Barriers to Entry
For many years India was largely viewed as a country to outsource operations to reduce cost and employ highly skilled workers who wage demands were lower that domestic workers. This view of India however is rapidly changing and the country is increasingly becoming known as the world’s largest potential market for goods and services.
India is also expected to become a powerhouse (along with China) of middle class consumerism over the next two decades. India’s global middle class is expected to reach 200 million by the year 2020. Growth is expected to accelerate after 2020, reaching 475 million by 2030 and adding more people than the Chinese to the global middle class worldwide. A growing middle class presents a great opportunity for our company as a fast food chain as middle class citizens are more likely to spend money on fast food and eating out.
But even though India presents huge opportunities for our company, there are also significant risks and barriers to entry to consider. Barriers to entry as simply forces within the foreign company that have the potential to prevent our company from being successful there. Our company will have to have a knowledge and understanding of these barriers in order to successfully become established and grow to meet profit objectives. Some barriers into India include: 1. Infrastructure: Infrastructure in such areas as electric power, roads, and telecommunications networks has not been developed. This could pose a tremendous risk in finding viable locations for our stores. For example, bad roads can create problems for the delivery of items to our stores. The lack of infrastructure can also create bottlenecks, inefficiencies, and waste. 2. Government’s protection of its mom and pop retailers: India’s government has been staunch in its opposition to certain retail companies with the goal of protecting its mom and pop retailers. 3. Regulation: The Indian government has been slow to deregulate certain markets. As a result, tariff spikes in sensitive categories, including agriculture, and incremental progress on economic reforms still hinder foreign access to India’s growing market. 4. Cultural differences: The differences in culture between India and the United State need to be considered. One example of how cultural difference can affect our company’s expansion into India is that our company will have to adjust its menu to provide foods that are more suitable to Indian culture. In the case of selling food globally, one size does not fit all. Our company, specifically our company’s CEO will have to gain a knowledge and understanding of the culture.

Doing Business in India http://www.worldbusinessculture.com/Business-in-India.html China and India: tomorrow’s middle classes http://www.ey.com/GL/en/Issues/Driving-growth/Middle-class-growth-in-emerging-markets---China-and-India-tomorrow-s-middle-classes Walmart trying to break through India barrier http://www.cnbc.com/id/101565791#. Wal-Mart trying to break through India barrier

Indian government seeks more investment while protecting retailers http://www.wsj.com/articles/new-indian-government-seeks-more-investment-while-protecting-retailers-1402935779 Caitlin Long “U.S. Business and Global Barrier to Entry” (2009): Print