MDO Inc.

Expanding To India
Prepared for
Mr. Mark Orr.
CEO
MDO INC.
Grand Rapids, Michigan

Prepared by
Team Eagle

Name ID
MD. Shohel Rana 132-0491-030
MD.Nazmus Sakib 131-1351-030

MD. Saif Faysal 132-0105-030

Rafid Hossain 132-0750- 030

December 07, 2016

 Letter Of Transmittal

December 07, 2016

Mr. Mark Orr, CEO
MDO INC.
Grand Rapids, Michigan
Subject: Submission of project to expand MDO INC. into India.
Dear Mr. Mark Orr:

Here is the project that we assigned on the topic as per your request. We have used both
practical, theoretical knowledge to complete the project and have made recommendations for a
plan of action to expand MDO INC. into India. We would be happy if you read the report
carefully and we have been trying our heart and soul to provide the information to justify our
logics.
We covered several crucial areas that will help you make your decision on whether or not to
expand into India. We analyzed their culture, the state of the government and economy, as well
as the competition you would have after expansion. India is a very stable country and its
economy is good rather than other south Asian country and law is more supportive for pro-
business. They have several ports in their country. We strongly believe that India is a suitable
environment for expansion and provides plenty of opportunity for MDO INC. to succeed in this
foreign environment.

We have tried our label best to complete this project meaningfully and correctly, as much as
possible. However, if you need any assistance in interpreting this project we will always be
there to help you.
Sincerely,

Shohel
Sakib
Rafid
Saif
 Executive Summary

To remain competitive on a global scale, we suggested MDO INC. to expand their business into
India. India is located in South Asia. India has variety of culture and considered as one of the
prominent developing country in the world. India is also technologically advanced rather than
other south Asian countries. India has also good relationship with USA in terms of business
policy.

We suggested MDO INC. to invest on beverage sector. Beverage market is very profitable in
India. Their core product must be Juice items products. If they success on those items, they can
produce coke items after few years. There are lots of competitors in the market. The consumption
of beverage products is high.

Team Eagle have done few research for this project .According to that research we can hope that
expansion into India would be a profitable move. The economy of India is very strong and USA
has good relationship with India in terms of business policy. MDO Inc. target market should be
Metro city in India. MDO Inc. can use English for their business communication in India. Labor
cost is also low in India. They can also set up factories in India to reduce production cost and
also can collect different fruits from all over the India. These statements alone make India a very
attractive option for the next expansion of MDO Inc. into a foreign nation.
 Introduction

MDO Corporation is widely known throughout the United States. Their headquarters are located
in Grand Rapids, Michigan. MDO Corporation is worried that many corporations similar to them
are expanding globally. They don’t want to get left behind. They also want to expand
their business like their competitor.
Team Eagle has researched India to determine if MDO Corporation will be
successful in expanding into new market.

Purpose and Scope

MDO Corporation is a financially stable company in USA. Their CEO wants to

expand their business internationally. He would like expand on a specific non-
European and predominantly non-English speaking country. Mr. Orr is not necessarily looking
for a positive recommendation but a well-researched one. The purpose of our research is
to decide whether or not MDO INC. should expand its business into India.

As we know that India is a developing nation. They have multiple cultures

.India is consists of 29 states .Their government business policy is too good
for foreign investment. The average GDP of India is 6.5% .India is also a
politically stable country. That’s why we think that India is an attractive
option where MDO Inc. can expand their business.

This report will cover several topics about India including their geography,
people, currency, population, customs, climate, culture, government,
economy, history, and beverage as well as any competition and possible
locations. We can’t take on site interview from Indian People. Because it’s
unable for us to conducts face to face interview within short time.

Methods

The information in our report comes from online sources and reference
books. We found several
good sources. For example: we got most the data from food and beverage
report of CIA world factbook. We got many idea and information about Indian
market in online and articles. These resources have given us a lot of useful
information and we have based our recommendation on this information.

Limitations

The information in the report was limited to what we retrieved from our
sources. We were not
able to travel to India to conduct on-site research. Team Eagle was also
limited because we have not been immersed in the Indian culture and have
not gotten input from Indians on the expansion of companies into their
country. We are also limited because MDO Inc.
has not sold to the 18-21 year old beer market as they will be in India.

Criteria

Team Eagle has established criteria that need to be favorable before we give
a positive
recommendation about India. The criteria include the culture, government
rules and condition, economy, business policies, communication process and
market condition. We will analyze all those area. After analyzing, we

About India:

India is one of the largest democratic countries in the world. India is located in South Asia. The
total population of India is 1.22 Billion. India was under British colonialism for a long time.
India is an enormous country with vast economic potential, but traversing the diverse and
complicated corporate landscape can be a daunting task without the right help on board.

Not only is India one of the fastest growing countries in the world, it is also going through a
period of unprecedented economic liberation, granting overseas investors more access to its vast
and varied market than ever. A large, young population and a strong export sector await
expanding businesses, with a potential consumer base that far outstrips most other nations in the
developed and developing world.
There are many reasons that we consider and analyze to expand business into India. We looked
into their culture, geographic position, economy, food and beverage sector and import tax of
India. In India, Food and Beverage industry has a unique role in expanding economic
opportunities because it is universal to human life and health. The food and beverage sector
which is currently growing 23-24 percent within a year according to recent statistics. This sector
is profitable for a new company to expand their business. India

Culture:
India is one of the world's oldest civilizations. The Indian culture, often labeled as an
amalgamation of several various cultures, spans across the Indian subcontinent and has been
influenced and shaped by a history that is several thousand years old. India is consists of 100
nation. Every nation culture is differ from others cuture.

According to the 2011 census, 79.8% of the population of India practices Hinduism and 14.2%
adheres to Islam, while the remaining 7.37% adheres to other religions, mostly Jainism,
Buddhism, Sikhism and Christianity.[83] Zoroastrianism and Judaism each has several thousands
of Indian adherents, and also have an ancient history in India

Economics:
India is a country of one of the largest population in the world with a rapidly growing economy.
India will become the world’s third largest economy by 2030. As part of the BRIC (Brazil,
Russia, India, and China) community, it is already the second largest growing economy behind
China.

With the increase in disposable income and changes in consumption patterns, Indians are
increasingly eating out. This drove the growth in the food and beverage industry and is expected
to continue to grow in the near future. According to 'India Food Service Report 2013’ by the
National Restaurant Association of India (NRAI), Indian food and beverage industry is worth
US$ 41 billion and is expected to grow at the rate of CAGR 11% and reach USD 68 billion by
2018 . Nowadays, Indian service industry is also contributing in their GDP. That’s helping India
to become superpower in Asia.

Natural Resources:
In India, there are many natural resources like flowering plants, fruits, fungi, insects, lichens,
mammals, microbes, mosses, natural gas, petroleum etc. If any foreign companies want to
expand their business in India, India natural resources can be a great opportunities for them. We
are suggesting MDO Inc. to produce beverage items like fruits juice. India fruits industry is the
largest fruit industry in the world. They can buy good quality fruits from local supplier within
low price. That may reduce their cost if they use local fruits to produce beverage items. That’s
also helping them to compete with other companies.

Beverage Market:
In India, India’s food and beverage category constitutes about 40% of its Consumer Packaged
Goods (CPG) industry. This sector was valued at more than $25 billion in 2015. In India,
Beverage market is increasing day by day. There are lots of companies who are operating
business in this sector like Pepsi Co., Coca-Cola, Amul, Nestle etc. Soft drinks and fruit drinks
are becoming more common in India. Coca-Cola and PepsiCo are already dominating this
category.

We think that MDO Inc. should produce fruit items 1st few years. This segment can be lucrative
sector for them because there is less competition in this sector in terms of good quality fruits
juice. Indian people don’t trust on their local beverage company. So, that’s the chance for a
foreign company to expand their business in India. If they are successful on this sector, then they
should produce drinks items to compete with other foreign companies.

FIG: Indian Beverage industry

Import duty & taxes:

India is one of the fast growing developing nations in the world. They took many decisions to
attract foreign investment. The import duty rate for food and beverage sector is 10% in 2016. In
2013, the import duty for food and beverage sector was 16%. Recently India government
appreciates more foreign investment In India .FDI investment rate is zero for Food and beverage
sector in India.

There are also some other duties and tax which are given below:
 1. Entities in infrastructure development are given a deduction of 100% for the first 5
years & 30% for the next 5 years for the calculation of taxable income
2. Customs duty on all imported capital goods and raw materials & other inputs is
exempted, in addition to excise duty & sales tax on domestic inputs, for all export
oriented units
3. There is a provision for duty-free import replenishment of inputs, subject to basic input-
output norms for approximately 600 export categories
4. Encouragement to private sector – 100% export-oriented units are allowed to sell up to
50% of their produce in the domestic market. Export earnings are exempted from
corporate taxes
5. Tax incentives and Sops - Import duty scrapped on capital goods and raw materials for
100% export-oriented units. 100% tax exemption for 5 years followed by 25% in
subsequent years.

How to Adapt Successfully

In order To found Beverage Company, further expand into the Asian market and specifically
India, MDO Inc. need to look into the current competition of the beverage industry. They also
need to analyze the competition and figure out how to properly maintain the same level of
popularity among the Indian market. They must set up one local office in every state and all
office will control by one head quarter.

Competition

According to the Indian Food and drinks report from 2015 quarterly report, “Beverage remains
the Country’s dominant soft drinks and juice items, and the industries are highly competitive
because of many facilities to expand the market in India. Main threats of these sectors are full of
huge competitor. Huge kinds of Domestic Juice Company use to produce maximum production
in India because of cheap labor and available of raw materials. Many kinds of juicy fruits
produce here. Like Sprite is a product of Coca-Cola in India and it was introduced in 1999 to the
Indian market. In 1999, Thums Up is considered synonymous to energy, Limca is a lime and
lemon carbonated soft drink in India. Maaza is the most famous, most popular and the largest
selling mango drink in the India, along with other well-known brand. This brand is our direct
competitor. These locally brewed open compete with an imported brand. Sprite is able to keep up
with their market demand in India due to their unique marketing. The soft Drinks in India are
more successful in carbonated types of beverage but less successful in juice sector. We are
suggesting That MDO Inc. should emphasize more in juice sector in India and if They success in
that sector, then they should expand their market in other metro city in India. Indian peoples
don’t believe their local soft drinks industry market in terms of quality. So that’s a chance for a
foreign industry to expand their market. Indian people believe that foreign beverage is good
rather than their local beverage. Once MDO start their operation in India, they need to perform
great branding to retain customer trusts.

Location

India has many fruit agriculture metro city. We are suggesting MDO Inc. to set up their
headquarters in Mumbai .This metro city is the optimal location for the Headquarters of India. As
we mention earlier that MDO Inc. should produce juicy items 1st few years. In order to collect
raw materials like fruits, they need to set up few local offices in the biggest metro city in India
like Andhra Pradesh, Gujarat, Utter Pradesh, Kolkata, Kashmir etc. Those states are considering
as the biggest fruit producing state in India. India hosts the annual beverage festival where
numerous beverage producers show their sample over 180 different beverages from all around
the world. Most of the items are carbonates beverage. But Fruit/vegetable juice sector is little. So
that the chance for MDO Inc. to expand their business in India.
 Other Issues

Business Culture of India

Business Policies: Prime Minister Narendra Modi has made India’s policies transparent and
predictable. “We have made our policies transparent and predictable. Mr. Modi said, “We have
made our procedures clearly defined and smooth,” He also said that they are focusing on
eliminating unnecessary laws and regulations, making processes easier and shorter and
ensuring that the other government is more transparent. This statement shows clearly that
India is now getting more involved with the foreign companies and they are making their
business policy easier so that the foreign companies can get enough flexibility to do business
there. India is providing enough support for the foreign companies to do business there.

Business Behaviors: India is a vast, populous and diverse nation encompassing many different
identities, languages, cultures and religions. It is very difficult to make generalizations about
Indian culture.

In India, someone is likely to encounter two types of companies. The first is a traditional, family-
run business, the second being a more modern hi-tech operation working with western
business methodology. They maintain a high power distance. Being the boss usually means ‘the
boss’ in India. Senior managers are not expected to engage in work which could be done by
somebody lower down the organization.

Most of the decisions are made by the top of an organization and it can be a waste of time
negotiating at the middle levels of a company if top level approval has not already been given.
Working hours in India usually start from 10am. However, some companies in large cities such
as Mumbai are known to start as early as 7.30am.

There is a hierarchical culture in India. Therefore greeting the eldest or most senior person first
is usually most common. The official languages are English and Hindi. English is widely used in
business. Indians don't like using the word "no" as it is considered negative. Instead, what is
common is to use something more acceptable like "maybe" or even just telling the individual
whatever they want to hear. In terms of body language, if they say "yes" to a question while
bobbling their head (a mixture between a shake and a nod), that generally signifies "no".

Indians do not generally touch as part of communication. The distance between people is
usually 3 feet apart. Standing with your hands on your hips will be interpreted as an angry,
aggressive posture. When doing business in India, Indians themselves use the “Namaste”
instead of shaking hand.

Normal business dress for men is suits and ties. However, because of warm climate a full-
sleeved shirt and a tie is also acceptable. For foreign women, pantsuits of long skirts that cover
the knees are most acceptable. The neckline of the blouse or the top should be high. Indian
doesn’t like to talk about their personal matter while doing business.

So I can say that, doing business in India for the American company like MDO. Inc will not be
that much problem. Though their cultural behavior is a little bit different, but the business
opportunities are much higher there.

Technology
India is getting developed day by day in terms of technology. Information technology is playing a
very important role in India and this has transformed India's image to a land of innovative. 2.5
million Direct employments are being generated by the IT sector in India. India is now one of
the biggest IT capitals of the modern world and all the major players in the world IT sector are
present in the country. Bangalore is the leading IT exporter in India. Top five Indian IT services
providers’ are-

 Tata Consultancy Services

 Infosys
 Cognizant
 Wipro
 HCL Technologies

India is using their talent in technology in each of the sectors of their business. So, technology
will not be an issue for expanding business. MDO.inc will get enough technical support from
India while doing business there.

Marketing
Marketing is one of the most important factors while expanding business to another country.
India is a large country. Promoting MDOs’ products there will not be an easy task. MDO can do
some promotional activities there according to their law. For market promotion, they can do-
  Celebrity Endorsement: As we know that, Bollywood is India’s biggest sensation, using
celebrity will be much effective for promotion.
 TVC: They can do a lot of television commercials there. They have a huge number of
popular TV channels. They can use those channels for out promotion.
 Print Media: They can publish posters, newspaper advertisement, banners and also
magazine advertisement
 Internet marketing: Internet is the biggest place for promotion. They need to focus
highly on online advertisement on social media and popular local websites of India.
 Contests: Indian peoples love contests. Conducting some contests there for the purpose
of promotion will be effective for them.
 Sponsorship: Indian people are crazy about cricket. So sponsoring on IPL would be the
best promotion for our product.

Integration
Integration into Indian culture should also not be an issue. People of India will not face trouble
to consume MDOs’ products. They just need a proper promotion in India, so that they can set
their product in the mind of India’s people. Foreign direct Investment of India is free for foreign
companies. And as they are having transparent business policy, integrating in India for MDO.Inc
will be very effective.

Reference:

1. https://www.todaytranslations.com/doing-business-in-india

2. Reference: https://en.wikipedia.org/wiki/Information_technology_in_India

3. http://www.thehindu.com/news/national/indias-business-policies-transparent-and-
predictable-modi/article6607091.ece