Economic strategy of multi-national fast moving consumer good firms in India

Abstract

Many foreign fast-moving consumer good (FMCG) firms don’t invest in India whereas they could make lots of profit. For instance, the Italian Panzani is not present on the Indian market whereas its pastas and spaghettis could be an appreciate alternative to the wellknown Maggi noddles for the Indian consumer. The reason is that they are afraid of failing on a market which is so different from which they are used to. Investing India requires more than simply transferring products, management and strategy. Its fast growth, its large and fragmented population, its huge size and its so different culture make India a very mysterious country for foreign companies. Investing in India requires to deeply analyze the Indian market features to then adapt strategy. Our report has to be seen as a tool for foreign FMCG firms to better understand the Indian market and to have a comprehensive view of the reasons why a multi-national FMCG firm can succeed or fail in making business in India. Our research has refered on Academic reviews, Management Journals as well as newspapers. Academic reviews gave us theories and thesis on strategy in India, Management Journals gave us facts and practices and newspapers brought examples to our research. Moreover, in order to add an operational analysis to our report, we have conducted several interviews which have helped us to get an in-depth view of the FMCG market in India. The elements of the interview have been fully integrated to the report. More details are available in the appendix. Thus, we have been able to follow the methodology below: We have highlighted features of the Indian market and then we have wondered wether they were a challenge that FMCG have to face. If yes, we have explained why. Finally, we have highlighted the various strategies that FMCG firms have developed to respond them, those which proved successful and those which failed.The initial subject of our report was “The economic strategy of multi-national retailing firms in India”. When doing our research, we found irrelevant to compare the whole retailing firms. Pure retailers, FMCG firms and durable consumer goods companies do not face the same challenges. That is why we decided to reduce our subject to FMCG firms. The initial plan of the report was also modified. In fact, we underrestimated the challenges that companies face to organize its logistics in India. So, we decided to divide the subject in four parts. The first is on the mode of entry on the Indian market: what are the various possibilities and why to choose one more than another. The second part talks about the supply chain management: what are the challenges in India and what strategies FMCG have elaborated to face them? The third part is about the distribution strategy. Finally, the last part deals with the marketing strategy. The report follows the steps that a company has to go through when investing India.