Greenfield Investment Method - Pest Analysis

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Additionally, the emergent and advancement of technology in Pune, India has significantly influence the research and development of product (R&D). For instance, the emerging of information technology has introduced the fresh cost-cutting process which will reduce the timing of process. Besides having a growing industrial hinterland with information technology, Pune also have engineering and automotive companies sprouting. As referred to Nitin Dahad, the CEO and publisher of The Next Silicon Valley, Pune seen to has surpassed Bangalore as one of engineering hub for multinational corporations. There are a lot of available resources for the future entrepreneurs in India. Plus, the increment number of role models of successful India entrepreneurs whom able to share their experiences also can encourage many future entrepreneurs in India, (Ravindra Abhyankar,2014). Moreover, India also known as a country that have about millions of software engineer and programmers, and that is why it is a so called IT superpower, (Javed Anwer, 2015). Apart from that, as a development of a small city, Pune also has an active start up ecosystem especially in IT and Software, manufacturing technology as well as a clean tech, (Ravindra Abhyankar,2014). Hence, the advancement of technology and the large numbers of experts in Pune, India are actually good for the investment of our product. We can have everything perfect like technology and skills which only required a small number of cost compared to Japan.

2.2 GEOGRAPHY FACTORS

Pune is a district that located in somewhere of the western region in Maharashtra, India. The district is lies in the Western Ghats mountain range which extends to on the Deccan Plateau on the east. It actually stands on the leeward side of Western Ghats at the altitude of 559m (1863 ft) above sea level and located between 17.5° to 19.2° North and 73.2° to 75.1° East. Pune is a hilly city. The highest hill there is known as Vetal Hill which the rising is 800m (2600 ft) above sea level. For the new place of our company, we actually can build it either somewhere in northeast of Pune city which located at the Lohegaon Air Base near the Pune International Airport or in the city of Pune. Besides in Pune, it consists of two municipal corporations which called Pune Municipal Corporation (PMC) and Pimpri Chinchawad Municipal Corporation (PCMA). On the other hand, Pune also had experiences of three seasons which are monsoon, summer and winter. However, it often has a hot semi-arid weather bordering with tropical wet and dry which average temperature in between 20 to 28 °C. However, summer usually starts from February to May, and the monsoon lasts from June to October with moderate rainfall, while the Winter begins in November as referred to Rosy Cold. Therefore, since the climate and bearing of Pune is very strategic and convenience, so choosing this location for the new venture is a correct decision.

2.3 DEMOGRAPHY FACTOR

India in facts, has a very young population with a median of population age of 24years and around 65% of the total population is belong to population less than 35years old. As a quite big district, Pune also having this kind of demographic which the median age is closer the national level. But in the Pune, most of 62% population actually under the age of 30 years. Then, the group of age 25-34years are actually a larger proportion of the total population in Pune compared to the national level. However, it has been estimated that about 50% of the population growth in Pune is actually been on account of migration. The migrating population rose from 43,900 to 88,200 in 2011 to 2015. For the population density of Pune city, it has about 10,412 per square km as in 2001 census, Pune has said, to has a lower gross population density compared to others city such as Chennai and Bangalore. So, there is a big scope of development particularly in investment within the area. Last but not least, Pune also has 77 per cent of literacy rate as per the last census. The higher literacy rate is male at 81.4 per cent and followed by females, 72.2%. However, this gap is nothing much affect the population because it is only a narrow gap of literacy rate as compared to prevailing in 1991 (Chandna,R.C., 2005)

2.4 PORTER DIAMOND

Porter Diamond of Competitive Advantage offers an analysis that can be used to understand what the four determinant of competitive advantages are and how those determinants can help a nation to achieve its international success in particular industry, (Michael E. Porter, 1990).

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Figure 1: Porter’s Diamond Model of Competitive Advantages

2.4.1 DEMAND CONDITIONS

The first determinant that crucial in national competitiveness is demand condition. As referred to Linder, (1961), usually if a demand of product from local is required, so the company need to export the product, (Jonathan I. Dingel, 2014). Normally, to be succeed in any industry, firms need to have a local demand for their product. Basically, if demand from local is higher, so the tendency to export the product is much bigger. The demand condition of industry also will be depending on a few factors like the size of home demand, the number of buyers, size of demand and the growth pattern. As such in Pune, India, it has attracted over 250 multinationals around the world to set research centres in India. In a meantime, in pharmaceutical industry, India also is expected to be on the top three of ranks for the pharmaceutical markets in terms of incremental growth by 2020. It also will be announced as a sixth largest market globally for absolute size by zero. Besides, the 20% volume of global export for the generic drugs in India, making the country as the largest supplier of generic medicines worldwide. Last but not least, the cost of production in India is significantly much lower compared to other country like Japan and USA. Therefore, India particularly in Pune is a suitable place for Greenfield of pharmaceutical industry.

2.4.2 FACTOR ENDOWMENTS

Besides demand condition, factor of endowment or production like land, labour and capital also often been described in a broad term in competitive advantage of strategically distinct industries, (Michael Porter, 1990). As about 70% of India population is under age 35, so it is definitely good for the economy growth because the young population are more productive than the older population group (Yaohua S,2012). Besides, the population in India particularly in Pune also predictably will increase more than 500 billion in the next 40 years.