Environmental Analysis of India for Investment by a UK Tourism Company

Running Head: GLOBAL BUSINESS ENVIRONMENT 0
GLOBAL BUSINESS ENVIRONMENT
Student name
12-16-2018

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Executive summary
This report will include the environmental analysis of a developing country like India, where a
U.K. tourism country would like to enter into India and invest in the country. For this objective,
the factors like political, geographical, economic, legal, technological, and geographic were
analyzed in detail, to decide on the investment in India.
Some of the major challenges that the company could face while investing are the factors like
terrorism level and risk in the country, political instability in the country, as the political parties
are changing rapidly, high level of corruption, and low technological development as compared
to the country like the United Kingdom. Some more such factors included the cultural difference
of both the countries and India being the multi-cultural country; consist of many religions and
values. This concluded that the company before investing must consider the cultural difference to
the priority.
Some of the major opportunity for the tourism U.K Company to invest in India included the
famous geographical location, that is the major influencer for the tourist to come and visit, which
can be benefited to the company while investing. Moreover, considering the legal factors, the
major opportunity is that the government is taking various initiative focusing this industry in the
country to boost this sector.

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Contents
Executive summary.........................................................................................................................1
1. Introduction..............................................................................................................................3
2. Geographic factors...................................................................................................................4
3. Political factors.........................................................................................................................4
4. Economic factors......................................................................................................................8
5. Socio-cultural factors.............................................................................................................10
6. Legal factors...........................................................................................................................13
7. Technological.........................................................................................................................14
8. Conclusion..............................................................................................................................16
References......................................................................................................................................18

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1. Introduction
The tourism industry is in a growth stage worldwide; tourism companies are responsible for
services like traveling services outstation and in the city travel, or hospitality service. In this
report, the focus would be on the hospitality service of U.K firm, wishes to trade or establish that
in a developing country that is India. For this reason, the challenges and opportunities for the
company to invest in India would be studied, considering various factors like geographical,
political, economic, legal, and socio-cultural factors of India. Tourism and hospitality industry of
India is growing at a great rate. The major advantage that a company can have while investing in
the country is the robust demand, attractive opportunities, government policy support, and
diverse attractions.
This industry is considered to be the growth driver for India among other various service sectors.
The most important potential aspect to consider is that the nation is rich in culture, variety in
ecology, natural beauty locations, historical heritage, and terrains all across the nation.
Moreover, it is beneficial for the country as well, because this is the reason to generate
employment. Considering the fact and figures, then the fees from this industry during January to
October in 2018 has been increased by 8.30% every year to US dollar 23.54 billion (ibef.org,
2018). If the investment is considered, as per DIPP (Department of Industrial Policy and
Promotion) the tourism and hospitality industry has attracted foreign direct investments to
approx. 11.39 billion of US dollar, for a period of 2000- 2018. Moreover, to attract major tourist,
the government has considered many schemes in the account, which will also indicate a growth
opportunity for the tourism company to invest in this industry in India.

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2. Geographic factors
While considering the geographical consideration, the foremost thing is terrorism, which is a
factor, which will influence the investment decision for the company. Terrorism and security –
this factor have a negative effect on the progress and growth of the nation. Terrorism also has an
adverse effect on such industry. This aspect is one of the political problems for the nation’s
authority. Some states as if Kashmir and Assam state, which are very much, considered as a
terrorism area. This aspect can be a challenging to the company for investing in the country.
Although the official authority of the nation takes place with regard to handling terrorism by
enhancing the security of tourist who is traveling to areas that are prone to terrorism (Trivedi,
2016).
Considering this factor, some of the most popular geographical locations are Goa, Agra for
TajMahal, Andaman and Nicobar islands, Munnar, Kerala for lakes and tea gardens, Leh Ladakh
for adventure, Darjeeling being the queen of the Himalayas, Udaipur as the city of lakes. There
are numerous locations and a geographical feature that is a creation for the opportunity for the
tourism companies to gain an advantage, as these are the most attractive places to target
customers in India (Doole & Lowe, 2008)
3. Political factors
This is considered the most important factor while analysis the environment of India. Some
major aspects considered in this factor are:
 Political instability – this index plays an important role, as with the change of political
parties, and its frequency the laws and regulation are also altered, which will eventually

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affect the business in the long run and in operations. India does not have very prong
political stability index considering the global rankings (theglobaleconomy, 2018).
Figure 1: Source: (theglobaleconomy, 2018)
 Corruption – the corruption level also has a great influence in deciding for the investment
in the nation, for this factor an index is control of corruption, that is how political parties
can control the level of corruption in the country. Through facts for 1996 to 2016, it was
observed that the controlling power is very low (theglobaleconomy, 2018).