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Difference Between Service Company and Manufacturing Company

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Executive Summary
Globally, the aquaculture segment continues to be the fastest growing food-fish producing segment and for India, the second largest food-fish producing country, it was forecasted that the segment would grow at an average annual growth rate of approximately 7.0% to reach a total production target of 8-10 million tons by 2020. Currently no commercial fish vaccines are available in India; therefore, the macro-environmental factors with respect to the competitive, political, economic, socio-cultural, technological, and legal landscapes, which influence a potential entrant’s strategic business decisions to set up a fish vaccines company, are evaluated. We basically concentrated in this Food Fish because in the last report of Nature Magazine they made a research paper where they said that about 250 types of fishes are vanished due to environment and food pollution. There was limitations of time but we tried our best. Basically in this report we describe about how can food fish can do business in India. This is the opportunity for the new entrepreneur like us.

The target country of this research is India, which is the world’s second largest food-fish producing country (Brugère & Ridler, 2004). In India the inland aquaculture production has increased substantially from 1.55 million tons in 2000 to 3.72 million tons in 2010 (FAO-Statistics, 2010) and is forecasted to reach between 8-10 million tons by 2020 (Paroda & Praduman, 2000). The Carp species, namely, Catla, Rohu and Mrigal, dominated the aquaculture segment amounting to 87% of the overall production (Abraham et al., 2010). Exotic species like Silver carp, Grass carp, 10 other minor carp species and catfish (Magur and Singhi) are gaining importance. Some of the reasons for the lack of success in vertical expansion of the Indian aquaculture industry were attributed to bacterial or viral disease outbreaks and poor disease resistance in the cultivated species.
The decision to set up a business in a given country is determined by influences in the external company environment such as competition, political, economic, socio-cultural, technological and legal factors. Therefore, the authors chose to evaluate the Indian aquaculture market to enable a new entrant to develop a strategy for entry into the fish vaccines business sector. Furthermore, since fish vaccines fall under the biopharmaceutical segment of the biotechnology industry and are highly regulated, an understanding of the macro-environmental factors that affect this specific industry is also important for the new entrant in strategic decision making.

Macro-Environmental Factors
Strategic management scholars theorized that the environment exogenous to a company has a strong influence on its strategic decision making and has to be constantly dealt with by the managers to maintain their firm’s strategic position and retain profits. These dynamic changes in the surrounding environment may lead to uncertainties, impose constraints or may create opportunities and help the management to avoid potential threats. Only those firms that are vigilant about the changing environment will succeed in taking corrective measures to remain competitive and become more efficient than their rivals. The macro-environmental factors such as competitive, political, economic, socio-cultural, technological, environmental and legal factors not only influence a firm’s activities in the short-term but also impact its long-term sustainability. the success factors as political stability, high market opportunity, economic development and performance, cultural unity, low legal barriers, physiographic barriers (infrastructure, climate, population density and land area) and geocultural distance. An understanding of these macro-environmental factors is therefore essential for us.

Competition in a market of choice is an important driver that determines the investment into a segment. At present there are no direct competitors for commercial fish-vaccines in India. The most likely competitors in India are substitute manufacturers such as Glaxo Laboratories, etc., who are supplying chemotherapeutic agents for aquaculture enterprises. . Aggressive competition based on price from these substitute providers may be an issue for a new entrant who is aiming to keep the vaccine products attractive to the aquaculturists from a financial perspective. Constraints such as the diversity of fish species, the size discrepancies of fish farms, lack of biological knowledge of Asian fish species, diverse pathogenic strains and the price sensitivity of the aquaculturists were described as limiting factors for the existing international firms to invest in Asia.

Political and Legal Analysis
The political structure and systems are key factors that drive the policy and shape the incentives for entrepreneurs to select an entry country . India is the world’s largest democratic country and a federal republic with three branches of governance: the legislature, the executive and the judiciary. The federal legislature is a bicameral parliament with the President as the constitutional head of the country but the executive power is conferred to the Prime Minister and the state legislations may be unicameral or bicameral, with a Chief Minister as head of the state. In India, the leftist political ideology calling for ‘India to be built by Indians,’ ideological divisions among pluralistic political parties, and the political weakness of the current government due to unstable coalitions are impeding the creation of a ‘business-friendly’ national policy. Indian entrepreneurs are reported to be more innovative than their Chinese counterparts in conceptualizing and implementing novel strategies to develop new products. In general, politicians at all levels of government support foreign investment and trade, evidenced by the presence of international enterprises such as Pfizer Inc., Novartis, etc. in India. The policy change started in the year 1991 and successive governments have sought to pursue a knowledge-based economy by opening the Indian market and reducing government control on foreign trade and investment. Tariffs on imports were reduced from 90% in 1991 to 30% in 1997. Accordingly, India has established a National Biotechnology Development Strategy (NBDS) in 2008 allowing Foreign Direct Investments (FDI) into the biotechnology industry, which reached USD 10 billion by the end of the last decade. In 2006 India became the only Asian country after Singapore with significant biotechnology FDI (Pereira, 2006). Political attention was garnered by the fisheries sector with the introduction of the Model Bill in 2006 aiming to develop inland fisheries and aquaculture in a sustainable manner. Property rights are bipolar depending if a state favors the entry of new firms or not. A case of property rights being too restrictive was illustrated in the state of West Bengal (WB), where local agricultural interests prohibited building a manufacturing plant for the Tata’s Nano car. In the state of Andhra Pradesh (AP) on the other hand, required land was provided to Novartis for building its Bioinformatics Centre. Therefore, the diverse political agendas of different states can threaten the economic freedom. But overall situation is positive and the Fish food business can run well because of plenty raw materials, research materials, government support.

Indian Economy
The economic policy of an entry country enables investors to determine the growth potential of the industry and to assess the alignment of the policy with their own business interests. The economic policy of 1991 in India is one such policy that accelerated the economic growth making India one of the fastest growing economies in the region. The GDP growth rate, although it reached 8.4% in 2011, has declined to 6.9% in 2012, due to the trailing effects of 2008 global economic meltdown but is forecasted to reach 7.5% in 2013. The inflation rate is expected to decrease from 11.3% in 2011 to 4.0% by 2016 due to the Reserve Bank of India’s revised monetary policy. The fiscal deficit in 2010 was 6.4%, but India started already in 2002 to repay its liabilities to International Monetary Fund. The debt-to-GDP ratio stood at 69.2% in 2011, indicating a high risk for investments and high borrowing costs (Datamonitor, 2011); however, economists have shown that this ratio can be as high as 70% without compromising economic growth. India is recognized for its mature financial and capital markets with strong regulatory frameworks to control 23 stock and other capital markets under the Securities and Exchange Board of India Act of 1992. The household savings rate is fairly high, standing at 25% of its GDP. The household disposable income grew at an average rate of 13% during 2000-2010 (USD 5386/household in 2010) and the total expenditure per household grew at a rate of 16% in 2010. To increase the momentum for exports, the government has signed international trade agreements and created policy incentives for sectors in foreign trade.

The fisheries sector has been recognized for its increasing contributions from 0.75% to 1.04% to India’s gross GDP and from 2.17% to 5.93% to the agriculture GDP between 1980 and 2005. As a result, the fisheries sector has secured a government investment of USD 0.62 billion towards development of PPP, technology transfer, institutional restructuring, etc. in the 11th five year plan (2007-2011) (GOI-Entrepreneurship), while the Division of Fisheries received USD 35.33 million for R&D in fisheries and aquaculture. The Marine Products Export Development Authority (MPEDA) was set up to promote aquaculture, increase exports, specify standards, assist in marketing, provide training, etc. and all states now have fisheries departments focusing on the overall development of the sector (Aqua Overview). Import tariffs on fish feeds and the 20% duty on oil-meal, a component in fish feed, were abolished to facilitate production and exports. The overall analysis results that the business of fish feeding is profitable though there are risks.

Socio-Cultural Analysis
Socio-cultural factors are vital for a new entrant and respective investors for the purposes of communication, employee training, design of a benefits package and choosing an appropriate leadership style to manage the business successfully. India is a multicultural, secular nation with a caste-based societal structure. Hinduism constitutes the largest religion (80.5%), followed by Islam (13.4%), Christianity (2.3%), and others (3.8%). India has 1.2 billion people with an annual population growth rate of 1.344% and is the second most populous nation in the world after China. The median age is 25 years and 75% of the population is below 15 years of age, which gives India a competitive edge in terms of work force over other nations in coming years (Index Mundi, 2012). In terms of the Human Development Index (HDI), India ranked 134 (HDI=0.547) out of 187 countries in 2011 due to poor performance in social indicators (health, education and income), falling below the South Asian average of HDI=0.548 (UN-HDI, 2011).

India’s coastal fishing industry is categorized as an unorganized sector, in which 99% of the workforces do not receive any social security benefits, and due to declining common pool resources, many are changing their occupation to seasonal laborers in agriculture. Child labor is a prevailing concern globally including India where children constitute 40% of the workforce. y. Fish protein is considered as ‘protein for the poor,’ but only 28.2% of the rural and 20.9% of the urban households consumed fish in a seven day period in 2010. The total per capita fish consumption stands at 6.08 kg/year (NSS 66, 2012) and is forecasted to reach 15 kg/year by 2030 considering poor households to respond more positively to the higher income. As stated previously, the increasing trends of India’s household disposable income and the total expenditure per household is anticipated to translate into more spending on fish because of its cheaper price than other meat products. This would therefore lead to higher demand for fish in the future as the elasticity of demand for fish products was determined as 1.66 which is comparatively higher than other meat products.

Technological Landscape
Technology is a vector to translate a concept into commercial value (Malhotra, 2011) and it is an essential tool for firms to compete in the globalized world (Schwab, 2011). English is one of the major languages in the world and it is estimated that nearly 20% of Indians are adept in this language giving India a competitive advantage over other countries in a knowledge-based economy. To develop talent, 300 educational and research centers offer biotechnology degree programs (Chakraborty & Agoramoorthy, 2010) and more than a dozen fisheries colleges offer courses in Fisheries Science and Aquaculture in each state. The College of Fisheries in Bangalore was the first to offer courses in aquatic medicine, pharmacology and toxicology which enables the graduates to prescribe therapeutics for the aquaculture industry. Which can be the opportunity for us because we do the business for the consumers and for the fisheries organizations. When the professional workers joined with us we can expand our fish feeding business.

The strategic macro-environmental factors in India indicate that setting up a fish vaccines business is feasible currently and the time for entry is favorable since there is no direct competition. However, some of the limitations that need careful attention include IPR, poor governance, the lack of a business-friendly environment, bureaucratic hurdles etc. In order for an entrant to move forward, following are some suggestions:
(1) a primary market research to obtain data on the aquaculturists’ needs and to develop an epidemiological (frequency and distribution of disease) map of the country;
(2) a study to determine the market size and the attractiveness of fish vaccines; and (3) an evaluation of the competitive industry forces in the Indian aquaculture industry.

Aqua Overview. National aquaculture sector overview: India. Retrieved 05/05, 2012, from Armstrong, G., & Kotler, P. (2011). Marketing: An introduction. Boston.
Arora, D. (2005). Foreign multinationals in India: Adapting to India’s work culture and management practices. Retrieved from
Ayyappan, S. (2006). Report of the working group on fisheries for the eleventh five year plan (2007-2012).
Government of India. Retrieved from
Ayyappan, S., & Gopalakirshnan, A. (2008). Resilience in fisheries and sustainability of aquaculture. Paper presented at the 8th Indian Fisheries Forum, Kolkata. 22-26 November 2008, 1-9. Retrieved from Ayyappan, S., & Gopalakrishnan, A. (2006). Transgenics in fisheries: Perspectives, priorities and preparedness for India. Indian Journal of Fisheries, 53(2), 127-152.
Babatunde, B. O., & Adebisi, A. O. (2012). Strategic environmental scanning and organization performance in a competitive business environment. Economic Insights - Trends & Challenges, 64(1), 24-34.
Bagchi-Sen, S., & Smith, H. L. (2008). Science, institutions, and markets: Developments in the Indianbiotechnology sector. Regional Studies, 42(7), 961-975.…...

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