5 Challenges India’s Multinational Companies face
In order to flourish in India, you must accommodate the locals’ cultural preferences, maintain a
competitive pricing point, respect their various cultural traditions, avoid offending people’s
feelings, provide top-notch services, and do a lot more. Since liberalization in 1991, many
international businesses have established operations in India. Many of these businesses have
folded up quickly since they couldn’t make it in India. There were several causes for their
downfall, from General Motors’ announcement of its withdrawal in the middle of 2017 to banks
like Barclays and Royal Bank of Scotland closing down their banking operations. The difficulties
they encountered were often not anticipated during the original preparation.
Let’s go further into some typical obstacles that multinational corporations encounter while
opening offices in India.
- Numerous demographics
Over 138 crore people call India home, yet there are vast disparities among them. MNCs
often make the serious error of assuming that Indian consumers are uniformly
homogeneous. Regional differences in consumer preferences exist within the same
nation. Local expertise is essential for MNCs to enter the market, but it is difficult to
acquire, particularly if the firm is run by an expatriate. Local leadership must take the
place of expatriate leaders to resolve these problems affecting MNCs in India. These
individuals are more knowledgeable about what it takes to be successful in India and are
familiar with both the market dynamics and the cultural makeup of the nation.
Multinational Companies may find it difficult to choose a suitable location in India.
Western businesses often lease rather than own their office space. Due to a lack of
adequate infrastructure and strong demand, businesses must reserve offices in newly
constructed buildings far in advance of their completion. Additionally, to control the
company’s development and the availability of additional space, they must first lease
sizable office premises. This initially causes quite a nuisance since the places are too
big for the number of people they can accommodate. When a business expands and
there is room for more offices, it is fortunate if those new offices are located close to the
ones already there.
Given its vastness, it is not unexpected to find that there are cultural distinctions inside
India as well as between its many internal areas. It might be difficult for an MNC to open
offices throughout India. To prevent offense and promote harmonious teamwork, they
must strike a balance between enabling workers to express their opinions and teaching
everyone about cultural diversity. Soft skill development has a role in this. MNCs should
spend in understanding both the company’s culture and the cultures of its personnel.
Events held after work help the staff bond and break the ice for new hires.
- Price-focused clients
Indians aren’t afraid to spend money on luxuries, but they’ll also barter for common
products and services. Indians have a special, price-focused attitude that is often cited
as one of the issues MNCs encounter. Statistics show that Indians are more price
concerned than brand loyal. A price rise of any kind might result in a decrease in clients.
Therefore, companies must find a means to manage expenses without sacrificing
quality. Moving to a coworking space might also be beneficial in this regard. MNCs that
rent space in coworking spaces are exempt from having to pay for things like office air
conditioning, cleaning, and security. This may result in considerable savings over time.
Top global corporations are competing to acquire the finest personnel in India due to the
country’s status as a center for the IT/software and service sectors. Additionally, there is
India is a terrific market for MNCs to explore and is poised for growth. However, developing
policies based on what is effective in other nations may not be a smart idea. Only by meeting
these demands will MNCs get a return on their investment in the Indian market and workforce.