Selling Smart Phone in India, Research Paper Example

The technological advancements over the last few decades have been mind blowing by any measure and one only needs to look at smart phones to get the idea. Smart phones could be considered as the most portable form of computing devices available today and can efficiently run numerous software applications that once only belonged to the domain of personal computers. Smart phones are not a luxury anymore as evident by the statistical data. As of May 2013, 91 percent of Americans had a cell phone of which more than half or 56 percent were smart phones (Brenner, 2013). But the smart phone revolution is not limited to the U.S. and other developed countries only but has also spread to emerging economies including India. India offers great potential for smart phone manufacturers and the country is now the world’s third largest market for smart phones, only behind China and the U.S., after eclipsing above Japan this year. Even more impressive is the fact that the market for smart phone in India grew by 129 percent from Q2 2012 to Q2 2013 which is the fastest of any country in the world (NDTV, 2013).

There are several reasons why businesses embrace globalization. First of all, globalization enables organizations to become more profitable due to access to cheaper factors of production which explains the rise of production of goods and services in countries with lower labor costs like India and China. Globalization also enables companies to expand the market for their products and services and take advantage of economies of scale. Markets for many products and services has saturated in developed countries like the U.S. For example, 91 percent of Americans already own cell phones of which 56 percent own smart phones which means there is limited potential for growth. In contrast, emerging economies like India and China have still largely unexplored markets and huge populations, translating to tremendous growth potential.

Globalization also means management’s task becomes more complex because markets for products and services in different countries may have different characteristics due to differences in demographics, culture, and consumer lifestyles. But companies’ management also have several tools at their disposal to efficiently manage global operations. First of all, factors of production have become more mobile which means organizations have more diverse workforce which helps them better understand international markets. In addition, more and more organizations are setting overseas operations and hiring local employees as well as forming business alliances to reduce risk and operational mistakes. Strong brands also give organizations significant advantage when entering international markets. Companies with strong brands have little difficulty acquiring customers and may also have to allocate fewer resources to marketing than those with weak or unfamiliar brands.

As far as an international market for smart phones is concerned, India makes a compelling case. First of all, smart phone market in India has been growing at a tremendous pace which is even ahead of China and India is already the world’s third largest smart phone market. India now has a fast growing middle class which is the ideal market for smart phones. The fact that even Apple has been gaining market share in India (Lomas, 2013) shows that Indian consumers now have rising income and they are not afraid to spend. Deloitte expects sales of smart phones to exceed one billion units in India for the first time this year which only confirms the fact that it is an ideal time to enter India’s smart phone market (Deloitte, 2013).

There are other factors also that increase India’s appeal to smart phone manufacturers. The median age of an Indian is only 26.7 years (CIA) and younger population is more likely to embrace new technology. India is also expected to make about $1 trillion investment in infrastructure over the next few years (Overdorf, 2012) which also increases its appeal as an investment destination. It is also easier and quicker to enter Indian market as most investment proposals are usually processed within thirty days (HSBC, 2010). Similarly, India also has language advantage as English is spoken by a large number of Indians (CIA).

It is also important to take into account political factors when doing business internationally. One of the political benefits is that companies are able to build contacts with the government officials which may prove beneficial in the future. Companies who commit to foreign direct investment may also receive incentives and other favors from the government, thus, giving them competitive advantage against the competition. But there may also be political costs and risks. As China’s example shows, even huge multi-national companies like Google have to agree to censor requirements which negatively affect their ability to freely operate and may also hurt their brand goodwill on global scale. Corruption is more widespread in some countries and companies are sometimes forced to engage in unethical conduct in order to do business. Companies also run the risk of theft of physical or intellectual capital as some countries do not allow international companies to own assets or set up operations without a local partner. Political instability also increases the risk of asset confiscation by dictatorial regimes.

References

Brenner, J. (2013, June 6). Pew Internet: Mobile. Retrieved August 17, 2013, from http://pewinternet.org/Commentary/2012/February/Pew-Internet-Mobile.aspx

CIA. (n.d.). India. Retrieved August 17, 2013, from The World Fact Book: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html

Deloitte. (2013). Smartphone market will grow but usage will remain simple. Retrieved August 17, 2013, from http://www.deloitte.com/view/en_IN/in/industries/technology-media-telecommunications/tmtpre2013/tmtpredictionstele13/1f01f6f5a8f9c310VgnVCM2000003356f70aRCRD.htm

HSBC. (2010). Doing Business in India. HSBC & PWC.

Lomas, N. (2013, June 26). India Passes Japan To Become Third Largest Global Smartphone Market, After China & U.S. Retrieved August 17, 2013, from http://techcrunch.com/2013/06/26/india-third-in-smartphone-world/

NDTV. (2013, August 6). India is now the world’s third-largest smartphone market: Report. Retrieved August 17, 2013, from http://gadgets.ndtv.com/mobiles/news/india-is-now-the-worlds-third-largest-smartphone-market-report-402182

Overdorf, J. (2012, November 1). India: Singh calls for $1 trillion in infrastructure investments “at any cost”. Retrieved August 17, 2013, from http://www.globalpost.com/dispatches/globalpost-blogs/india/india-infrastructure-investment