INTERNATIONAL MARKETING ASSIGNMENT 2

MBA 4018
TOPIC:
INDIA
v/s
DUBAI
Business development from 20th-21st century

GROUP MEMBERS
BARNALI DHAR 20212MBA0056
OM PRAKASH MAHATO 20212MBA0070
KETHRIN HORO 20212MBA0166

SUBMITTED TO:
Dr. UTTAM CHAKRABORTY
SOM
PU
INTRODUCTION
Indian entrepreneurship, innovation, and business firms have gone through a
plethora of changes, particularly in the last three decades. The most significant
change is the result of national government policies that had the effect of
moving away from postcolonial Nehruvian socialism and creating a climate for
more economic freedom for entrepreneurs and private businesses. The 1990s
was the watershed decade for these revolutionary changes. Indian business
suddenly took off with a new outburst of energy and enthusiasm in the 1990s
that was unprecedented in the post-Independence era.
In the 1990s, India made a transition from an inward-looking democratic
socialist economy that often discouraged international trade/investment and
allowed private business but overregulated it to a set of market reforms that
brought in foreign investments, connected India to the global market, and
created opportunities for Indian companies to venture abroad. A large range of
actors, both in formal (regulated by government policies) and informal sectors
(unstructured markets, not monitored by government regulations) juggled to
secure their own niches in new waves of policy changes, globalization trends,
and competition from foreign investments.
The post-Independence era (post-1947) presented a new political climate for
Indian business. There was growing antipathy toward capitalistic freedom
(often synonymized with colonialism) and private enterprise that was fueled by
the “socialistic” mindset of Nehru, the first Indian prime minister. He favored
government control of the economy, structured economic planning, and the
dominance of the public sector, but allowed a mixed economic model without
eradicating the private sector. With the regulatory acts of 1951 and 1956, the
government could determine location of industries, quantities, production,
price, and distribution of products. Thus began the era of the “license raj” for
the next fifty years, where control by the government set the dominant
narrative of Indian business. Nehru was inspired by the Soviet model and
economic practices of Communist China. Yet Indian business groups were not
totally demotivated, as they were left undisturbed in areas of consumer
products in a huge domestic market. The politically influential owners of
private big businesses worked and invested in developing mutually supportive
relationships between government and bureaucracy that sometimes included
“insider information” that could cause owners to invest or refrain from
particular business endeavors.
Regulations became more severe during Indira Gandhi’s (Nehru’s daughter)
governments (1966–1977, 1980–1984). She nationalized major banks (1969),
and introduced restrictive trade acts (1969) and foreign exchange regulations
(1973). In her governments, the number of foreign firms rapidly declined,
public-sector undertakings expanded, and fewer private businesses were
created than in earlier post-Independence governments.

Economic Reforms and the Re-emergence of Entrepreneurship

Rajiv Gandhi, who assumed the office of prime minister in 1984, nourished
visions of creating technological changes in India. There was already growing
disillusionment with the public sector, lesser apathy toward the private sector,
and a greater realization of the necessity of economic reforms. However, not
much changed in the 1980s except in the telecommunications sector, which
was transformed by the Centre for Development of Telematics (C-DOT) under
the visionary technocrat Sam Pitroda and his team of software professionals.
The major turnaround took place with the assumption of office of PM
Narasimha Rao in 1991 after the untimely death of Rajiv Gandhi.
Rao had the advantage of moving beyond the burden of the Gandhis’ socialistic
legacy. Much as there was an ideological acceptability of the necessity of
reforms, it was actually triggered by the country’s acute current account deficit
in 1990. At one point, India’s foreign exchange reserves fell to a cash
equivalent of two weeks’ imports. Rao appointed Dr. Manmohan Singh, a
Cambridge-trained economist, who succeeded Rao (2004–2014) as his finance
minister, to the surprise of many. The Rao–Singh team created history and
reversed the country’s fortunes. The new industrial deregulation, delicensing,
and export-oriented policies did away with the “license raj” and opened new
horizons for private enterprises. Tariffs on intermediate goods were reduced,
encouraging exports, and banking sector and stock market reforms were
initiated. Economic growth rates catapulted to 9 percent between 2003 and
2007, later moderated to 5.6 percent (2012) and 8 percent (2015–2016).

Some Popular Mergers and Acquisitions by Indian Companies

The start-up journey in India had been inspired by Indian technology
firms in Silicon Valley, along with the growth of the internet, the
dotcom boom, and the availability of funds through venture
capitalists.
India’s New Image in the New Millennium
While the 1990s provided major groundwork for entrepreneurial development,
the twenty-first century witnessed Indian companies scaling new heights in
diverse trajectories. One significant characteristic of the new decade was the
visibility and progression of Indian multinational enterprises (MNEs) and Indian
business leaders on a global stage. Between 2000 and 2009, 437 Indian MNEs
spent more than US $70 billion on 976 acquisitions. Indian firms were
aggressively accessing overseas markets, natural resources, technologies, and
skills. Competition from foreign direct investment into the Indian market also
provided a push to Indian firms to venture abroad, mobilizing integration of
the Indian market with the global economy. Most of the outgoing Indian firms
used mergers and acquisitions (M&A) and/ or joint ventures rather than
investing in green field ventures (building from the ground up) in order to get
quicker global recognition. While the majority of these investments entered
developed markets, such as the UK, Germany, Switzerland, and USA, to access
technology and skills (around 83 percent), Indian firms also targeted emerging
markets in Africa, Latin America, CIS countries, and other developing countries
(approximately 17 percent). These ventures gave rise to global business
leaders with commendable entrepreneurial capabilities. Kumar Mangalam
Birla, Narayana Murthy, and Mukesh Ambani were no longer familiar merely to
Indians.
The new-age Indian entrepreneurs were also facilitated by the process of
digitization, which has led to platforms for the creation of companies such as
Paytm, OlaCab, Flipkart, and Zomato. OlaCab, India’s most popular online cab
aggregator at present, does not own their own cabs or employ drivers, but
makes business by connecting users to drivers with a technological platform
through a cellphone application. Digitization is closely related to the rising
“start-up culture” in India. It is usually a technology-driven business idea with a
scalable business model that enables the start-up idea to transition into a
company with professional management, investors, incubators, and
accelerators. It is driven by the innovative energy of skilled technologists or
professionals working toward the commercialization of new products,
processes, or services. The Indian start-up ecosystem is one of the largest in
the world and grew from 7,000 in 2008 to 50,000 in 2018.9 The founders are
usually skilled enterprising students, engineers, and/or management graduates
between twenty and forty years old.

MILESTONES IN INDIAN BUSINESS

1958: Dhirubhai Ambani establishes the Reliance Group as a trading house
called Reliance Commercial Corporation.
1968: The Foreign Investment Board is established.
1969: 14 leading banks are nationalized.
1969: The Monopolies and Restrictive Trade Practices Act becomes law.
1970: The Industrial Licensing Policy comes into force, confining the role of
large business to core, heavy and export-oriented sectors.
1971: The collapse of the Bretton Woods system sees the rupee pegged to the
pound sterling. This causes real depreciation and exports to grow at 15% in
nominal terms over the following decade.
1973: The Foreign Exchange Regulation Act is passed.
1977: Reliance Industries launches its initial public offering (IPO).
1978: Housing Development Finance Corporation Ltd, or HDFC, the first
specialized mortgage company in India, disburses its first home loan.
1980: India’s first credit card, Central Card, is introduced by the Central Bank of
India.
1981: Infosys Ltd is incorporated by N.R. Narayana Murthy and six other co-
founders.
1983: First batch of Maruti cars rolls out, priced at about Rs35,000 apiece.
1986: S&P BSE Sensex, India’s first equity index, is launched.
1987: India’s first debit card is introduced by Citi Bank, first ATM installed in
Mumbai by HSBC.
1992: Reliance Group becomes the first Indian conglomerate to raise money in
international markets.
1999: Satyam Infoway’s Rs499-crore buyout of Rajesh Jain’s IndiaWorld sets off
dotcom boom in India.
2000: Privatization of insurance business with a 26% limit on FDI in the sector.
2006: Tata group pays $12.98 billion to acquire UK-based Corus in the largest
ever cross-border acquisition by an Indian company.
2008: Tata Motors launches Tata Nano, the world’s cheapest car.
2016: The government announces demonetization of Rs500 and Rs1000
currency notes.
 HISTORY OF DUBAI

From humble beginnings as a small fishing village first documented in the 18th
century, the city grew rapidly as it became a major centre of the pearl-diving
industry. With its business-savvy ruling family reducing taxes and welcoming
foreign merchants, the city expanded further in the early 20th century and
soon became a re-exporting hub for Persia and India. Benefiting from modest
oil wealth in the latter half of the 20th century, Dubai continued to focus on
trade and attracting investment, channeling oil surpluses into major
infrastructure projects such as an international airport, dry docks, and a trade
centre. In the 1990s the city began to diversify, building up its luxury tourism,
real estate, and financial sectors. These all required skilled, educated foreign
workers, and many moved to Dubai for its tax-free salaries and relatively stable
politics. With expatriates coming from elsewhere in the Arab world as well as
from Asia, Europe, and North America, the city took on a rather cosmopolitan
air and was considered to have one of the most liberal societies in the region.
Contrary to popular belief, Dubai does not have an oil-based economy. The
little oil wealth it did enjoy between the 1960s and the 1990s was used to
enhance other sectors of its economy by building physical infrastructure. Trade
remains at the core of Dubai’s economy, with the city operating two of the
world’s largest ports and a busy international air cargo hub. The Jebel Ali free-
trade zone was established in the 1980s to attract industrial investment;
activities based there include aluminum smelting, car manufacturing, and
cement production.

Finance and other services

In the 21st century, activities meant to attract foreign investment have
increased. Several free zones, like Jebel Ali, have been established that allow
foreign companies to operate from Dubai without needing a local partner.
These have been phenomenally successful, with the largest being home to
more than 6,400 companies, many of which are European or North American.
In the 1990s the city began positioning itself as a luxury tourist destination,
spending a significant percentage of its GDP on grandiose resorts and
attractions.
By 1998 Dubai had begun to permit foreign investors to purchase 99-year
leases on properties, allowing the real estate sector to flourish. The Dubai
International Financial Centre, which opened in 2006, is set aside in the UAE
constitution as an independent legal jurisdiction; it operates under a separate
commercial and civil framework based on English common law. This
arrangement caters to international financial companies seeking to establish a
presence in the Middle East. These companies can use Dubai’s geographic
location as a means to bridge the time zones between major financial hubs in
Europe and East Asia. In 2009 the real estate and financial sectors crashed in
the wake of the international credit crisis. A loan of $10 billion from Abu Dhabi
helped Dubai avoid defaulting on its obligations, and the real estate market
soon recovered.

Transportation
With wide highways, a hot climate, and a year-round reliance on air-
conditioning, Dubai is not a welcoming city for pedestrians, so vehicle traffic
can be extremely intense. However, in the early 21st century, new bridges,
roads, and a fully automated, driverless metro rail system have eased the
frustrations of moving around the city. Tourism has been greatly enhanced by
the Dubai-owned airline, Emirates, which operates a large and modern fleet of
aircraft.

Administration and society

Government
Dubai Municipality is one of the largest government institutions in the country.
It is managed by a director general who in turn is accountable to the chairman
of Dubai Municipality, a member of the ruling family. The director general
oversees six sectors and 34 departments, which employ about 11,000 people.
The municipality not only manages services in the city but is a key driver of

Cultural life
In the early 21st century, Dubai’s art and film industries blossomed, with the
annual Art Dubai fair showcasing contemporary art and the Dubai International
Film Festival promoting both local and international movies. The Dubai
Museum, housed in an 18th-century fortress, displays artifacts and exhibits
related to the area’s early history and traditional culture. Dubai’s public library
system has several branches throughout the city, and there are a number of
bookshops in the city’s shopping malls.
Dubai is home to a large number of international sporting events. These have
greatly boosted its status as a tourist destination. The Dubai World Cup is the
world’s most lucrative horse race, and the city’s Dubai Desert Classic is a
popular fixture on the European Professional Golfers’ Association (PGA) Tour.
The city’s media industry remains firmly divided between government-backed
television and newspapers, most of which are heavily censored, and the
foreign media companies that operate branch offices from the Dubai Media
City, a purpose-built complex that serves as an international media hub for the
region. The latter include the BBC and the Associated Press, and their output
does not have to conform to local restrictions.