ABSTRACT
Purpose/Objectives/Hypotheses
The aim of this research was to conduct a study investigating market entry of MNCs in emerging market of India. The research was conducted with reference to Smartphone market in emerging Indian market. The research has achieved following objectives: to determine the prospect MNCs in Indian Smartphone market with focus on prospective segments; to examine as which should be the most appropriate entry strategy for MNCs in Indian Smartphone market and what should be the most effective strategic focus; to examine as which should be the most appropriate strategic approach for MNCs to successfully operate in Indian Smartphone market and how competitive advantage might be put on; to examine as which should be the most appropriate marketing approach for MNCs to successfully reach to customers in Indian Smartphone market and which component of marketing mix should be most focused. Further the research has tested following two hypothesis : Hypothesis 1: Foreign entrants will have successful entry mode in the forms of joint venture and independent operation but former is more successful than the later in emerging market; Hypothesis 2:Both structural variables(actions, programs, systems, policies) and managerial skills(interacting allocating, monitoring, organizing) are important but the former are more important than the later for strategic implementation in emerging market.
Methodology
Considering the nature of the study the researcher opted deductive research design. This research was a scientific study as regards testing hypotheses, so there was no question of adopting inductive design. Realism was applicable for this research, so the researcher adopted deductive research design. This research was conducted adopting the deductive research design and the researcher required collection of both qualitative and quantitative data for answering research questions. The quantitative study was conducted using questionnaire based survey. The primary research was conducted using questionnaire survey and quantitative data was collected through the survey which helped out the researcher to achieve the research objectives and test the hypotheses. The findings obtained through primary research are analysed using both simple and standard statistics where data was coded and interpreted in numbers and percentage, and mean and standard deviation. Further for testing hypotheses, t-test is conducted is conducted. For measuring the quantitative data both Microsoft Excel and SPSS software are used. The chapter is basically structured into two sections analysis and hypothesis testing.
Findings/Implications
Smartphone market is highly prospective in India from the perspective of MNCs. Consumer segment of Smartphone market is the most prospective in India from the perspective of MNCs. Joint venture as entry strategy would be most suitable for MNCs in Indian Smartphone market. Firm specific and technological aspects as strategic aspects should be most focused by MNCs in Indian Smartphone market. Glocal strategy as strategic approach would be most suitable for MNCs in Indian Smartphone market. Cost focus as aspect of competitive advantage would be comparatively more benefiting (than differentiation) for MNCs entering inIndian Smartphone market. Adaptation marketing approach would be comparatively more suitable (than standardization) for MNCs entering in Indian Smartphone market. Price and promotion as marketing mix elements should be most focused by MNCs entering in Indian Smartphone market. Both the hypotheses developed are proved. Hypothesis 1: Foreign entrants will have successful entry mode in the forms of joint venture and independent operation but former is more successful than the later in emerging market. Hypothesis 2: Both structural variables (actions, programs, systems, policies) and managerial skills (interacting allocating, monitoring, organizing) are important but the former are more important than the later for strategic implementation in emerging market.
Limitations and Future Scope
There were two major limitations in this research. First no interview was conducted on senior management level, and further no secondary quantitative data was collected about measuring the quantitative performance of entry and various other related strategy. Hence, research is recommended to conduct prevailing over these two limitations, for the wide-ranging acceptance of the findings for the practitioners in MNCs operating or willing to enter in Indian Smartphone market.
TABLE OF CONTENTS
| Acknowledgement | ii |
| Abstract | vii |
| CHAPTER #1 | INTRODUCTION |
1-5 |
|
| 1.1 | BACKGROUND AND RATIONALE |
1 |
|
| 1.2 | POTENTIAL SEGMENTS IN INDIAN SMARTPHONE MARKET |
2 |
|
| 1.3 | RESEARCH OBJECTIVES |
4 |
|
| 1.4 | RESEARCH QUESTION |
5 |
|
| 1.4.1 | Sub-questions |
5 |
|
| 1.5 | STRUCTURE OF THE STUDY |
5 |
|
| CHAPTER # 2 | LITERATURE REVIEW |
6-27 |
|
| 2.1 | INTRODUCTION |
6 |
|
| 2.2 | MARKET ENTRY STRATEGY |
6 |
|
| 2.3 | ENTRY STRATEGY AND EMERGING MARKETS |
8 |
|
| 2.4 | FOREIGN MARKET ENTRY AND STRATEGIC MANAGEMENT |
12 |
|
| 2.4.1 | Inter-firm Interfaces |
13 |
|
| 2.4.2 | Technological strategy |
15 |
|
| 2.5 | STRATEGIC MANAGEMENT IN EMERGING MARKETS |
15 |
|
| 2.6. | CHALLENGES AND EMERGING MARKETS |
18 |
|
| 2.6.1 | Demographic trends |
18 |
|
| 2.6.2 | Natural resources |
19 |
|
| 2.6.3 | Political and legal unease |
20 |
|
| 2.7 | SUCCESS FACTORS IN EMERGING MARKETS |
20 |
|
| 2.8 | ADAPTATION AND STANDARDIZATION IN |
23 |
|
| INTERNATIONAL MARKETING |
23 |
||
| 2.8.1 | Adaptation Approach |
24 |
|
| 2.8.2 | Standardization Approach |
26 |
|
| 2.6 | SUMMARY |
26 |
|
| CHAPTER # 3 | RESEARCH METHODOLOGY |
28-34 |
||
| 3.1 | INTRODUCTION |
28 |
||
| 3.2 | RESEARCH DESIGN |
28 |
||
| 3.2.1 | Research design for this study |
28 |
||
| 3.3 | RESEARCH METHOD |
29 |
||
| 3.3.1 | Research method for this study |
30 |
||
| 3.4 | DATA COLLECTION |
30 |
||
| 3.4.1 | Data collection for this study |
31 |
||
| 3.5 | Sampling Design | 31 | ||
| 3.5.1 | Sampling Design for this study | 32 | ||
| 3.6 | DATA ANALYSIS | 32 | ||
| 3.6.1 | Data Analysis for this study | 32 | ||
| 3.7 | ETHICAL ISSUES | 33 | ||
| 3.7.1 | Ethical issues for this study | 33 | ||
| 3.8 | VALIDITY AND RELIABILITY | 33 | ||
| 3.9 | SUMMARY | 33 | ||
| CHAPTER # 4 | FINDINGS AND ANALYSIS |
35-22 |
| 4.1 | INTRODUCTION |
35 |
| 4.2 | ANALYSIS OF FINDINGS |
35 |
| 4.3 | HYPOTHESIS TESTING |
47 |
| 4.4 | SUMMARY |
51 |
| CHAPTER # 5 | CONCLUSION AND RECOMMENDATIONS |
53-58 |
| 5.1 | INTRODUCTION |
53 |
| 5.2 | SUMMARY OF FINDINGS |
53 |
| 5.3 | ACHIEVING OBJECTIVES |
54 |
| 5.4 | HYPOTHESIS TESTED |
55 |
| 5.5 | MANAGERIAL IMPLICATIONS/RECOMMENDATIONS |
56 |
| 5.6 | LIMITATIONS AND FUTURE SCOPE OF RESEARCH |
58 |
| BIBLIOGRAPHY | 59-73 | |
| APPENDIX | 74-76 | |
| Questionnaire | 74 | |
LIST OF TABLES
| Table 4.1: Prospect of Indian Smartphone Market | 35 |
| Table 4.2: Prospective Segments of Indian Smartphone Market | 37 |
| Table 4.3: Entry Strategy in Indian Smartphone Market | 39 |
| Table 4.4: Strategic Focus and Entry into Indian Smartphone Market | 41 |
| Table 4.5: Strategic Approach and Entry into Indian Smartphone Market | 42 |
| Table 4.6: Competitive advantage and Entry into Indian Smartphone Market | 43 |
| Table 4.7: Marketing Approach and Entry into Indian Smartphone Market | 45 |
| Table 4.8: Marketing Mix and Entry into Indian Smartphone Market | 46 |
| Table 4.9.1: Paired Sample Statistics | 48 |
| Table 4.9.2: Paired Sample Test | 49 |
| Table 4.10.1: Paired Sample Statistics | 50 |
| Table 4.10.2: Paired Sample Test | 51 |
LIST OF FIGURES
| Figure 4.1: Prospect of Indian Smartphone Market | 35 |
| Figure 4.2: Prospective Segments of Indian Smartphone Market | 38 |
| Figure 4.3: Entry Strategy in Indian Smartphone Market | 39 |
| Figure 4.4: Strategic Focus and Entry into Indian Smartphone Market | 41 |
| Figure 4.5: Strategic Approach and Entry into Indian Smartphone Market | 42 |
| Figure 4.6: Competitive advantage and Entry into Indian Smartphone Market | 43 |
| Figure 4.7: Marketing Approach and Entry into Indian Smartphone Market | 45 |
| Figure 4.8: Marketing Mix and Entry into Indian Smartphone Market | 46 |
INTRODUCTION
1.1 BACKGROUND AND RATIONALE
The last couple of years have witnessed a phenomenal smartphone sales growth in India. According to the growing trends smartphone sales could exceed feature phone sales. According to CyberMedia Research, the quarter ending in March 2012 saw for the very first time, total handset sales cross the 50mn mark (c.f. Menezes, 2012). The report also estimated the mobile handsets market in India to grow over 30% in 2012. Although, smartphones contributed for just 5.3% of the share, they are growing at a very rapid pace. As per the research conducted by IDC, smartphones sales saw a 9% growth this fiscal, which is expected by 2015 to touch 68% (c.f. Menezes, 2012). The report further says that smartphone share in the total handset market in India is estimated to reach 9.3% by 2016. Experts believe that the handset sales seem to outnumber the subscriber additions.
Big players like Samsung, HTC, Nokia, among others have been competing hard along with the emerging homegrown manufacturers such as Micromax, Lava, Karbonn, etc. occupying the sub- Rs 10000 market segment. As consumers constantly seek for more premium features and upgrading and in their smartphones, most handset manufacturers are keen to further democratize their smartphone product offerings at very competitive prices.
Today trade barriers are crumbling with emerging economies prospering; MNCs can grab the opportunity in these emerging countries and succeed. The advantages of these emerging markets include rising incomes, cheap labor, and weak competition from local players. However, today there are numerous local players giving stiff competition to multinationals. One sign of this growing strength and number can be accessed by the ranking of companies by Fortune Global 500. In the 2011 ranking, 61companies were Chinese, 8 Indian, 7 from Brazil, 3 from Mexico and 7 from Russia (money.cnn.com, 2011).
Generally, multinationals from the developed world focus on high end segments to protect themselves from emerging local players. This allows them to maintain margins but volumes are low. Another strategy could be to study the local market leader go for value-for-market strategies. For example, IBM was challenged by local Indian players like TCS, Infosys and Wipro. To fight the competition IBM acquired Daksh, a small rival of the three local players, and transformed it into a large business competing on cost and quality (The Economist, 2008).
Smartphone and apps market will be extremely competitive until high teledensity is achieved. Consumers will quickly move to smartphones, and those already using smartphones will desire for more as this is an aspirational market and brand consciousness will keep increasing. Currently new brands in lower end category are looking for consumer numbers while the established brands stress on market share along with competitive differentiation. Nokia has adopted internationally a shift to Windows operating from its Symbian OS. They are focusing on smartphones and targeting high end consumers. Brands survival in future will depend on differentiation using innovation and by consumer connect. Only a brand that can innovate continuously will survive in the long run. It is predicted that top end smartphones consumers will slowly move towards international brands because of high brand consciousness lower end consumers will help prosper Indian and Chinese brands because of high value-consciousness (Singh, 2012).
1.2 POTENTIAL SEGMENTS IN INDIAN SMARTPHONE MARKET
The worldwide market of smartphones is segmented into consumer smartphones and business smartphones. According to Markets and Markets (2010) consumer smartphone segment is larger & faster-growing which accounts for approximately 75% of the worldwide smartphones revenues. Though, business smartphone segment would grow faster in the future because of the continued enterprise mobilization. In both market segments, touchscreen seems to have emerged as preferred preferable interface, accounting for 39.6% of worldwide shipments (Markets and Markets, 2010).
In India the smartphone segment are divided on the basis of the cost of the product. The lower segment includes smartphones of Rs10000 and below, the mid segment constituting of Rs10000 to 20000 smartphones and the high-end segment of above ₨ 20000 smartphones. The mass end of the consumer basket is currently the most favoured target market with each brand manufacturing mobiles for them. Similarly, smartphone manufacturers are betting huge on the sub- ₨ 10,000 segment.
Currently, the segment accounted for almost 60 percent of the smartphone sales (Vats, 2012). Another segment in the smartphone could be the multi-sim devices which were first catered to by the homegrown or low cost brands but slowly brands, specifically Nokia has entered this segment.
Source: Cyber Media Research (2012)
As per the above chart by Cybermedia 54% of a total of 166 million handsets sold in India during Jan-Nov 2011 was the multi-SIM devices and 10 million were smartphones.
According to Canalys (2011) Asia Pacific (APAC) has become the largest market for smartphones, with 98% y-o-y growth to 37.3mn units, thus placing it above Europe, Africa (EMEA), and the Middle East for the very first time ever since 2007.
Successful organizations need to form a glocal stratagem, by using their international experiences and henceforth tailoring and customizing their products and services in a manner which appeals to the local markets. The customization should involve product design, communications, and also marketing mix variables.
In August 1995, India saw the commercial launch of mobile services and since then India has become amongst the fastest growing mobile markets in the world. India’s smartphone and mobile-handset market is estimated to rise from US$5.8bn currently to US$8 billion market by 2016 (Frost and Sullivan, 2011). India’s youth and urban citizens having high incomes at disposal have an increasing desire for high-end handsets or smartphones by Apple, Samsung, Nokia, Sony etc. Even though a clutter of companies are present no mergers or consolidations are expected as these newer brands don’t own any intellectual property and they just package the existing stuff and market them under their own brand name. According to Singh (2012) in India, brands with capability to differentiation will survive. He says that the low cost segment would experience brand variety while smartphone space would experience a shakeout and those in the middle would be squeezed out.
This research aims at studying the foreign market entry strategies of the MNC’s in emerging economies and the reason why they are now being considered as a major market in most multinational’s expansion strategies. The study further focuses on the adaptation and standardization strategy adopted by multinationals in emerging markets such as India and its smartphone market.
1.3 AIMS AND OBJECTIVES
The aim of this research is to conduct a study investigating market entry of MNCs in emerging market of India. The research has been conducted with reference to Smartphone market in emerging Indian market. The research attempts to achieve following objectives:
- To determine the prospect MNCs in Indian Smartphone market with focus on prospective segments
- To examine as which should be the most appropriate entry strategy for MNCs in Indian Smartphone market and what should be the most effective strategic focus
- To examine as which should be the most appropriate strategic approach for MNCs to successfully operate in Indian Smartphone market and how competitive advantage might be put on
- To examine as which should be the most appropriate marketing approach for MNCs to successfully reach to customers in Indian Smartphone market and which component of marketing mix should be most focused
1.4 HYPOTHESES
Hypothesis 1: Foreign entrants will have successful entry mode in the forms of joint venture and independent operation but former is more successful than the later in emerging market
Hypothesis 2: Both structural variables (actions, programs, systems, policies) and managerial skills (interacting allocating, monitoring, organizing) are important but the former are more important than the later for strategic implementation in emerging market
1.5. STRUCTURE OF THE STUDY
Introduction
Literature Review
Methodology
Findings and Analysis
Conclusion