chapter  7
19 Pages

Entry modes and dynamics

ByKUMAR, OLGA ANNUSH

India is one of the fastest-growing emerging economies in the world and an important receipient of foreign capital in Asia. Although the absolute amount of foreign direct investments (FDI) entering India is substantially less than that entering China, the other major emerging economy, its rate of growth far exceeds that for China (UNCTAD 2008). Import flows into the country are also characterized by a similar trend. While India’s absolute imports are far less than that of China’s, its rate of growth is substantially higher (UNCTAD 2008). Tables 7.1 and 7.2 provide details in this regard. The statistics are reflective of the critical significance that India commands, vis-à-vis its Asian counterparts, for the international expansion of foreign multinational enter - prises’ (MNEs). In this chapter, we discuss the dynamics associated with entry mode options available to foreign MNEs that wish to enter the Indian market. We substantiate our discussion with case studies of two Italian companies (Lavazza and Fiat) that have entered the Indian market in very different fashions, illustrating the inherent complexity in designing entry strategies and the importance of accounting for industry and institutional factors in such an endeavour.