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The business systems within India are structured in a different way to many countries. India is populated with many small businesses operating locally or between towns and cities; these small sized businesses usually hire employees with no degrees but are taught the needed skills for the job however no detailed training course is usually offered. The other businesses in India whom are larger usually operate on a global scale exporting their good usually employee graduates for the companies office work and skilled workers in their factories. This system is similar to the UK business system however the differences are apparent in the working conditions and the training programs supplied to non-graduates who work in a UK company.
Traditionally Indian work culture was similar to that of the developed countries, where an authoritarian leadership management was apparent, however recent reports show that India work culture is developing in the same path towards the working culture similar to our UK companies. This gradually change will help in eliminating different work cultures in the future and aid us in having a stronger relationship with Morarjee as there would be a greater understanding between us. Morarjee is already one of India's leading exporting firm and are suppliers of popular globalised companies such as DKNY, GAP, Banana Republic, Ann Taylor, Liz Claiborne, Jones Apparel, Diane Von Furstenberg, Marks & Spencer, Robert Graham, Abercrombie & Fitch, Tommy Hilfiger, John Lewis, Zara, and Next. There wide history of been suppliers for major global companies show that cultural differences have no affected business relation or quality of products from Morarjee as their textile supplies must have been of high quality to be used by well established international brands.
There are a variety of languages in India but Hindi is the most spoken by the population. There are:
18 regional languages
24 relatively major
23 tribal languages
This shows a wide diversity within the country and no mainstream language as most countries, this would seem an issue however English is used officially to communicate with business matters as English used in most universities and technical and professional education as well as higher degrees. This shows that although India is a developing country it has many good aspects as the population in the country seem to be skilled and adapt well to new changes.
India has a rapid growing economy and as seen through data of 2007-2008 India had a GDP growth of 9.1%; this made it the 2nd fastest growing economy during that year. It is beneficial to develop a relationship with a firm that is within a growing economy as it can help our company improve its position. The predicted investment into India for the year 2008-2009 is said to be $40 billion, all these positive aspects make it appealing to trade with India as their economic position is becoming gradually towards that of developed countries.
An advantage of importing Morarjee materials to the UK is that Morarjee has set up a European office in Italy, this can help 212-Clothing incase our company has difficulties contacting the main office in Mumbai. Also a positive aspect is if our main trading is through the European office who receive the Morarjee materials from India, it may man we would be able to work put a contract where our fees of the distribution of importing would become less as it would be from Italy rather than from India. One of its offices is in Italy because Morarjee Textiles Ltd. was a joint venture between Ashok Piramal Group and Italian company Manifattura di Valle Brembana during 1996, however by 2006 Morarjee bought Brembana's 50% share in the venture.
Importing from India requires 212-Clothing to obtain an import license this is due to import restrictions of some products depending on many factors such as quantity, content, safety, etc. As 212-Clothing will be importing from a non-EU country there must also be a proof of origin for the textiles as well as the license and tariff fees will also need to be paid. The fees will vary according to which country, the material imported and quantity etc. As Morarjee have been capable of providing materials to many global companies they have already dealt with many paths of exporting and already know the charges and documents they need for their textiles to be disturbed safely with a reliable source and assure no damage during the exportation process to the UK.
Exchange rate is a huge aspect that 212-Clothing needs to consider. The risk in regards to the exchange rate is that depending on the current economies of UK and India the exchange rate will change. UK functions using Great British Pound (GBP) whereas India function using Rupees (Rs). For the upcoming month (1st June 2009- 30th June 2009) the predicted exchange rate is 74.3187 Rupees per 1 British Pound, exchange rates are fairly stabile so we can expect the exchange rate to stay roughly in the same position for a few months. However due to India's rapid growth and analyzing India's past exchange rate it shows that the value of the Rupees is increasing meaning that in the future it will cost us more pounds to exchange to Rupees. A negative aspect is that it means in the far future will may need more capital to purchase the same quantity that we would have purchased, this undermines our capability to produce profits as the cash outflows would have increased and there is no certainty that the inflow would increase because raising our product prices to cover the more expensive price for out materials may not be highly accepted by out current market.
212-Clothing is considering importation of textile materials from Morarjee, in India, however there is also an opportunity to invest in Morarjee. Considering the vast rate of development in India and the predicted future that it is heading towards becoming a developed country as can be seen from the billions of dollar that are been invested in Indian business. Investing now would become beneficial for expanding our business and spreading our risks out as India's economy has a bright future ahead and is worth the investment as our company would become more successful and popular. Morarjee have already entered markets of 20 different countries and on their website they express their interest in looking for new ventures, partnerships and other business related opportunities to expand their market, spread their risk and overall satisfy the wants and needs for their customers. Possible minor investment risk may come from political issues in India. As publicized in the media for the past few years the government within India has not been stabile with many problem, now the government is more stabilized, however in the past when the government was unstable the only issues effecting business in India was the slow decisions of the economy caused by lack of government communication and understand due to problems
Corporate social responsibility policy
Establishing a social responsibility policy within India would be difficult for our company, India's culture and economy widely varies from our culture and many social issues differ. For instance the minimum age for employment is 14 years of age. This is normal for the Indian society as children need to work to contribute to their household due to poor conditions; this is not irregular for most people in developing countries. However in the past many issues have been publicized by the media where textile companies in India have sent their products to small business to add some details before exporting the goods, the problem occurs when the products are sent to small business whom seem to hire children under the age of 14. This is not ethical and it violates the social responsibility of most firms in India. Popular companies which have been penalized for this were Primark and Gap whom imported clothing from India and where not aware that the companies they imported from for instance used to send clothes to small firms where underage children were working to add small details such as sequins. This disappoints customers, especially loyal customers who buy from the shops as they feel that the company has violated social and ethical issues.
On the other hand Morarjee are a well established textile company and from the information provided about them it is apparent that most their materials are produced within the factories which have machinery of high technology and can only be operated by skilled workers, therefore Morarjee are unlikely to hire anyone under the age of 18 and also they would need a responsible mature worker who is skilled as machinery is expensive and dangerous. As Morarjee are well established they have already taken the responsibility to be social and ethical responsible and have published their own code of conduct. The code of conduct outline ethical issues and emphasizes that even those with high status within their company cannot violate the rules or uses the companies assets, finance or features etc. for their own personal advantage. It also emphasizes that unethical issues seen by employees should be directly reported. Morarjee aim to develop ethically and they do so by abiding to policies similar to that of UK and other developed countries as they wish to be developed themselves.
I have investigated the aspects of the Indian company Morarjee Textiles Ltd. as well as cultural background of Indian society to analyze whether 212-Clothing should consider making a contract between Morarjee and our company to make them one of our main suppliers of material that we will use for our clothing range. Morarjee offers many types of textiles that can be used for shirts, dresses, etc. Its high quality textiles and portfolio of the brands that it supplies assure high quality, specialized textiles as well as professional business communication. In some developing countries linguistic difference would affect the level of business communication however India is a well integrated society and have used English in their universities to ensure that graduates can speak fluently, not only that most Indians in towns and cities have quickly learnt English due to diversity within the country so it had become easy to communicate especially amongst professional business. Considering Morarjee's past business activates no linguistic barriers seem apparent which makes communicating with them a simpler experience.
Rapid development in India and predictions that it will soon be considered a developed country is an appealing aspect not only to make Morarjee a supplier of our material but also to invest shares into the company as the improvement in India's economy will result in further expansion and popularity of Morarjee who are keen for new investors and opportunities. This will benefit 212-Clothing as it spreads our risks onto a new market who is predicted a respectable and profitable future. However we need to consider our financial position and whether 212-Clothing would be able to adjust to an international market and cope with the needs of the investment or partnership. If our company is barely coping to fulfill needs of our national market then it would struggle even in just investing a large share in Morarjee.
Importing fees and license are needed for international business as it is a necessity of the law. This is a must for all business interacting internationally so it is not an unexpected cost. It is more beneficially to make a large order to import rather than several, although weight is a partial measure of the fees the basic rate we have to pay just for importing not considering the quantity would become less if we only make one other rather than every couple of weeks making a new order.
Current exchange rates are beneficial for our UK based company but we also have to consider the future exchange rates. As India is rapidly increasing its economy, soon the value of the Rupees will rise and we would have to pay more for the same quantity, however if we also consider investing in Morarjee or another India based company we could use capital generated by that to pay the Morarjee supplier. However with the economy exchange rate usually rise slowly so for the next few months we would not expect a rapid increase in the Rupees value.
Corporate social responsibly has already been established within Morarjee's policy. To maintain their high quality standards and brand name they ensure ethical trading, and ensure that within their business system they also stay ethical and avoid breaking policies, even their high status managers are not an exception to miss-use the companies funds, this shows that they are ethical and are worth investing in as their manager would not be able to assign themselves a large portion of the profits for personal use, this shows they are a safe and trustworthy company.
Overall investing in the Morarjee Textile Ltd. company to allow them to become a main supplier for 212-Clothing seems a wise decision, the Indian economy is developing at a speedy rate and so is their use in new technology and production in high quality materials, Morarjee are suppliers of many reliable trusted brand whose high quality has caused them success. Due to the globalization of international companies it has now been made easy to overcome barriers such as languages, exchange rates etc. this makes it easy for our UK based company to do business overseas with companies such as Morarjee without the difficulties that where apparent in the past. Invest in Morarjee would be wise also as in already operates within 20 different markets and has spread out its risks more.