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RETAIL MARKETING PROJECT INTERIM REPORT LITERATURE REVIEW AN EMPIRICAL STUDY OF THE GROWTH PROSPECTS AND PROFITABILITY OF FDI IN RETAIL SEGMENTS OF INDIA Submitted to: Prof. Sapna Parashar Date: 23-07-2008 Submitted by: Arnab Sinha 071108 INDEX INDEX2 CONCEPTUAL ANALYSIS3 Summary of Retail Market in India and FDI in Indian Retail3 LITERATURE REVIEW5 1.
Literature Review-15 2. Literature Review-25 3. Literature Review-36 4. Literature Review-47 5. Literature Review-57 GAP ANALYSIS8 REFERENCES9 CONCEPTUAL ANALYSIS Summary of Retail Market in India and FDI in Indian Retail India tops the AT Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. •The Indian retail market, which is the fifth largest retail destination globally, according to industry estimates is estimated to grow from the US$ 330 billion in 2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015.
•Subsequently, organized retail is likely to increase its share in the total retail market to 22 per cent by 2010. India’s vast middle class with its expanding purchasing power and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. •With international brands like Tommy Hilfiger, Esprit and Puma (that have entered the country) growing well over 100 per cent, many others are also planning to foray into the Indian retail market. •The Government allows 100 per cent foreign direct investment (FDI) in cash and carry through the automatic route and 51 per cent in single brand.
Besides, the franchise route is available for big operators.
To further attract global retailers, the economic survey 2007-08 has suggested a share for foreign equity in all retail trade and 100 per cent in respect of luxury brands and other specialized retail chains. •The estimated growth of the Indian retail industry with sector wise specifications is given in the following two diagrams: LITERATURE REVIEW 1. Literature Review-1 Title: An Examination of International Retail Franchising in Emerging Markets Authors: Dianne H. B. Welsh, Ilan Alon and Cecilia M. Falbe Source: Journal of Small Business Management
Volume 44 Issue 1, Pages 130 – 149, 6 Dec 2005 The article begins with an overview of the development of the literature and then discusses the nature and scope of emerging markets, with particular reference to their impact on the stakeholders of international retail franchising. Next, the article develops a conceptual model relating international retail franchising to its stakeholders. Then, a review of the research is divided into the areas of emerging world market: Central and Eastern Europe, Mexico and South America, Asia, and other areas that include India, Kuwait, and South Africa.
The article concludes by discussing the next step to developing a research base for further understanding of emerging markets in addition to the opportunities and challenges for retail franchising and future research. 2. Literature Review-2 Title : Regional Business Networks and the Multinational Retail Sector, Long Range Planning Authors: Stephane J. G. Girod, Alan M. Rugman Source: International Marketing Review, Volume 38, Issue 4, August 2005, Pages 335-357 This article examines the network relationships of a set of large retail multinational enterprises (MNEs).
The paper analyzes under what conditions a flagship-network strategy (characterized by a network of five partners – the MNE, key suppliers, key partners, selected competitors and key organisations in the non-business infrastructure) explains the internationalization of three retailers whose geographic scope, sectoral conditions and competitive strategies differ substantially. It explores why and when retailers will adopt a flagship strategy. The three firms are two U. K. -based multinational retailers (Tesco and The Body Shop) and a French-based global retailer (Moet Hennessy,Louis Vuitton).
Evidence of strong network relationships for all three retailers is found, although each embraces network strategies for different reasons. Their flagship relationships depend on each retailer’s strategic use of firm-specific-advantages (FSA s) and country-specific advantages (CSA s). It infers that a flagship strategy can succeed in overcoming internal and/or environmental constraints to cross-border resource transfers, which are barriers to foreign direct investment (FDI). 3. Literature Review-3 Title: Foreign entry into British retailing, 1850-1994
Authors: Andrew Godley, Scott Fletcher Source: International Marketing Review; Volume: 17 Issue: 4/5; 2000 This paper traces the history of foreign direct investment in UK retailing since 1850. The results suggest that the upsurge of cross-border activity in the 1980s and early 1990s was exceptional in absolute terms. However, when compared to the most likely determinant of entry rates, consumer purchasing power, the recent upturn is best seen as a return, after several decades of relatively low entry rates, to the high level of FDI prevailing in the early twentieth century.
Moreover, the paper concludes that cross-border retailing will continue to increase, and to do so at a rate close to twice that of the growth in consumer purchasing power. 4. Literature Review-4 Title: Sino-British joint ventures in China: Investment patterns and host country conditions Authors: Huaning Li, Colin M. Clarke-Hill European Business Review; Volume: 16 Issue: 1; 2004 This paper analyses the investment patterns of Sino-British joint ventures in China.
The research is based on the data of 551 Sino-British joint ventures formed over the period of 1983 to 1996. It aims to provide an overview of Sino-British joint ventures’ investment in China and to explain the investment conditions. The article analyses the investment patterns from the dimensions of investment value, geographical location, industry sector and equity ownership. To explain the formation of the patterns, it further explores the host country factors of investment based on the policy framework, economic determinants and business facilitation.
It reveals the investment trend, the uneven spatial distribution, the sectoral characteristics and the ownership structure of joint ventures. It also suggests that government economic strategy and policies towards FDI are imperative in shaping the investment patterns. Locational advantages, economic growth, industrial structures and reform process are major economic factors influencing the investment decisions. Decentralization of decision making and local governments’ facilitation efforts also play a complementary role in attracting foreign investment. . Literature Review-5 Title: Host economy impacts of transnational retail: the research agenda Authors: Neil M. Coe and Neil Wrigley Source: Journal of Economic Geography, April 21, 2007 The last decade has witnessed an acceleration of retail foreign direct investment into a range of emerging markets across East Asia, Central and Eastern Europe and Latin America, led by a small cohort of food and general merchandise retailers from Western Europe, and to a lesser extent, North America.
While these investment flows have had profound developmental impacts in host economies, research in this area is still in its infancy. This article therefore maps out a detailed research agenda with respect to the host economy impacts of transnational retailing. After setting the scene empirically and conceptually, the article considers different dimensions of these impacts on retail competitiveness, supply chain dynamics, consumption practices and consumer/civil society, institutional and regulatory frameworks and, reciprocally, on the retail transnational corporations themselves.
It concludes by calling for a concerted interdisciplinary research effort into this important and understudied aspect of economic globalization. GAP ANALYSIS Most of the major work surrounding foreign investment in retail sector has focused upon planning strategies, host country conditions, franchising and investment opportunities and impact of cross border trade. Improvisation on these works will be done on the basis of investigating the scope of foreign investment in various retail segments, profitability across these sectors and a comparative analysis.
Also impact of suitable parameters that can affect organized retailing and entry of foreign players will be evaluated through a regression analysis and significance will be tested. Also how government reforms should be undertaken will be recommended that will give a boost to retail sector in India and the economy as a whole. REFERENCES 1. ABI Inform Global, ABI Inform Trade & Industry 2. EBSCO- Business Source Complete 3. ELSEVIER – Science Direct 4. Price Waterhouse Coopers Analytical Publication 5. ibef. com 6. researchwiki. com 7. livemint. com