Cluster Analysis in Emerging Markets: India

1 Introduction

According to PricewaterhouseCoopers (2011, p. 22) the increasing spending power in rural India, in combination with the reduction of traditional entry price barriers to vehi-cle ownership, will provide an enormous upside potential in the domestic market. Fur-thermore, global products from domestic Indian automakers will boost export volumes in the mid- to long-term. As a result of those facts, an entry into the Indian automobile sector appears to be attractive. This paper analyzes the business infrastructure of India for a non-automotive company, for example Google, which decides to build-up its own automotive business in India. First, a short introduction to India, to its demographic development, and to its economic situation as well as to its future will be given. Second, a short industry analysis will be done. Third, special emphasis will be put to the cities or clusters of Bangalore, Chennai, Pune, and New Delhi. This analysis will of focus on the following for criteria:

• Research and Development (R&D)

• Souring and Procurement

• Manufacturing and Production

• Global Competitiveness

In the end, a short conclusion will be given to shortly illustrate the findings of this pa-per.

2 The Country

India, with its capital New Delhi, is one of the most interesting countries for potential investors, due to several reasons. It consists of 28 states and seven union territories which together account for 3.29 million square kilometers (Ernst & Young, 2011, p. 9). It has a huge population of 1,241.5 billion inhabitants in 2011, with a median age of 26.2 years (Ernst & Young, 2011, p. 11; United Nations Development Programme, 2011, p.164). 30% of the inhabitants are living in urban areas, the remaining 70% lives in rural areas (Ernst & Young, 2011). Therefore, India is the second largest country in world in terms of population. As a result of this large population, there currently exist 42 cities, which have more than one million inhabitants; however, until 2030, the number is expected to be 68 (McKinsey, 2010, p. 16 ). Nevertheless, the United Nations further expects a significant growth in India's population until 2030 to 1,523.5 billion inhabitants (United Nations Development Programme, 2011, p.164).

The most common religion is Hinduism with 81% of the total population, followed by Muslims (13%), Christians (2%), and Sikhs (2%). Other religions such as Buddhism, Jainism, Judaism, and Zoroastrianism account for the reaming two per-cent. The official language in India is Hindi. However, only 41% of the population prefers to speak this language. Apart from Hindi, there exist 21 other official languages (Ernst & Young, 2011, p. 12).

Moreover,