Business Environment 1

Business Environment

This paper will analyze the business environment in India and Indonesia. In India, the

focus will be on the communications industry and in particular, the mobile phone company

Nokia. In Indonesia, the focus will be on Unilever Indonesia, which is a large consumer goods

company. Both companies have different markets. Both countries are highly populated and they

are located in Asia. Indonesia is a country that is rich in both human and natural resources but it

has a bureaucratic system and faces social instability. Although the market in the country is

moving towards a modern approach, there are many things to be worked on. Businesses there

face legal uncertainties and the people are rooted strongly in their culture (Dean, 2001).

Politically, the situation is not any better. The government has faced various accusations

of corruption and lackluster performance (Scarpello, 2009). India is among the fastest growing

economies in the world. Unilever is facing stiff competition from Procter and Gamble Co. This

means that it has to produce more products and enlarge the markets in order for it to satisfy the

markets demands. It plans to increase expenditure and in some cases, it has been forced to cut the

prices of some of its commodities (Molenaar, 2010).

Unilever also faces other challenges especially where the environment is concerned.

There have been protests and the public is calling on the company to play a more active role in

environmental conservation. The destruction of forests, in order to cultivate palm oil trees, has

seen many people act and protest against the firm. The management has however found a way to

deal with the situation. In some instances, it has refused to work with firms, which are destroying

the forest, and it has agreed to plant more trees. In moving with the spirit of corporate

responsibility, the company has also collaborated with various companies such as World Food

Program in then aim of improving nutrition.

 Business Environment 2

India is also faced with bureaucratic problems. It may prove hard for an investor to

convince the government of the need to undertake a particular project. The government also

limits competition between various firms especially those offering similar services. This does not

however mean that there is no competition among businesses. Although it controls more than

half of the mobile phone marketing in India, Nokia is facing much competition from other

companies of the same nature. Companies such as Vodafone and Motorola are becoming a force

to reckon with.

Nokia has come up with strategies to enlarge its market and to fend off competition by

designing affordable handsets and expanding to the rural areas. This is a business strategy that

most mobile phone providers have overlooked. Nokia retains its upscale market by improving on

its products and adding more features, which will appeal to a majority of people. The problem of

poor infrastructure is a real issue in India. In 2006, Nokia experienced a heavy loss because the

company could not get a warehouse at the airport. The country also faces a lot of corruption.

Politics play a major role in business. Politicians already control peoples minds and development

is hindered in some areas (Hamm, 2007).

Unilever in Indonesia and Nokia in India are two multinational companies located in

different countries. The problems they face are similar to some extent. Having to deal with a

bureaucratic system and a corrupt nation is not an easy thing. The politicians do not make it easy

for them. With proper business management and wise business strategies, a business can survive

regardless of where it is. This is something that Unilever and Nokia have practiced. Unilever has

found a way to deal with the environmental crisis facing them and Nokia has employed strategies

to deal with poor infrastructure and stiff competition.

 Business Environment 3

References

Dean, G. (2001). Doing Business in Indonesia. Retrieved 06 July 2010, from

http://okusi.net/garydean/works/bizindo.html

Hamm, S. (2007). The Trouble with India. Retrieved 06 July 2010, from

http://www.businessweek.com/magazine/content/07_12/b4026001.htm

Molenaar, J. (2010). Unilever to Boost Indonesia Spending Amid P&G Threat. Retrieved 06 July

2010, from http://www.businessweek.com/news/2010-06-23/unilever-to-boost-indonesia-

spending-amid-p-g-threat.html

Scarpello, F. (2009). Reform Hopes Fade in Indonesia. Retrieved 06 July 2010 from

http://www.atimes.com/atimes/Southeast_Asia/KL17Ae01.html