SUBMITTED BY: NAME: UDAY BHASIN MBA-IB (2010-12) SECTION: F SUBJECT: PGBM FACULTY: Ms.

AREEJ AFTAB

ECONOMY OF BRAZIL
The Economy of Brazil is the world's eighth largest economy by nominal GDP and ninth largest by purchasing power parity. Brazil has moderately free markets and an inward-oriented economy. Its economy is the largest among all South American nations and the second largest in the western hemisphere. Brazil is one of the fastest-growing major economies in the world with an average annual GDP growth rate of 5%. In Reais (Brazilian currency), its GDP is estimated at R$ 2.9 trillion dolars in 2009. The Brazilian economy has been predicted to become one of the five largest economies in the world in the decades to come, the GDP per capita following and growing. Brazil is a member of diverse economic organizations, such as Mercosul, SACN, G8+5, G20 and the Cairns Group. Its trade partners number in the hundreds, with 60% of exports mostly of manufactured or semimanufactured goods.[14] Brazil's main trade partners in 2008 were: Mercosul and Latin America (25.9% of trade), EU (23.4%), Asia (18.9%), the United States (14.0%), and others (17.8%).[15] According to the World Economic Forum, Brazil was the top country in upward evolution of competitiveness in 2009, gaining eight positions among other countries, overcoming Russia for the first time, and partially closing the competitiveness gap with India and China among the BRIC economies. Important steps taken since the 1990s toward fiscal sustainability, as well as measures taken to liberalize and open the economy, have significantly boosted the countrys competitiveness fundamentals, providing a better environment for private-sector development.[16] The owner of a sophisticated technological sector, Brazil develops projects that range from submarines to aircraft and is involved in space research: the country possesses a satellite launching center and was the only country in the Southern Hemisphere to integrate the team responsible for the construction of the International Space Station (ISS).[17] It is also a pioneer in many fields, including ethanol production. Brazil, together with Mexico, has been at the forefront of the Latin American multinationals phenomenon by which, thanks to superior technology and organization, local companies have successfully turned global. These multinationals have made this transition notably by investing massively abroad, in the region and beyond, and thus realizing an increasing portion of their revenues internationally. Brazil is also a pioneer in the fields of deep water oil research from where 73% of its reserves are extracted. According to government statistics, Brazil was the first capitalist country to bring together the ten largest car assembly companies inside its national territory.

Rank

8th (nominal) / 9th (PPP)

Currency Fiscal year Trade organisations Statistics GDP

Brazilian real (BRL, R$) Calendar year Unasul, WTO, Mercosul, G-20 and others

$1.574 trillion (2009) (nominal; 8th) $2.013 trillion (2009) (PPP; 9th)

GDP growth GDP per capita

-0.2% (2009) $9,960 (2009) (nominal; 60th) $15,280 (2009) (PPP; 75th)

GDP by sector

agriculture: 5.5% industry: 28.7% services: 65,8% (2007) 4.31% (2009)

Inflation (CPI)

Population 15.5% (2009) below poverty line Gini index Labour force 49.3 (June 2009) 95.21 million (2009 est.)

Labour forceagriculture: 20%, industry: 14% and services: by occupation 66% (2003 est.) Unemployment Main industries 7.3% (May 2010) airplanes, steel; iron ore, coal; machine building; armaments; textiles and apparel; petroleum; cement; chemicals; fertilizers; consumer products, including footwear, toys,

and electronics; food processing; transportation equipment, including automobiles, rail cars and locomotives, ships, and aircraft; electronics; telecommunications equipment, commercial space launch vehicles, satellites, real estate, brewing, tourism Ease of Doing129th Business Rank External Exports Export goods $158.9 billion (2009 est.) transport equipment, iron ore, soybeans, footwear, coffee, autos, automotive parts, machinery

Main partners

exportUnited States 14.0%, Argentina 8.9%, China 8.3%, Netherlands 5.3%, Germany 4.5%, Japan 3.1% (2008) $136 billion (2009 est.) machinery, electrical and transport equipment, chemical products, oil, automotive parts, electronics

Imports Import goods

Main partners

importUnited States 14.9%, China 11.6%, Argentina 7.7%, Germany 6.9%, Japan 3.9%, Nigeria 3.9%, South Korea 3.1% (2008) external$216.1 billion (31 December 2009 est.)

Gross debt

Public finances Public debt $103.2 billion; 6.4% of GDP (2008 est.)

ForeignReserves $285.7 billion

Brazilian Telecom Market

Brazilian telecom market has grown by 16 percent year-on-year to reach 176 million by the end of last year and the sector continues to be dominated by its big four players: market-leader Vivo, America Movils Claro, Telecom Italias TIM Brasil, and local operator Tele Norte Leste Participacoes (also known as Oi). These four operators were the principle winners of the countrys first WCDMA (3G) auctions that took place at the end of 2007. But the future of the so called Big Players does not seem to be very smooth as there are a number of new competitors all set to enter the telecom sector later this year. However, there are possibilities that the existing players will be barred from bidding for further 3G spectrum when the local regulator (Anatel) sells-off the so-called H-band WCDMA bandwidth later this year, paving the way for the arrival of the small players. Some of the new comers almost certain to bid at these auctions is Nextel, the iDEN operator, Frances Vivendi, entered the Brazilian market last November via the US$4 billion acquisition of fixed-line broadband firm GVT, along with Telefonicas Telesp and America Movils Telmex. Till date, Brazil has only around 130,000 WiMAX subscribers and the WiMAX market is deemed to be suffering from a persistent shortage of spectrum and around 75 percent of 3.5GHz spectrum has yet to be released, while the use of mobility in 2.5GHz is restricted. MVNOs which are expected to be allowed into the market for the first time this year, can pose further competition. Carrefour, the Brazilian arm of French retail group has already confirmed its interest in entering the market via this route and other big names could follow. But by the time, the small players make their mark in the sector and among the users the established players continue to play a dominating role. A 50/50 joint-venture between Spains Telefonica and Portugal Telecom and the market-leader Vivo surpassed the 50 million connections milestone in 4Q09 besides capturing over a third of net additions in the quarter (fourth-quarter additions accounted for 42 percent of Vivos total for 2009). By combining its Mobile and fixed-line assets, second-placed America Movil is looking to ramp-up competition with fierce regional rival Telefonica while its Brazilian mobile arm Claro kept pace with Vivo during 2009. Establishing coverage from scratch and reaching unconnected rural areas will not be easy. Introduction of competition and establishment of rural 3G coverage having potential to disrupt the current status quo are some of the requirements for stimulating the market in Brazil. Race towards improving 3G coverage has also emerged as the key to unlocking additional revenue. To win the race, a clear set of tariffs and a streamlined portfolio will be necessary to enact any disruption in Brazil. Besides, there is a requirement for network-sharing agreements on a site or infrastructure level to lessen the financial blow. Four companies dominate the Brazilian mobile phone market: Vivo (Telefnica/Portugal Telecom), Claro (Amrica Mvil), TIM Brasil (Telecom Italia), and Oi (Telemar). Together,

these four control 98.3% of Brazils mobile subscriber base. Vivo is the leader, although its market share has been slipping; Claro and TIM Brasil have been vying for second and third place; Oi occupies a close fourth position, having increased its market share through the acquisition of Brasil Telecom. The remaining 1.7% of the market is shared between CTBC Telecom, Sercomtel, trunking network operator Nextel Brasil, and start-up company Unicel trading as Aeiou. The country has 173.959 million subscribers in total , or a 90.55% penetration rate.(December 2009) Anatel regulates the country's telecommunications. Subscribers Rank Operator Technology Ownership (in millions) CDMA2000 1xRTT, EV-DO (discontinued) GSM UMTS, HSPA+ GSM UMTS, HSDPA GSM UMTS, HSDPA Brasil GSM UMTS, HSDPA iDEN GSM UMTS, HSDPA

Vivo

51.74 [18] Telefnica (100%) (December 2009)

2 3

Claro TIM Oi Includes Telecom NEXTEL CTBC [23]

44.40 [19] Amrica Mvil (100%) (December 2009) 41.11 [20] Telecom Italia and Telefonica (December 2009) 36.05 [21] Oi and Telemar Participaes (December 2009) 1.9389 [22] (March NII Holdings 2009) 0.54 [24] (December Algar 2009) 0.09 [26] (December Londrina city (Paran) State2009) owned Sercomtel 0.02 [27] (December Elav Group (Melo da Silva 2009) family).

5 6 7 8

Sercomtel Celular GSM [25] UMTS, HSDPA Unicel / aeiou GSM

ENTRY IN BRAZIL
Product basket : Telecom services and mobile phones.

Brazil telecom sector is right now growing at a good pace thus it should be targeted. Brazil is the largest market in Latin America and the region's leading investment destination for international operators and suppliers.With the country's economic recovery well under way, the spending power of Brazilian consumers is on the rise. Demand should remain strong for telecom services, especially broadband and mobile telephony. Recently there was a news also on Vodafone entry in brazil.The news was According to the Brazilian local daily, O Estado de S. Paulo, The UK-based Vodafone Group is resorting to the services of an investment bank to study the possibility of acquiring a stake in mobile network operator. The newspaper stated that Vodafone has already entered in talks with Spanish Telefonica Group, a shareholder of Telecom Italia which controls TIM Participacoes (TIM Brazil) There are 4 leading companies in Brazil that are vivo,claro,TIM and Qi.

The mode of entry chosen for that country :

Obviously, the entry mode to enter brazil it can only enter through a joint venture or buying stake in existing company.

TIM BRAZIL-Telecom Italia Mobile is Telecom Italia's mobile phone brand, and runs a GSM, EDGE, UMTS and HSDPA network in Italy and Brazil. In Europe, TIM is part of the FreeMove alliance. Our firm can get into contract with this company.It is clear that only through joint venture because launching new services getting licenses etc is not very easy plus taking stake in the exisiting company. Brazil is a decent market to enter at this point of time. The entry strategy should be like getting talks with TIM and try to convince them for a joint venture.the firm should try and get the first mover advantage by providing mobile phones at cheaper rates, as after recession brazilian economy is growing now and populations purchasing power parity is good enough.So providing cheaper mobile phones while entering plus cheap mobile calls will help us alot in making a good brand image among customers of Brazil.

CHINAS ECONOMY : AN OVERVIEW

China's economy is huge and expanding rapidly. In the last 30 years the rate of Chinese economic growth has been almost miraculous, averaging 8% growth in Gross Domestic Product (GDP) per annum. The economy has grown more than 10 times during that period, with Chinese GDP reaching 3.42 trillion US dollars by 2007. In Purchasing Power Parity GDP, China already has the biggest economy after the United States. Most analysts project China to become the largest economy in the world this century using all measures of GDP.

However, there are still inequalities in the income of the Chinese people, and this income disparity has increased in the recent times, in part due to a liberalization of markets within the country. The per capita income of China is only about 2,000 US dollars, which is fairly poor when judged against global standards. In per capita income terms, China stands at a lowly 107th out of 179 countries. The Purchasing Power Parity figure for China is only slightly better at 7,800 US dollars, ranking China 82nd out of 179 countries. Economic reforms started in China in the 70s and 80s. The initial focus of these reforms was on collectivizing the agricultural activities of the country. The leaders of the Chinese economy, at that point in time, were trying to change the center of agriculture from farming to household activities. At later stages the reforms extended to the liberalization of prices, in a gradual manner. The process of fiscal decentralization soon followed. As part of the reforms, more independence was granted to the business enterprises that were owned by the state government. This meant that government officials at the local levels and the managers of various plants had more authority than before. This led to the creation of a number of various types of privately held enterprises within the services sector, as well as the light manufacturing sectors. The banking system was diversified and the Chinese stock markets started to develop and grow as economic reforms in China took hold. The economic reforms made in China in the 70s and 80s had other far reaching effects as well. The sectors outside the control of the state government of China grew at a rapid pace as a result of these reforms. China also opened its economy to the world for the purposes of trade and direct foreign investment. China has adopted a slow but steady method in implementing their economic reforms. It has also sold the equity of some of the major Chinese state banks to overseas companies and bond markets during the middle phase of the first half of the 21st century. In recent years the role played by China in international trade has also increased.

THE COSMETIC AND TOILETRIES MARKET IN CHINA:

China represents one of the most dynamic and untapped cosmetics and toiletries markets in the world. Last six to seven years have proved highly beneficial for the market when it has undergone rapid transformation and expansion phase. The Chinese cosmetics and toiletries market is the 2nd largest in Asia-Pacific region after Japan and seventh largest in the world. Although the market registered an impressive growth, the country still has high growth potential which is far from its saturation level. Extremely low penetration level and vast consumer base are two key factors that catch the eyeballs of cosmetic manufacturers.

As per our new research report Cosmetics and Toiletries Market in China, skincare dominates the overall cosmetics and toiletries market in China. In 2009, the segment acquired almost 40% share and showed no signs of slowdown despite post recessionary scenario. Other segments like hair care, color cosmetics, fragrances, etc have also experienced double digit growth over the recent years. The market provides opportunities to both homegrown and international players. However, international companies like P&G and LOreal are currently leading the Chinese cosmetics and toiletries market. These companies are responsible for generating majority of the industry revenue and are preferred by the consumers over the local companies. Strong and wide product lines along with aggressive marketing strategies have been considered the success mantra proactively adopted by these international cosmetics giants. Although the Chinese cosmetics market has become highly competitive, there is still a plenty of room for new entrants provided they adopt appropriate market entry strategies, find right manufacturing or distribution partners, use effective marketing strategies, and make suitable products for various customer groups at reasonable price points. With increasing disposable income, surging working population (especially females) looks conscious approach and strong promotional strategies, we anticipate that the Chinese cosmetics and toiletries market revenue will surpass US$ 31 Billion by 2013. Besides, the CAGR growth projected for the market during 2010-2013 will be the highest among the major Asia-Pacific cosmetics and toiletries markets. The research will help clients to get in-depth knowledge of the current, past and future performance of the industry. The segment and sub-segment wise analysis provides cutting edge market intelligence and facilitates deep and conceptual understanding of the market in Chinese perspective. The future outlook mentioned in report has been derived by interacting with industry veterans, developers, analyzing information from research papers, journals and our industryspecific in-house developed models.

The product basket of Brazil country:

Essential toiletries and cosmetics : soaps, shampoos, hair oils, face washes, skin care creams etc.

The mode of entry chosen for that country is joint venture with one of the growing brands like AVON.
Joint Venture: two or more partners own or control a business Cross marketing arrangements,Technology sharing agreements,Production deals,Equity arrangements Types of Joint ventures: Non equity venture : one group providing service for another Equity Venture : financial investment by MNC in business of local partner. contracting

The feasibility of the product and the mode of entry chosen

There is a huge demand for cosmetics in China. The market provides opportunities to both homegrown and international players. Since international companies like P&G and LOreal are already leading the Chinese cosmetics and toiletries market it is better to enter the market through joint venture as the risk and the cost of investment will get diversified and will be lesser. The efficiency of both the firms will increase as large scale production would help them realise economies of scale and in turn reduce cost of production thus increasing demand and profits.joint venture would help in getting greater access to knowledge as there would be a pool of resources like financial and technoligal resources will be shared. Since there are two firms hence, they will be able to compete with their counterparts more effectively.

Examples of brands that are already competing in chinese markets are: Unilever China Ltd: Joint venture of Unilever set up in Shanghai in 1986 Product range comprising skin care, hair care, deodorant, detergent, soap, toothpaste and fragrance Actively acquiring local brands, most notably, Zhong Hua Massive spending in advertising, for example, spent 100 million yuan on promoting the brand, Ponds Established R & D centre in Shanghai in 2001 with initial investment amounted to US$166 million Working on building a low cost and competitive production base by relocating and consolidating its production and logistics facilities, and R & D capabilities to Hefei in Anhui in an attempt to lower the overall production costs and the product prices

Its products are as follows:

Hazeline Ponds Vaseline Pears Zhong Hua Signal Lux Dove

THE RUSSIAN ECONONMY: A BRIEF OVERVIEW

The economy of Russia is the twelfth largest economy in the world by nominal value and the seventh largest by purchasing power parity (PPP). Russia has an abundance of natural gas oil, coal, and precious metals. It is also rich in agriculture. Russia has undergone significant changes since the collapse of the Soviet Union, moving from a globally-isolated, centrally-planned economy to a more market-based and globally-integrated economy. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy and defense-related sectors. Nonetheless, the rapid privatization process, including a much criticized "loans-forshares" scheme that turned over major state-owned firms to politically-connected "oligarchs", has left equity ownership highly concentrated. The protection of property rights is still weak and the private sector remains subject to heavy state interference.

Economy of Russia Rank Currency Trade organizations Statistics $1.229 trillion (2009) (nominal; 12th)[1] GDP GDP growth GDP per capita GDP by sector Inflation (CPI) Population below poverty line Labour force Labour by occupation Unemployment force $2.109 trillion (2009) (PPP; 7th)[1] -7.9% (2009)[2] $8,693 (2009) (nominal; 52nd)[1] $14,919 (2009) (PPP; 52nd)[1] agriculture: 4.6%, industry 39.1%, services 56.3% (2007 est.) 8.8% (2009 est.)[3] 15.8% (2007 est.) 75.81 million (2009 est.) agriculture 10%, industry 31.9%, services 58.1% (2007 est.) 8.9% (2009) 12th (nominal) / 7th (PPP) Russian ruble (RUB) CIS, APEC, EURASEC, G-20, G8 and others

Main industries

coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; defense industries including radar, missile production, and advanced electronic components, shipbuilding; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, handicrafts

Ease of Doing Business 120th[4] Rank External Exports Export goods $295.6 billion (2009 est.) petroleum and petroleum products, natural gas, wood and wood products, metals, chemicals, and a wide variety of civilian and military manufactures Netherlands 11.2%, Italy 8.1%, Germany 8%, Turkey 6%, Ukraine 5.1%, Poland 4.5%, China 4.3% (2008) $196.8 billion (2009 est.) vehicles, machinery and equipment, plastics, medicines, iron and steel, consumer goods, meat, fruits and nuts, semifinished metal products Germany 13.5%, China 13.2%, Japan 6.5%, Ukraine 6%, US 4.5%, Italy 4.3% (2008) $369.2 billion (31 December 2009 est.)

Main export partners Imports Import goods

Main import partners Gross external debt Public finances Public debt Revenues Expenses

6.9% of GDP (2009 est.) $205.3 billion (2009 est.) $306.6 billion (2009 est.)

THE ELECTRONICS INDUSTRY IN RUSSIA

Electronics manufacturing in Soviet Union was mostly concentrated in science and production associations, which united R&D institutions with a number of specialised plants. The most famous were Rubin (TV sets producer), Minsk enterprise for computer techniques, Svetlana, Krasnaya Zariya (telecommunication equipment), etc. The electronics industry suffered greatly from the collapse of the Soviet Union and Perestroika. The transition resulted in a break down of the traditional production connections, decrease of the state military orders and shortfall of state R&D spending. Some science and production associations fell apart, as some departments were located in the other Soviet Republics. As a result, the development of the sector was frozen and it gradually lost its position.

Table 1. Production dynamics of consumer electronic devices

Equipment Computers, Radio receivers, TV sets, 1990 313 5748 4717 1995 62.3 988 1005 1996 118 477 313 1997 132 342 327 1998 62 235 329 1999 27 332 281

Source: Goscomstat Nowadays the share of electronics manufacturing in Russian GDP does not exceed 0.12%. The total output of the sector accounts for USD 300 million while the whole market of civil electronics goods in Russia reached USD 20 billion in 2000. Russian manufactures have lost almost all positions on the consumer electronics market - the share of imports is nearly 100% in all the main segments (computers, monitors, TV sets, audio devices, telecommunication equipment, etc). Not all Soviet electronics plants managed to survive in the new economic environment and in 2000 only 257 companies were operating in the industry As a result of Soviet industrial policy, the electronics sector had only a few competitive products at the world markets, most of which were military equipment. With opening of the Russian market for the foreign companies, local manufacturers of consumer electronics and components lost their market. The main competitive advantage of the Russian electronics industry is educational infrastructure and science. Russian scientists have always been famous for fundamental research. Here one could mention Jores Alferev, who received a Nobel Prize for progress in research in semiconductors technologies. Many Russian universities keep on training specialists for the electronics industry, providing the sector with a qualified labour force.

The Russian electronics industry has been considered as a high-risk sector for investments. However, stabilisation and growth in the industry has already attracted the first foreign investors.

The product basket of the country

Electronic items: video camera, television sets, portable audio etc.

Entry mode chosen: Wholly owned subsidy

A subsidiary whose parent company owns 100% of its common stock. In other words, the parent company owns the company outright and there are no minority owners. Firms can establish a wholly owned subsidiary in a foreign market: setting up a new operation in the host country acquiring an established firm in the host country

The feasibility of the product and the mode of entry chosen 1. Since the domestic market of Russia is incapable to fulfilling the entire demand of the country its better to set up a subsidy in Russia and capture a huge market share. 2. The main competitive advantage of the Russian electronics industry is educational infrastructure and science thus, establishing a wholly owned subsidy would be beneficial as there will be inflow of new talent and innovation. 3. Since the subsidy is a wholly owned subsidy there will be no risk of losing technical competence to a competitor. 4. The company can have a tight control of operations. 5. The company can realize learning curve and location economies which will in turn reduce the cost of production and thus the products can be made available at cheaper prices in turn increasing demand and thus profits.

Although the company would have to bear huge initial investment costs to set up the business in the country but the huge demand and market available, the company would be able to soon recover them if it succeeds in developing a brand name for itself.

Example: Sony Moved Into Russia With Its Wholly Owned Subsidiary Sony Music Entertainment Russia (SMER).

UNITED ARAB EMIRATES (UAE): AN OVERVIEW

The United Arab Emirates (UAE) is a rapidly diversifying, highly developed economy, based on various socioeconomic indicators such as GDP per capita, energy consumption per capita, and the HDI. At $270 billion in 2008, the GDP of the UAE ranks second in the CCASG (after Saudi Arabia), third in the Middle EastNorth Africa (MENA) region (after Saudi Arabia and Iran), and 38th in the world). [4] There are various deviating estimates regarding the actual growth rate of the nations GDP, however all available statistics indicate that the UAE currently has one of the fastest growing economies in the world. According to a recent report by the Ministry of Finance and Industry, nominal GDP rose by 35 per cent in 2006 to $175 billion, compared with $130 billion in 2005. Although the United Arab Emirates is becoming less dependent on natural resources as a source of revenue, petroleum and natural gas exports still play an important role in the economy, especially in Abu Dhabi. A massive construction boom, an expanding manufacturing base, and a thriving services sector are helping the UAE diversify its economy. Nationwide, there is currently $350 billion worth of active construction projects. The UAE is a member of the World Trade Organization.

STARTING A BUSINESS IN UAE :

Whatever type of business you are setting up, you will need a license to do business in the United Arab Emirates. The three types of licenses are 1. Commercial license (all kinds of trading) 2. Industrial license (manufacturing or industrial) 3. Professional license (professions, services and craftsmen)

Before starting to setup a company, you need to decide how the ownership of the company will be. Sole Ownership In order to start up a company that is solely owned by you, requires that you setup one at one of the free trade zones throughout the UAE. The majority of IT companies have setup their middle eastern branches in the Dubai Internet City (DIC), while many media related companies have setup their branches in the Dubai Media City (DMC). A list of the various free zones in the UAE

can be found here. Alternatively, expats can have a company setup by a UAE national and sign legal documents at the courts that the actual ownership of the company is for them. This agreement normally involves paying the UAE national an agreed amount of money each month or year.

FURNITURE INDUSTRY IN UAE

Furniture production in the UAE is very limited, and most of the domestic demand, which grew dramatically during the recent economic boom, is satisfied by imported products. Import demand for furniture has been rising steadily during the last decade (particularly between 2006 and 2008), driven by increasing oil revenues, the construction boom and expanding population. By the end of 2010 the UAE economy was hit by both external and domestic shocks. The country is now starting to recover from these shocks, even though prospects between the main Emirates appears to be different Local and international experts and analysts anticipate that the furniture market in the UAE will grow by 40% this year, owing much to the real-estate and tourism projects, which are estimated to reach several Billion of Dirhams in 2010. Further, the increase in size of local and expatriate families in the UAE, has seen a considerable rise in the demand for furniture and interior design solutions, giving the UAE a unique position amongst the GCC countries, as the most important furniture and design related industry in the region. As per recent studies and research, it is further anticipated that more than 500 furniture companies in the UAE will rake in revenues of 700 Billion Dirhams in 2010, owing to the launch of recent real-estate projects estimated at 96 Billion Dirhams. The studies also expect that the cost of the real-estate construction and tourism projects will reach 300 Billion Dirhams in the UAE and 450 Billion Dirhams in GCC, during the 2 coming years. Currently, real-estate projects worth 50 Billion Dollars are undergoing annual studies in the Gulf region, 54% of these projects is owned by the UAE market, ranging between construction works in the airports, islands, houses, commercial complexes, hotels and many others. The UAE leads the GCC market in relation to the number of projects under execution, estimated at 820 projects since June 2005, out of 1,785 projects in the GCC region. The experts confirm that the real-estate and tourism boom will positively effect other sectors like furniture, interior design, and lighting in the UAE and the Gulf region.

Product basket: Wooden Furniture

CABINET MAKERS ,CARPENTERS & JOINERS ,DOORS ,FURNISHERS - CONTRACT ,FURNITURE MANUFACTURERS ,HOTEL & MOTEL FURNITURE SUPPLIERS ,INTERIOR DECORATORS ,SHOPFITTERS & SHOPFITTING EQPT SUPPLIERS

Mode of entry: Wholly owned subsidiary

1. Since the domestic market of UAE is incapable to fulfilling the entire demand of the country its better to set up a subsidy in UAE and capture a huge market share. 2. Since the subsidy is a wholly owned subsidy there will be no risk of losing technical competence to a competitor. 3. The company can have a tight control of operations. 4. The company can realize learning curve and location economies which will in turn reduce the cost of production and thus the products can be made available at cheaper prices in turn increasing demand and thus profits. 5. Although the company would have to bear huge initial investment costs to set up the business in the country but the huge demand and market available, the company would be able to soon recover them if it succeeds in developing a brand name for itself.

Entry strategy
All kind of designer furniture which will be produced and sold at united arab emirates.As the demand of furniture is very high and most of it is imported it will be cheaper to produce furniture there only. Wood can be imported at a cheaper rate with comparison with the rate of readymade furniture. Settling up a wholly owned subsidy is not a problem at UAE. Evidence for entry strategy undertaken UAE-based Leader Furniture and Joinery Craftsmen Ltd, part of the Juma Al Majid Group, began life as a small joinery shop 25 years ago, and the factory it established in 1994 is today the biggest facility of its kind in the Gulf region. First-time exhibitors, Standard Carpets Industries, manufacturers of wall to wall carpets and BCF yarn, expects its appearance at The Hotel Show to reinforce its drive to grow its business annually from $10 million at present to $15 million by the end of next year. The company plans to expand capacity at its UAE manufacturing facility to produce woven and printed carpets in the next 12 to 18 months, and says it can offer Middle East hotel industry customers the benefit of reduced transportation costs, faster delivery and enhanced service. Another new name at The Hotel Show, UK-based Sico Europe Ltd, manufactures hospitality products used and specified by major hotel chains worldwide, including stages, tables and portable dance floors. Regional sales manager, Graham Dimond, says the Middle East currently accounts for 15% of the company's annual turnover, but the launch in Dubai of new products such as The Lite Step illuminated portable dance floor could help bring a major expansion of business in a region showing dynamic hotel growth.

THE INDIAN ECONOMY : AN OVERVIEW

The economy of India is the eleventh largest economy in the world by nominal GDPand the fourth largest by purchasing power parity (PPP).Following strong economic reforms from the socialist inspired economy of a post-independence Indian nation, the country began to develop a fast-paced economic growth, as free market principles were initiated in 1990 for international competition and foreign investment. India is an emerging economic power with a very large pool of human and natural resources, and a growing large pool of skilled professionals. Economists predict that by 2020. India will be among the leading economies of the world. India was under social democratic-based policies from 1947 to 1991. The economy was characterised by extensive regulation, protectionism, public ownership, pervasive corruption and slow growth. Since 1991, continuing economic liberalisation has moved the country toward a market-based economy.A revival of economic reforms and better economic policy in 2000s accelerated India's economic growth rate. In recent years, Indian cities have continued to liberalize business regulations. By 2008, India had established itself as the world's second-fastest growing major economy. However, the year 2009 saw a significant slowdown in India's GDP growth rate to 6.8% as well as the return of a large projected fiscal deficit of 6.8% of GDP which would be among the highest in the world. India's large service industry accounts for 55% of the country's Gross Domestic Product (GDP) while the industrial and agricultural sector contribute 28% and 17% respectively. Agriculture is the predominant occupation in India, accounting for about 52% of employment. The service sector makes up a further 34%, and industrial sector around 14%.The labor force totals half a billion workers. Major agricultural products include rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry and fish. Major industries include telecommunications, textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, information technology enabled services and pharmaceuticals. India's per capita income (nominal) is $1,030, ranked 139th in the world, while its per capita (PPP) of US$2,940 is ranked 128th. Previously a closed economy, India's trade has grown fast. India currently accounts for 1.5% of World trade as of 2007 according to the WTO. According to the World Trade Statistics of the WTO in 2006, India's total merchandise trade (counting exports and imports) was valued at $294 billion in 2006 and India's services trade inclusive of export and import was $143 billion. Thus, India's global economic engagement in 2006 covering both merchandise and services trade was of the order of $437 billion, up by a record 72% from a level of $253 billion in 2004. India's trade has reached a still relatively moderate share 24% of GDP in 2006, up from 6% in 1985.

INDIAN GOLD INDUSTRY

India is the largest consumer of gold in the world to be followed by China and Japan. Though global consumption of gold witnessed a sharp fall in 2002 in last five year -- from 3770.1 tonnes in 1997 to 3067.4 tonnes in 2002 -- India maintained its lead with 575.7 tonnes against 688

tonnes in 1997 followed by China (202.3 tonnes) and Japan (141.5 tonnes). India is emerging as world's largest trading centre of this commodity with a target of US$ 16 bn set for 2010. India consumes nearly 800 tonnes of Gold Bullion, accounting for about 20% of world gold consumption. Nearly 600 tonnes of it goes into making jewelry. The Indian jewelry market, estimated to be worth $13.5 billion in fiscal 2006-07, accounts for 8.3% of world jewelry sales by value according to a study by KPMG. The industry is well supported by Government policies and the banking sector. Around 50 banks provide nearly $3 billion credit to the Indian diamond industry. In addition, India is expected to have a diamond bourse soon. Indian jewelry demand rose by 70% during the first half of 2007 compared with the same period in 2006. Jewelry demand increased to 387 tonnes from 227 tonnes during the period. Gold consumption, meanwhile, grew by 70% to 528 tonnes during the first six months of 2007, compared to 307 tonnes in the same period last year. India's total gold consumption in 2006 including Gold Investment demand was slightly over 700 tonnes. While jewelry accounted for around 73% of gold demand, investments in the forms of coins and bars accounted for the rest.

The product basket of the country:

Gold jewellery

THE ENTRY MODE CHOSEN IS FRANCHISING :

Franchising is the practice of using another firm's successful business model. Franchising has been around in one form or another since man first began to engage in commercial enterprise. It has evolved from a simple grant of a right or privilege in the middle ages to the sophisticated business format franchise concept of today.

India is the largest consumer of gold in the world to be followed by China and Japan. India is emerging as world's largest trading centre of this commodity with a target of US$ 16 bn set for 2010.

A detailed plan of the entry strategies undertaken with evidence :

Under Franchising :
Fanchising's primary benefit is risk minimization. Starting a new business is risky. Most studies show that over 90 percent fail within three years. The primary reason that the failure rate is so high is because the owners have to go through the learning curve of operating that specific type business. Franchising reduces that curve substantially. Another reason to buy a franchise is that a franchise investment can be thoroughly researched before any significant expenditures are made. Existing franchisees offer a wealth of information about the business so that new franchisees can try the business on before they buy to make sure it's a good fit for them. Franchisers sell a defined, proven business format or method of operation, offering a product or service that has sold successfully. An independent business is based on both an untried idea and operation. The experience of the franchiser's management team increases the potential for success. This experience is often conveyed through formal instruction and on-the-job training. Franchisees can often buy lower-cost goods and supplies through the franchiser, resulting from the group purchasing power of all the franchises. Established franchisers offer national or regional name recognition. While this may not be true with a new franchiser, the benefit of starting with one is the potential to grow as its business and name recognition grow. Franchising provides a uniform system of operation, so that consumers receive uniform quality, efficiently and cost-effectively. A uniform system brings with it the advantages of mass purchasing power, brand identification, and customer loyalty, capitalizing on the proven format. A franchiser also provides management assistance, including accounting procedures, personnel and facility management. An individual with experience in these areas may not be familiar with how to apply them in a new business. The franchiser helps a franchisee overcome this lack of experience. Franchisors help franchisees develop a business plan. Many elements of the plan are standard operating procedures established by the franchisor. The most difficult part of a new business is its start-up, since even experienced managers lack the knowledge to set up a new business. One of the biggest benefits to franchising is marketing. The franchiser can prepare and pay for the development of professional advertising campaigns. Regional or national marketing done by the franchiser benefits all franchisees. In addition, the franchiser can provide advice about how to develop effective marketing programs for a local area through a cooperative marketing fund, to which the franchisees contribute a percentage of their gross income.

It's possible to receive assistance in financing a new franchise through the franchiser, who often makes arrangements with a lending institution to lend money to a franchisee. The franchisee must still accept responsibility for the loan, but the franchiser's involvement usually increases the likelihood that a loan will be approved. A franchiser also provides training for the franchisee. This is especially important if the concept is complex. The best training combines classroom or one-on-one training at the franchiser's facility with field training at the franchisee's place of business.

Example : D'damas One of the predominant forces in the jewellery retail franchise sector, D'damas offers Indians a vast array of world class gold, diamonds and other jewels.