Foreign companies in India: Indian culture; A barrier to their market entry strategies?

Abstract

Liberalization of Indian economy in 1991 has been considered by many multinationals as a tremendous opportunity. At last, India was joining the globalization movement, reducing its barriers to international trade. Many companies rushed into the Indian market, attracted by its increasing middle-class representing a huge potential demand, by the real strengths of the country in terms of work, trade policy, etc. More than twenty years later, the assessment is that the entry into the Indian market has not have the results expected by many companies. Relatively few foreign brands have managed to integrate the everyday life of Indian consumers that often have not reciprocated the multinationals’ embrace. How can we explain the difficulties encountered by foreign companies? Is Indian culture a remaining trade barrier for international investments? This study aims at understanding the influence of Indian culture on Indian consumers’ behaviour so as to find an explanation to the failures of big and experienced multinationals. In a first part, we will try to identify cultural features influencing purchase habits of Indian consumers. However, the importance of culture in consumer’s behaviour do not need to be proven anymore. A lot of literature about consumer behaviour has concluded to the crucial influence of culture in our consumption habits. The globalization vs. adaptation debate has already reached the consensus of the necessity of a “think global act local” strategy. How is it that those companies did not manage to adapt their offer to the Indian market particularities? In its two last parts, this Contemporary Concern Study will focus on case studies and try to understand what motivated the mistakes of the foreign companies that did not managed to capture the market shares expected.