Explore BrainMass

MFN in India


What makes doing business in India interesting?

Please emphasis the financial elements of business from a multinational firm's perpective.

Please focus on international finance issues (exchange rate issues, transaction exposure, etc.)

Solution Preview

Update: From the original response:
"Finally, for some more financial perspective, visit: "

It is my goal to provide ideas, definitions, research help, and instructions on how you, the student, should approach the assignment.

First, I want you to consider information in the following table:

That will give you a lot of facts and figures on doing business in India.

Also consider:

"Doing Business in India: A Cultural Perspective

Joel stood by the windows of the Hilton and watched the lights twinkling in the harbor - tiny, glittering explosions of life. It was a quarter past nine in majestic Mumbai. Some Mumbaites were unwinding by the beach dining al fresco. Many were scurrying back home from work and the homeless were looking for a place to lay their heads for the night. The street below was bustling with activity and the loud, blaring sounds of rush hour traffic contributed to the environment the city is famous for.

It had only been a few days before that Joel landed in the subcontinent. In the back of his mind was the joint-venture that he had planned with a mid-sized Indian firm. Negotiations and meetings had followed each other everywhere in the past few days, but nothing concrete seemed to have been decided upon, yet. His future in this new, chaotic and strange land seemed bleak and unpromising. He couldn't seem to get a grip of events and frustrated, Joel was almost on the verge of calling it quits.

The Indian economy had been booming for the past few years. The country held great promise for the future. Liberalized foreign policies had unleashed the entrepreneurial spirit of its people and many multi-national firms, attracted by the dusty plains of Deccan, had already set up big offices throughout the nation.

Joel and his associates had been very excited at the prospect of entering into a joint venture with this particular Indian firm and were quite optimistic about the outcome. Negotiations had started off quite well initially, but slowly, problems and misunderstandings arose as a detriment to finalizing the deal. Joel had attended several meetings in the past one-week and had expected a completed deal that morning, but it seemed like the Indians didn't feel rushed to come up with a feasible deal and project plan. They had spent hours debating the objectives and long-term effects of the merger, but the discussions had rambled on and on without any concrete points being reached. Even after certain decisions were reached during discussions, the process was further prolonged by the necessity of going back to their senior colleagues for approval.

An enraged Joel tried to speed up matters, as a lot more issues had to be addressed, but the Indians felt that he was only interested in finalizing and implementing the deal. He didn't seem to be concerned about debating the finer concepts behind the deal. They also, began to question his intelligence, abilities and sincerity. His informal way of addressing them also made them feel uncomfortable and not respected. All in all, they didn't really trust him and the deal that he had carried all along and so eagerly looked forward to.

Trust had become a central issue between Joel and his Indian counterparts. Joel began to doubt the Indians capability of actually following through on the project and getting it done on time, therefore, making them a viable business partner became a huge question mark. On the other hand, the Indians were uncertain as to whether or not they could trust Joel. He also came across as tactless and rude.

Now, let's slightly examine with care as to where exactly this love story started falling apart. What was beyond Joel and gang as well as the Indians was that this lack of trust was mainly due to the cultural differences between the two countries. If only Joel had realized that the Indians viewed time differently from the Americans, he would definitely have been a lot more relaxed in his interactions. The Indians in turn, would not have viewed Joel as a pushy American who was only concerned about signing the deal, had they been a lot clearer about the American practical way of thinking and their approach to problem solving and project implementation. If either faction had been aware of how culture was a major factor in shaping business deals, they would have been able to adjust a little more and make each other more comfortable. This would have led to a sense of trust between them, business would have proceeded and the deal would have been negotiated to the satisfaction and benefit of all those who were involved.

Our cultures define our fundamental beliefs about how the world works and forms ways in which we interact and communicate with others and develop and maintain relationships. Doing business in a particular nation requires a focus on a multi-dimensional understanding of its culture and business practices. Understanding those differences and adapting to them is the key.

India is a complex country, and those arriving here to do ...