn to these nations in large part due to their favourable demographics.
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Both primary and secondary sources of information are used to accomplish the
goals of this study. For this reason, we resort to secondary data collecting
techniques such as scouring the internet and referencing published papers, books,
and textbooks (Contractor et al., 2020).
HOFSTEDE’S MODEL
Six distinguishing characteristics describe in Hofstede model cultures: power
index, collectivism against individuality; high uncertainty avoidance; short-term
versus long-term orientation; femininity versus masculinity; moderation versus
excess (Bhatnagar & Budhwar., 2018).
Along this axis, we see how a culture deals with the fact that its individuals aren't
identical. The phrase "power gap" is used to describe the extent to which the less
powerful members of a country's population expect and accept a disparity in the
allocation of power across the country's various institutions and organisations. This
is due to the fact that the majority of people in a society accept inequality even if
their leaders do not (Shams et al., 2021).
India fares badly in this regard. Indian workplaces are informal in terms of
hierarchy, with superiors being easily accessible and management placing a
premium on employee contributions (Shams et al., 2021). The lines of contact
between management and staff are always open and welcome. Similarly, the tone
of the communication is relaxed, the exchanges are candid, and the teamwork is
seamless.
For the United Kingdom to get a perfect score of 90, it must have a culture that
highly values independence and self-determination. Because of this, people isolate
themselves and their immediate families, and society as a whole becomes more
disjointed. Successful workers in the business world exhibit independence and
initiative. In the exchange-based world of work, merit or evidence of what one has
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done or can do is also taken into account throughout the recruitment and promotion
procedures (Aguilera & Grøgaard., 2019). Therefore, Hofstede's model compares
and assesses these two international marketplaces, India and the UK, to learn how
their respective cultures influence businesses in these regions.
Power Index
On the power ranking, India comes in at 77, with the United Kingdom at 35. The
Hofstede Perspective. It suggests that many individuals in India, in contrast to
people in the UK, believe power is distributed unfairly. Similarly, in Indian
organisations, leadership rises to prominence, takes choices, and commands
obedience from subordinates, resulting in restricted employee freedom, disinterest
in work, sluggish output, and stagnant innovation (Meyer et al., 2020). In contrast,
the situation in the United Kingdom is marked by a minimal power gap being,
indicative of high demand for human rights, an equitable workplace, widespread
employee satisfaction, fervent employee dedication, high levels of productivity,
and innovative breakthroughs.
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Individualism
In comparison to the United Kingdom, where individualism is valued at 89, India
ranks 48th. India scored in the centre of the scale, indicating that the country
displays characteristics of both collectivism and individualism (Radulovich et al.,
2018). Collectivism posits that individuals, to act in a way that benefits society,
must take into account the opinions of those around them, including those in their
own families and places of employment. Conversely, individualists must focus
solely on connecting with their own kind. In India's collectivist workplace culture,
people are evaluated on the basis of how often and how closely they engage with
others. In contrast, in individualistic workplaces, everyone is responsible for their
own work, and advancement is based on the quality of one's contributions. The
individualist environment in the United Kingdom encourages employees to focus
only on themselves, how to increase personal growth by defining their own
presentation goals and objectives and how to accomplish strong teamwork by
fixing their own deficiencies in order to fulfil collective goals (Mendon et al.,
2018).
Masculinity
Even though both the United Kingdom and India have a macho culture, businesses
in the United Kingdom are more traditionally masculine (66). Success tales, it
would seem, serve as an inspiration and drive for individuals in the United
Kingdom and India. It demonstrates that Indians and Britons both work hard to
achieve organisational goals.
Avoiding Uncertainty
There is a difference of 5 points between the UK's score of 35 and India's score of
40. Indians like to find a way to make do with what they have rather than accept
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failure. In contrast, people in the United Kingdom tend to think beyond the box
(Fischer & Singh., 2020). The people of the United Kingdom are known for their
adaptability and ability to come up with novel solutions to problems in the face of
unforeseen setbacks in business.
Long-term Outlook
Both countries tie at 51 on this measure. Entrepreneurs in both countries strive to
maintain a realistic outlook, accept change as inevitable, create business strategies
that are responsive to external factors and advocate for hard work and frugality as
means of future-proofing their companies.
Indulgence
The score for India is 26, whereas the score for the UK is 69. In India, people tend
to rein in their baser impulses and spend less time enjoying the fun. UK residents,
on the other hand, value spontaneity, pleasure, following their gut, and giving in to
their wants above all else (Malik, 2018). In the United Kingdom, citizens are not
restricted in their ability to spend money on pursuits of personal interest. They are
therefore characterised by a healthy dose of insolence toward their professional and
personal endeavours. Therefore, workers in the UK are happier in their positions
than their Indian counterparts.
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examples of the more conventional determinants of economic competitiveness.
Conversely, Porter's diamond theory outlines four diamond points as
interconnected elements of a country's comparative economic advantage.
Finance and banking, information technology, oil and gas, retail, healthcare, and
manufacturing are among the United Kingdom's most important economic sectors.
In 2018, the banking industry contributed £13.2 billion to the UK economy,
making it the third biggest in the world. Forecasts put grocery store sales in the UK
at $189.9 billion by 2021, while the healthcare industry there brought in £70 billion
in 2019–2020. This is indicative of the high level of competitiveness present in
modern business across both countries (Estrin et al., 2018).
ENGLAND
Statistics about the UK Population
There are 68.2 million people living in the United Kingdom, 18 different ethnic
groups call the nation home, and women in the country can expect to live until 83.1
years old while men in the country may expect to live until 79.4 years old.
Furthermore, Statista reports that there are 938.7 thousand people in the UK who
are 55 years old, 17.68 per cent of the individuals aged 0-14 years old, 63.76% of
the population aged between 15 to 64 years old, and 18.65% of the population aged
65 or older (Bashir & Farooq., 2019).
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Figure 1: UK Population
With a death rate of 9.429 per 100,000 people, the United Kingdom ranks dead
last. The UK has a 1.7% fertility rate and spends £3,227 per person on healthcare.
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Figure 2: UK Economical Conditional
The regional manager for Tesco in England has cited the social component as the
company's greatest achievement (Nuruzzaman et al., 2019). The diverse ethnic and
religious composition of England's population has inspired us to diversify our
offerings to meet the needs of all of our consumers. As a result of the richness of
our social makeup, we have been able to take advantage of several chances to run
our firm efficiently and accomplish our goals. The country's burgeoning population
also presents new possibilities for extracting substantial sums of money from the
marketplace. The respondent has also portrayed England as a country with
advanced technology. We have adapted to the changing technological landscape to
ensure the smoothest possible running of our firm.
The regional manager also indicated during the interview that keeping their most
knowledgeable and seasoned workers in their positions is a top priority. Skilled,
innovative, and experienced workers are in limited supply in England. As many of
the personnel in question are now based in England from the European Union, the
subject of Brexit has only made matters worse (da Silva Lopes et al., 2019).
Employees in this position are limited in their ability to move about freely in the
UK labour market because of the Brexit problem. Based on the feedback of Tesco's
regional managers, it is determined that a number of extraneous elements can
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influence the fortunes of a global enterprise. One study has concluded that, in this
context, adequate attention to external elements that might affect a company's
business operations is crucial for international corporations.
To provide an example, England's political stability helps Tesco run its company
well. However, the topic of Brexit has raised political worries that can have an
effect on the commercial operations of multinational organisations. Multinational
organisations can do this because the robust English economy allows them to
charge greater prices for their goods and services. Foreign direct investment (FDI)
policies encourage lower interest rates and help multinational organisations run
their businesses effectively (Shams et al., 2021). According to the findings of two
academics, foreign businesses benefit from the country's social variety by being
able to provide a broader selection of novel products and services to local
consumers. In England, this is being used to great effect by international
corporations like Tesco and others to conduct their daily business. Moreover,
introducing cutting-edge equipment into the workplace increases efficiency
without increasing expenses. As a result of England's technical prowess, foreign
organisations may easily make use of the country's technological advantages
(Aguilera & Grøgaard., 2019).
INDIA
Demographics and Features of India's Population
Current estimates put India's population at 1,417,173,173 as of the year 2022.
Current mortality rates are at 7.34 per cent, but the life expectancy of Indian males
is 68.46 years. Negritos, Protos, Mongoloids, Nordic Aryans, Dravidians, and
Western Brachycephalians are just some of India's 22 official languages, and they
are just some of the six primary ethnic divisions there. Rapid urbanisation, higher
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levels of education—especially among women—and progress in reducing poverty
have contributed to India's slower rate of development in recent decades (Meyer et
al., 2020). While India's population growth has slowed dramatically in recent
years, it is still outpacing China and is projected to overtake China by 2026, when
both countries are projected to have roughly 1.46 billion residents. India is
projected to overtake China as the world's most populated nation after 2030. By
2060, India's population is projected to reach its maximum of 1.65 billion, and then
it will begin a gradual decline. India's birth-rate peaked more than a decade ago
and has since been falling (Radulovich et al., 2018).
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sources of income are the Indian Oil Corporation, Reliance Industries, State Bank
of India, Tata Motors, Oil Nature Gas Corporation, Bharat Petroleum Corporation,
and others.
At current values, the GDP estimate for India in FY22 was Rs. 232.15 trillion
(about $3.12 trillion in American dollars). India is home to the world's third-largest
unicorn base, with more than 100 companies worth a total of US$ 332.7 billion
(Radulovich et al., 2018). In addition to concentrating on fossil fuels, the
government is working on generating 40% of its energy from renewable sources by
the year 2030.
For India to promote productivity and economic growth, the McKinsey Global
Institute suggests the country establish 90 million non-farm jobs by 2030. Between
2023 and 2030, GDP growth of 8-8.5% will necessitate a net employment rate
increase of 1.5% every year. The rising trade deficit was the primary factor in the
expansion of India's current account deficit (CAD) in 2021–2022.
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Figure 4: India Economical Condition
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The regional manager of Reliance Retail in India is concerned about the success or
failure of multinational businesses in the region, and he has thus turned his
attention to the external elements that may have an effect. The regional manager
claims that India has the most populous democracy and the most stable political
system in the world, both of which are helpful to foreign organisations. As a result
of the country's relative political stability, India has attracted significant investment
from outside companies (Malik, 2018). Unfortunately, India's high corruption rate
has been a problem for us. It has made it harder to do things like run the country's
government or expand the economy. High levels of corruption have made it
difficult, if not impossible, to develop our firm in a sustainable way, and have
driven up the costs of doing so. However, from what I have seen, the public's
growing consciousness and government initiatives are fighting corruption head-on.
The firm now sits at position 106 on Fortune's 2019 list of the 500 biggest
companies in the world. In 2016, Platts ranked it as the world's ninth-best energy
firm. Reliance is India's top exporter with an estimated Rs 147,755 crore in exports
and access to markets in 108 countries. Reliance is responsible for over 5% of
India's total income from traditions and extracts duty. Earlier this year, Reliance
Industries Limited became the first Indian business to surpass a valuation of Rs 9
lakh crore. The oil and gas collaboration between Reliance and Bharat Petroleum
was announced around the same time. BP paid a total of $7.2 billion, including the
KG-D6 hindrance, to purchase a 30% stake in 23 oil and gas creation sharing
agreements operated by Reliance in India. Reliance and BP also went into business
together to sell imported natural gas in India. By the end of 2018, RIL and the
Russian company Sibur had finished building a butyl elastic production in the
Indian city of Jamnagar, Gujarat. Due to its growth and development into new
areas, Reliance Industries is now among the top Indian MNCs. Mumbai, the capital
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of the Indian state of Maharashtra, is home to Reliance Industries, India's largest
publicly traded company.
In contrast to the United Kingdom, the United States, and Australia, India has a
higher interest rate, which has raised the cost of investing in the country.
According to the research, economic reasons might be the most important aspect
for multinational companies when expanding their operations in India. The
regional manager in India has indicated, with an eye on societal considerations,
that India is a significant consumer market for retail investors (Chaudhary et al.,
2020). A regional manager has informed us that, to the best of their knowledge,
multinational corporations are exploiting the region's massive consumer market.
The low-cost labour facilitates our ability to get into this massive market we are
able to attract. Several large corporations have set up shops in India because of the
country's cheap and plentiful labour supply. As we have seen, India's wide cultural
variety is reflected in the country's many languages, ethnic groups, and religions. I
have seen that the income level of the middle class in India has risen recently and
that the standard of living there has improved as a result (Mukherjee, 2018).
International businesses find these societal characteristics helpful when they enter
the Indian market.
The regional manager has stated that he believes it is simple for firms to
incorporate new forms of technology into their daily operations in India. From
what I have seen, the popularity of social media and other online communities has
exploded in India, providing excellent prospects for foreign companies to sell their
wares in the country. International companies may take advantage of a number of
advantages by setting up a shop in India, including a highly qualified IT staff and a
cutting-edge IT infrastructure (Estrin et al., 2018). Based on the regional manager
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of Reliance Retail's observations and practises, the Indian market appears to be
particularly promising for outside investors. Foreign investors can maximise the
benefits of the external business environment to increase the efficiency of their
operations. India's social, political, economic, and technical conditions are ideal for
the growth and development of international organisations. It is easier for
multinational corporations to run their daily operations with fewer obstacles.
In contrast, the United Kingdom's GDP per capita is $48,709, which is more than
India's GDP per capita. In the UK, the median annual salary is $43,732. The 2019
budget of the British people was 1.38 trillion pounds sterling. There has been a
recent uptick in eco- and ethically-conscious shopping. Numerous factors,
including cost, aesthetic value, quality, and possible environmental advantages,
enter into the decision to purchase a product or service. Thus, British citizens are
today superior shoppers to Indians, but this will change as India develops
economically and its population grows (Mendon et al., 2018).
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CONCLUSION AND RECOMMENDATION
The purpose of this assignment is to do secondary research to analyse two
worldwide markets, one emerging market and one industrialised country, for a
multinational corporation interested in expanding into these regions. The United
Kingdom (a highly developed economy) and China are both taken into account in
this study (emerging market). There is a high degree of predictability in terms of
trade, corporate growth, and investment prospects because of the United
Kingdom's stable, business-friendly climate. India's economy is one of the fastest-
growing in the world, and it has the potential to attract the most foreign direct
investment (FDI) and receives robust backing from the government in doing
business (Bashir & Farooq., 2019). The average age of India's population is quite
low compared to that of other countries. The increasing size of India's middle class,
together with the country's substantial foreign direct investment (FDI), large
investments in technology, and supportive policies at the federal level, all
contribute to India's potential as a commercial market. However, doing business in
India is not without its share of potential drawbacks. These include the fact that the
nation is not prepared, that it does not have an established infrastructure, that it is
unpredictable, that the competition among businesses is fierce, that its regulations
are always changing, that there is a fear of inflation, and that there is a lack of
fiscal prudence (Chatterjee et al., 2021).
In order to get into the Indian market, MNCs might use the joint venture
market entrance strategy, which provides them with access to local
knowledge, resources, skilled people, technology, expertise, networks, and
otters. In order to succeed in the Indian market, the company must first gain
familiarity with the local business climate and cultural norms.
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In order to get into the British market, businesses might consider licencing
and forming joint ventures. Further, the UK has a huge customer base. Thus
direct-to-consumer eCommerce methods like drop shipping will thrive there.
To be successful in this role, the organisation must understand how Brexit
will affect a certain sector in the UK.
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