Market entry is the introduction of new company or organisation to expose intothe market with offering a variety of services and options. According to Morschett, Schramm-Klein and Swoboda (2010), companies, when entered into the market, have to build an association with legal obligations, marketing strategies, and business plan. The success of enteringthe market depends upon marketing strategies that company hasbuilt before introducing. Raff, Ryan and Stähler (2012) have described that market entry strategies defined as a planned activity for delivering service or goods to target individuals. In this research, a market entry of a construction industry SAVETO in India will be the focus. There are a variety of options that a construction industry provides on every entry in the market, for the degree of control, cost and risk. To enter the market, companies need potential factors such as; marketing, sourcing, investment and control over activities. The potential marketing success is highly dependent upon company stakeholders for constructing industry because they are thecustomerswho buy the construction materials. As per the study of Singh, Hansen and Blattberg (2010), customer characteristic features such as; buying behaviour, interest, satisfaction, transaction, retention,affect the company market value. Moreover, Finkel (2015) referred that the companies need government and legal support for environmental, economic and regulatory sustainability. This research focuses on presenting marketing strategies SAVETO follows to fulfil customer demands. Moreover, the research will describe the success of SAVETO Company as a market entry in Indian constructing industries.
Indian construction industries are one of the most developed companies to invest in economic growth. According to Make in India (2017), there is a contribution of 8 % of the constructionindustries to GDP. Indian constricting industries trythe best to expand theirinfrastructures by following marketing strategies. Moreover, construction industries plan to expand forecast in energy projects, residential and infrastructure with a period of 2016-2020. These plans build when a compound annual growth rate from the year 2011 to 2015 had calculated 2.95 percentincreased (Cision, 2016). In addition, to promote economic growth with excellence in housing facilities is the major aim of Indian construction industries. Indian Mirror (2018) illustrated that there are 200 construction companies located all overall India in major cities. Indian construction industries are performing duties toward economic development, urbanization and industrialization.
According to ZKQ (2015), SAVETO established in 1981,in Europe, for the purpose to provide manufacturing material in European regions. The company later progressed and expanded its business all over countries in mainly three business. These three businessesinclude project division, saveto plasters and Vetonit retail. Saveto (2018) is a multinational construction industry having branches in Bahrain, Jordan, Qatar, Egypt, UAE and Saudi Arabia. SAVETO Group is planning to penetrate in the construction materials industry of India, which is one of the largest markets of the world with respect to future prospects about the rapid developments and infrastructure construction through various flagship programs. To set a high level of profile, SAVETO is planning to market strategies to increase its operation, financial performance, growth and incarnation. SAVETO Group hasdeveloped a partnership plan with Indian customers, suppliers, distributors, labour forces, and most importantly, the governmental and regulatory authorities. After the huge success of all over the countries now, SAVETO Group enters into construction industries of India. This study will undercover the success or failure of the company in terms of key marketing strategies builds.
Another challenge that construction industries are facing is a time requires for completing manufacturing process. Bhagat and Bhirud (2017) have presented in a study that Indian constructing industries faced the problem of labours, due to time management issues. Labours in construction companies are the main forces who encompass to run a firm business. There are otherproblems presented by the authorsuch as; a number of accidents, safety issues, labours, market image and financial problems. Due to inappropriate marketing strategies, these issues raise and it losses labours productivity. There is a delay in projects due to the financial shortage, lack of material resources, inappropriate machinery and unstable marketing tactics. This paper will present the issue management with designing marketing strategies and theories to overcome the issues due to time-lead. Moreover, this research will analyse the cause of unmanaged time-leadand company productivity problems.
The major problem that construction industries facing is lack of awareness regarding the issues and challenges. Majority companies marketing staff were unaware regarding the cost, price, quality and construction material. Moreover, the companies have no idea about the maintenance of the national and international standard. Bricks (2017) reported that Indian construction industrieshave lack experienced and skilled workforce. This means that they have reduced efficiency to understand construction business and new developing marketing ideas. With that,the quality of product to meet with international standards suffers. This research will provide details of existing construction industries quality and compare them with SAVETO group.
To enter in the market, one of the biggest threats for SAVETO Group in the construction industry of India is the presence of strong rivals, which have been operating in the country for the past many decades. This increased the competition for SAVETO with other construction industries inside and outside the country. Competition is not only with the other construction industries but alsowith SAVETO group operating in other countries. According toCision(2016), it was presented that Indian construction industries have performed market analysis due to competitors in business. To manage the competition, SAVETO group has to analyse construction material demands from key stakeholders. In order to deal with this problem, perspective regarding construction demand and behaviour of stakeholders will analyse.
There is another problem that the company does not have a knowledge ofits strengths and weaknesses. Thiscreated challenges and barriers for the company to meet its objectives and deal with the key competitors in the market. Moreover, the company employees do not have a knowledge about technological advancement follows by other organisations. These problems can create a negative impact on the company’s growth. Also, these problems affect future planning of the company regarding itsgoal achievement. In this dissertation, the marketing strategies and theories that can analyse company strengths and weaknesses will present. Additionally, the suggestionwould be given that by following tools and techniques, which create issues and challenge company, can successfully manage.
The aim of this study is to the Potential Market Entry of SAVETO Group into Indian constructing industries.
The Potential Market Entry of SAVETO Group into Indian constructing industries will be accomplished by measuring research objectives. There are two general and two specific research objectives designed to identify key tactics to enter the market. This study deals with following objectives.
· To study the role of Indian construction industries in economic, nationally and internationally.
· To analyse different marketing theories and models needed to beplanned before entering the market.
· To underpin SAVETO group role in boosting construction industry of India.
· To determine SAVETO group entrance in the market in terms of cost, time lead, products, quality and other supporting activities.
Q1. What is the role of Indian construction industries in economic, nationally and internationally?
Q2. What are the marketing strategies SAVETO group follows to enter in Indian construction market?
There are two types of variables exist in research studies include dependent and independent variables. Dependent variables arethose that cannot manipulate, this is an attribute on which research depends. While independent variables can change and consider to be manipulated to determine the effect on the dependent variable. In the given dissertation, the dependent variable is SAVETO group and the independent variable is marketing strategies that build for entering the market.
The dissertation aims to explain market entry of SAVETO group into construction industry of India. For this purpose, the thesis is divided into chapters, wherethese chapters explain thesis issues, reviews, methods, results and conclusion in an extensive manner. The chapter1 is an introduction, which has the explanation of the topic, provides information that market entry is the introduction of new company or organisation to expose into the market with offering a variety of services and options. Moreover, in this chapter, the background of Indian construction industries and problems have described. On the basis of background and problems, aims, objectives, research questions and variables select. Chapter 2 details with a literature review,which will highlight the topic with respect to the previous studies. Literature review section presents critical reviews and discussions on the construction industry of India, in the light of industry reports and analytics, expert reports, forecasts, analysis and statistical websites, and academic studies including books and research papers. Chapter 3 comprises of methodology designs with relevance to research aims and objectives. In the methodology, philosophy, approaches, methods, sample size and data analysis methods present. Other parameters such as; ethical considerations, reliability and validity will describe here. In chapter 4, data is analysed to determine the results of thesis report with statistical and non-statistical calculation. In addition, chapter 4 discusses the result and compare it with previous studies.Chapter 5 details withthe dissertation conclusion, recommendation, limitations and future option for the researchers.
The chapter will highlight the key market strategies for SAVETO Group in India. Also, focuses to analyse the dimensions of stakeholders and barriers related to their buying behaviour. This section presents critical reviews and discussions on the construction industry of India in the light of industry reports and analytics, expert reports, forecasts, analysis and statistical websites, and academic studies including books and research papers. The purpose of this literature review is to critically analyse the potential for SAVETO Group’s entry and success in India and compare different studies to draw a conclusion and recommend strategies to the Group.
As Arif et al. (2014), mentioned that construction industry in India is one of the most developed industries with 10% growth rate. The construction industry in India has an estimated contribution of around 8% to the country’s Gross Domestic Product with an average growth rate of 8.1% of Gross Domestic Product (Make in India, 2017). While the annual growth rate of the construction industry itself is 3.5% for the year 2012-2016 (PR Newswire, 2017). The reason behind the rapid growth and attractiveness of the construction industry in India is due to expanding real estate business. According to Make in India (2017), the US $1 Trillion has to be invested in the running year in India and it is expected that nearly half of this investment (40%) will be solely made by the private parties. It has also forecasted that 45% of this amount will be expended over the construction of new infrastructural projects while 20% will be dedicated to the rejuvenation, innovation, and up-gradation of the construction industry.
The rapid growth and attractiveness of the construction industry in India can be judged by looking at the forecasts of US $650 Billion investments in the infrastructure developments in urban areas of the country in the next couple of decades (India Brand Equity Foundation, 2017). The industry anmatedalysts also esti a rapid growth in the construction due to heavy investments in all commercial, residential, and energy segments which will directly contribute towards the development of the country economy (Wong, 2017). The industry forecasts anticipated that the Compound Annual Growth Rate (CAGR) will rise up to 4.16% having 3.95% growth rate in review period (PR Newswire, 2017). Another industry analysis was done by Rental Equipment Register (2013), which anticipated that the Compound Annual Growth Rate (CAGR) of the construction industry in India will rise up to 15.45% between the years 2013-2017. SAVETO Group is planning to penetrate in the construction materials industry of India which is one of the largest markets of the world with respect to future prospects about the rapid developments and infrastructure construction through various flagship programs.
According to Sawhney, Agnihotri and Paul (2014), there are many challenges that the Indian construction industry faces due to multiple factors. They identified issues surrounding the construction industry in India are corruption and unet that the major hical practices. The organisations have no concepts of learning from their past mistakes. Lack of professionalism and Human resource are also the major issues that cause significant challenges for local and foreign organisations to set up their businesses on Indian soil. It has also been identified in this research that fundamental principles of project management are also not utilised by the construction companies that delay the project completion time and increases cost.
As a part of India international business expansion strategy, SAVETO Group is planning to target the Construction industry. A detailed critical analysis of a country can be best conducted using different international marketing theories and models (Murray-Webster and Williams, 2010; Verbeke and Merchant, 2012). Critical analysis will help SAVETO Group in analysing all the forces and factors, which are present in the business environment of India. Factors affect the business operations, growth, financial performance, and overall incarnation in the construction market in a positive or negative way (Wilkinson and Kannan, 2013; Tan, Shen, and Yao, 2011).
PESTLE analysis framework, whichincludes political, economic, cultural, social, environmental, cultural and demographic, legal and technological factors (Ho, 2014; Giurco and Cooper, 2012).
The favourable political situation in India for the construction industry:
The Government of India is fully supporting the local private investors as well as foreigners in having an anticipation of attractive growth in the Indian market (Maier-Vidorno, 2017).As a result of this favourable political and governmental behaviour of the government, foreign direct investments are warmly welcomed in the construction industry of India through all channels (Make in India, 2017).
Indian government investments:
The Government of India has also launched the “Swachh Bharat Mission (SBM)” to support the growth of construction sector in the country (Kapur, and Iyer, 2015).Under this scheme, the government will attract investment of around 62,009 Crore Indian Rupees for the urban development purposes. Around three-fourths of this investment under “Swachh Bharat Mission (SBM)” will be financed by the private investors from the country and abroad. Other projects favouring the construction industry in India includes Indira Awas Yojana, National Rural Health Mission (NRHM), Jawaharlal Nehru National Urban Renewal Mission, etc. (PR Newswire, 2017). The favour and positive behaviour of the government of India can be judged by looking at its investments in large-scale commercial and trade infrastructures, residential infrastructures, and community parks (PR Newswire, 2017).
Future governmental programs for the construction industry:
Some of the most awaited programs for the purpose of boosting construction industry of the country includes: the National Skill Development Mission (NMSD), Housing for All 2022, the Atal Mission for Urban Rejuvenation and Transformation (AMRUT), 100 Smart Cities Mission, Make in India, Pradhan Mantri Gram Sadak Yojana (PMGSY), and Power for All (PFA) programs. The remarkable initiatives of the Government of India, which are attracting foreign direct investments as well as encouraging the local private investors to invest heavily in the construction industry (Make in India, 2017; PR Newswire, 2017; India Brand Equity Foundation, 2017). The initiative of the government to build 100 Smart Cities will take around an investment amount of US $7.2 Billion or 480 Billion Indian Rupees. Similarly, the government will spend an investment amount of the US $7.4 Billion or 500 Billion Indian Rupees Atal Mission for Urban Rejuvenation and Transformation (AMRUT) program (Maier-Vidorno, 2017).
As mentioned by Make in India (2017), the construction industry of India is one of the largest sectors of the economy to give employment and contribute towards the country development. A number of economic forces affected the entry of SAVETO Group in India as its existing presence around the MENA region. A study proposed that interested newcomerswould also need to carefully analyse the availability of construction raw material, equipment, labour and utility costs, and other factors before actually establishing its presence in the market(Maier-Vidorno, 2017). Since the Indian Government has encouraged all private and public investors to contribute their part in the construction of industrial sector, private investors (Wong, 2017). On the other hand, the construction Industry in India was highly affected by increasing rate of inflation in a negative way. The availability of housing finance by financial institutions and banks will facilitate the development of the construction sector in the country (India Brand Equity Foundation, 2017). With the help of their own capital as well as through bank, financing, local and non-resident Indians were investing in residential properties and service plots due to which the demand for construction material, labour and utilities have drastically increased. As referred by Maier-Vidorno, (2017) with an increase in the prices of raw material, finished products, and construction equipment like tools and vehicles, SAVETO Group would try to find attractive opportunities to grow in the market.
In order to establish its strong presence in India, the established brand image of SAVETO Group as a giant international manufacturer of construction materials was foundeffective to be used. Moreover, it was analysed that there is a relationshipbetween SAVETO Group with industry partners and key stakeholders around the Globe (EMIS, 2016). With the partnership, SAVETO Group can present a good image in the eyes of Indian customers, suppliers, distributors, labour forces, and the most important, the governmental and regulatory authorities. The strength of the brand image of SAVETO Group as a reputable international construction firm will help it in establishing its strong presence in the Indian market.
Wilkinson and Kannan, (2013) said that legal forces include all those governmental laws, regulations, and impositions of the regulatory authorities which directly affect the legal setting of business organizations in an industry. For the construction industry in India, the most significant legal force is the taxation system, which is quite favourable for the construction and manufacturing sector of the country. The government has fully encouraged non-resident Indians as well as other private and public investors from local and international markets to invest in this sector. The government also supported construction industry flagship projects like 100 Smart Cities, Jawaharlal Nehru National Urban Renewal Mission, Indira Awas Yojana, the National Rural Health Mission (NRHM), AMRUT, etc. The ease in taxation system and lowering of interest rates complemented the financial institutions’ credit facilities for the foreign and local investors in the country (Wong, 2017; Make in India, 2017).
The taxation system, legal requirements, interest rates, renovation of existing construction projects as well as flagship programs like 100 Smart Cities, AMRUT etc. are all attractive opportunities for the company in this market. Both legal and financial systems of the country are providing full encouragement to these investors, which are a positive sign for SAVETO Group in India.
The government is also keen towards the protection of labour due to serious accidents and injuries in the construction projects. For this purpose, the government has asked the construction companies to improve their safety standards and take initiatives for the protection of their labour at the workplace and sites. By the review, it is proposed that SAVETO Group India will have to focus on its minimum wage regulations, recycling procedures, and overall employment regulations to operate in the Indian market in a legal fashion. There are various unique requirements for construction firms operating in India, which were not present in the other elsewhere in the world (Maier-Vidorno, 2017). It is suggested that SAVETO Group will have to adhere to requirements without any hesitation. These requirements mainly include building infrastructure, material quality, commencement certificates, floor space indices, property transfer act requirements, stamp duty, and registrations, etc.
According to the study of Wuttke and Vilks (2014), poverty can be eliminated by the construction industry, which is the second largest industry in India after agriculture. The construction companies have played a role to eliminate poverty and improve theeconomy through their effective CSR. He investigated the CSR of 10 construction companies of India and concluded that 2 companies execute good CSR practices while 4 companies are engaged in average CSR practices at a low level. Other issues such as discrimination with the female construction workers, child labour, sweatshop, poorly skilled working labour should also be considered by construction industries in India to meet the global standards and requirements for effective expansion of the business.
Wuttke and Vilks (2014) identified that the environmental impact has gain importance among the construction companies in the Indian market. The trend of environmental sustainability is present more in large multinational organisations.
Another model that various researcher used for analysis of construction industries is SWOT analysis (Lu, 2010; Lee et al. 2010; Deng, Liu and Jin, 2012). SWOT model described as the evaluation of strengths and weakness of industry by comparing it with threats and opportunities. SWOT analysis is one of the most popular models or international marketing matrices used by individuals, business organizations, and governmental departments to conduct internal and external analysis for a product, brand, company, industry, market, system, or geographical location. The internal analysis consists of the assessment of the strengths and weaknesses while the external analysis is all about the evaluation of opportunities and threats (Helms and Nixon, 2010). It was suggested in previous researches that on the basis of the internal environment, i.e. the strengths and weaknesses, SAVETO Group needs to conduct external environmental analysis by assessing the potential opportunities. Lu (2010) said that assessment of internal and external analysis then reveal market opportunities as well as the threats which it must need to encounter using its own strengths. SAVETO Group may face difficulties to deliver products and material on time as per the demands of its clients (Talwar, Popli and Gupta, 2014). It was reviewed that company has to keep strong liaison with the industry partners as well as with local clients to ensure sustainability compliance in the market (Maier-Vidorno, 2017). The Green building projects initiatives by the local investors is also a good opportunity for SAVETO Group to invest in and establish a good mark in the eyes of Indian stakeholders. Moreover, it is analysed by literature review that facilities and perceived benefits from the constructed building will also affect the Indian population social and cultural behaviour towards SAVETO Group’s presence in their construction market. India Brand Equity Foundation, (2017) referred that the increasing trend of the Indian population to shift from rural to urban areas is also a positive sign for SAVETO Group to invest in its expansion to India.
The biggest strength of the construction industry of India is the support of the government. The political and governmental forces are quite favourable for both local and international firms investing in the construction industry (India Brand Equity Foundation, 2017). The government of India has initiated various multi-billion dollar projects, which are attracting investments from the local and international investors. Maier-Vidorno, (2017) proposed that projects like the Atal Mission for Urban Rejuvenation and Transformation (AMRUT), Power for All (PFA), 100 Smart Cities Mission, National Skill Development Mission (NMSD), Housing for All 2022, Make in India, Pradhan Mantri Gram Sadak Yojana (PMGSY) are the government’s flagship programs which have brought thousands of employment opportunities for the local skilled and unskilled labour force.
Transportation and natural resources:
A big strength of the construction industry of India is its efficient transportation and communication system, which fully supports the large-scale construction projects (Lu, 2010). The country has a large skilled and unskilled labour to fulfil the labour requirements of any sector of the economy (India Brand Equity Foundation, 2017). Moreover, the country is equipped with natural resources and large scale industries, which act as the supply chain members for the construction firms (EMIS, 2016).
In addition to the strengths of the system, there are numerous weaknesses, which SAVETO Group will also evaluate before entering the Indian market.
High transportation cost:
Since India is a large country with a huge geographical expansion, the construction projects were carried out in both nearby and farther areas from the markets (EMIS, 2016). The construction firms carrying out the projects have to bear huge transportation costs to take raw material and labour force to the construction sites (Business Wire, 2017).
Lack of automation in the construction industry:
The construction industry of India lacks automation. Various technologieshave been implemented in the European countries but are not integrated into the constructional activities in India. According to Joshi and Shah, (2015), the complexity of the construction projects, lack of skilled workforce and dangerous construction sites demand a high degree of automation to produce quality construction projects. Different technological disciplines such as architectures, civil engineers, and project managers need to contribute in terms of technology and automation to overcome the current challenges. The automation can be integrated into the on-site and off-site construction activities. Development and training programs should also be facilitated by the construction industry to train workers about the use of technology for their benefits.
Low technological advancement in rural areas:
The areas where technological procedures cannot be applied, the construction firms hadrelied on manual works or low-gradeprocedures, which affect their efficiency, quality as well as the image in the industry and among the stakeholders. Sometimes, delay in the governmental allocations and permission certificates cause inefficient processes in the construction industry, which is one of the greatest weaknesses of the system.
Increasing opportunities for construction material industry:
Business Wire, (2017) referred that demand for commercial and residential properties is on the rise which required the production of material, tools, equipment to fulfil the project requirements Being a large group targeting the construction sector of India, SAVETO Group will also avail these opportunities to facilitate the increasing demand.
Transformation towards megacities:
Moreover, the population shift of Indians from rural to urban areas is also a big opportunity for the firms which were carrying out in residential projects like housing schemes, plazas, flats, and housing complex (India Brand Equity Foundation, 2017). Another opportunity which waslied in the construction sector of India is the joint agreements and public-private partnership endeavours(Maier-Vidorno, 2017). The growing trend of the shift of Indian population from underprivileged areas to the developed cities is one of the most attractive factors for SAVETO Group in India. It can confidently invest in the residential schemes and the Government’s own initiated flagship programs to avail this potential opportunity to grow at a rapid pace.
Intense competition on Indian soil:
One of the biggest threats for SAVETO Group in the construction industry of India is the presence of strong rivals, which have been operating in the country for the past many decades. These rivals who are both Indian and multinational companies have given stiff competition to the firm with their financial strength, strong relationships with the suppliers, distributors, governmental and regulatory authorities, customers, marketing agencies, and other key stakeholders (India Brand Equity Foundation, 2017).
Inflation and rise in the cost of raw materials:
At the second place, the rising oil and energy prices in the country are also a big threat to the company in this market. As Sobolewski, Kent, and Berg, (2017) said that a rise in oil and energy prices would directly affect the business costs and profitability of the company in a negative way. Moreover, SAVETO Group India so far was not providing training and development opportunities for its indirect manpower of the potential customers, as they were available in the Middle East. Reason being, countries in the Middle East especially the United Arab Emirates have been undertaking mega construction projects for the last two to three decades (Asif, 2016). Therefore, the companies specialized and experienced in the projects from the Middle East also expected that the Indian market would provide the same growth and development opportunities.
Lack of resources to meet global standards:
Business Wire, (2017) further mentioned that such companies are still in the growing stage needed opportunities and technological procedures to meet the expectations of international construction giants. For this purpose, the government of India is supporting the firms and encouraging private and public organizations to invest in the construction industry to meet the requirement for international standards.
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