Developing a Risk Breakdown Structure

for a Market Entry: The Indian Case

 

FEATURED PAPER

By Massimo Malvestio

Milan, Italy

 


 

Abstract

In order to support the managers when approaching the Indian market, this paper analyzes the major challenges that they might face. In fact, despite a large number of documents available to managers, it still does not exist a comprehensive analysis that covers all the different aspects of the challenges of a market entry. Focusing in particular on the foreseeable uncertainty, the risks that are identifiable ex-ante, this work proposes a set of challenges that a company might face. Moreover, it prioritizes them by combining the results of a quantitative and a qualitative analysis. After a review of the literature, this paper analyzes, through a questionnaire, the experiences of a set of managers and companies which operate or have operated in India, and ranks the risks according to the results of a statistical analysis based on the survey. After that, the work takes a deductive approach and tests these results through an interview-based qualitative analysis conducted with a second set of managers. The results of the work propose a set of risks, highlighting the most challenging ones and providing suggestions that the managers can use in order to manage the risks and maximize the performance of their companies in the country.

Introduction

Indian economy is quickly growing, with a 5.4% increase in the GDP per capita and 6.6% growth rate in the GDP in 2017 according to the World Bank, and the country has the second largest population in the world, reaching 1.2 billion inhabitants in 2011, according to the Census of India of the Ministry of Home Affairs. Even though it is still falling behind the major economies in the world including its regional rival, China, India’s growth rate and increasing purchasing power attract FDI from all over the world, reaching USD 39.9 billion in 2017, according to the World Bank. Despite its attractiveness, India is a challenging country, with a unique and intense culture, a structural lack of infrastructure, weak institutions and low living conditions, hence lowering the attractiveness for expatriates.

Therefore, to effectively compete in the Indian market, a company and its management need to know which issues they are going to face, how they could impact their performance and how to prevent the potential adverse effects. To do so, there is a wide range of tools that support the managers in the process: books that explain the Indian culture to minimize the cultural clash for the managers, guides to the incorporation process that highlight the limits of Indian bureaucracy and so on. What is still lacking is an analysis aimed to identify which of all these different factors are the most crucial ones for the Italian companies who want to enter the Indian market.

The inspiration for this work comes from the personal experience of the Author in the country, as a student first and as a worker in a second place. He experienced most of the difficulties that a company might face when entering the country. Most of the things might sound obvious or at least very well known, but they become suddenly essential and difficult to manage when from theoretical they become practical concepts that need to be applied.

To identify in a synthetic but as exhaustive as possible way all the potential risk that, at a general level, an Italian company might face, this paper uses some basic concepts taken from Project Risk Management. Using them as a tool to interpret and categorize the vast amount of information available, the ultimate objective is:

to obtain a list that can show which have been, according to the experience of Italian companies so far, the most critical issues that need to be tackled to succeed in the Indian market.

This list, together with suggestions on how to overcome these risks, could then be used by managers of Italian companies as a checklist to effectively manage the entire operation and limit the risk to incur in poor performance or unexpected problems. To obtain relevant results, this work uses a “triangulation” approach, therefore using three different inputs to the research.

  1. The first input is a review of the current literature on doing business in India and the status of the Indian economy to highlight the most recurring challenges;
  2. The second is a questionnaire distributed to the managers of Italian companies currently or previously present in the Indian market, to gain insights into the trends in a structured list of risk factors;
  3. The third one is a set of 5 interviews aimed at providing in-depth examples of the performance of the Italian companies in the Indian market as well as giving the chances to follow up on the list of risk and the questionnaire itself.

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How to cite this paper: Malvestio, M. (2019). Developing a Risk Breakdown Structure for a Market Entry: The Indian Case; PM World Journal, Vol. VIII, Issue IV (May). Available online at https://pmworldlibrary.net/wp-content/uploads/2019/05/pmwj81-May2019-Malvestio-risk-breakdown-structure-for-market-entry-india2.pdf

 


 

About the Author

 
Massimo Malvestio

Bocconi University, Milan (Italy)
Indian Institute of Management, Ahmedabad (India)

 

Massimo Malvestio obtained a Master in International Management at Bocconi University, Milan. During his studies, he had the chance to obtain a Master in Business Administration (MBA) from the Indian Institute of Management, Ahmedabad, as part of a Double Degree Program with Bocconi University. Both the institutions are ranked among the top Business Schools in the world (Financial Times, Forbes, Bloomberg, and The Economist rankings). After his studies in India, he had the chance to continue his stay in the country with a work experience at Capgemini India, in Hyderabad.

Massimo Malvestio can be contacted at: massimo.malvestio@studbocconi.it

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