Should Lactalis expand their operations into India?

The Case

Should Lactalis Expand into the Indian Market? Groupe Lactalis (http://www.lactalis.fr/en/) is one of the largest food producing companies in the world, with a focus on dairy products. Begun in France in 1933, it now has over 75,000 employees with operations in over 45 countries.

You have been asked by the President of Lactalis Inc. to provide some consulting (advisory) service. Lactalis is considering expanding their company into northern India and is looking for a feasibility study that will include macroeconomic analysis and estimates of market potentials for Lactalis products.

Lactalis has issued a challenge asking for recommendations on whether they should or should not strengthen their investment in one of the fastest growing economies of the world: India. You are going to consider the macroeconomic environment of India and its trends, and then examine the feasibility of establishing a formal presence for Lactalis in northern India. If you recommend that Lactalis should enter this market, then you must also list the various steps that it should take to ensure its success. Should you recommend that the market is not suitable, then you must present a strong argument as to why.

Part 1: Collecting data

should bear in mind the following questions:

1. How big is the Indian market? What is the real GDP?

2. What is the current state of the economy? Collect the latest available data on nominal GDP, real GDP, per capita real GDP, unemployment rate, inflation rate, interest rates, exchange rate(s), and any other important macroeconomic data.

3. How is this economy doing? What is the growth rate of the real GDP? What is the trend in this variable?

4. How fast is the per capita real GDP growing?

5. Is the country experiencing an inflationary or a recessionary gap?

6. What kind of macroeconomic policy should this country follow?

7. At what stage of the Business Cycle is this country presently in? Is there an inflationary or recessionary gap?

8. What kind of fiscal and monetary policies is this country presently following? Expansionary or contractionary?

9. What is the price elasticity of demand for dairy product in India? Is it elastic or inelastic?

10. Danone is another large dairy company that entered into India in 2012 and existed at 2018. Watch the video Why Big Dairy Companies Struggle In India from CNBC on YouTube https://www.youtube.com/watch?v=4mBiFEspcIM&t=223s and discuss what Lactalis should learn from Danone's experience?

11. What is the Income Elasticity of demand for dairy product in India?

12. Watch the video No Considerations: Doing Business in India from Marginal Revolution University on YouTube. https://www.youtube.com/watch?v=hsuWe8XQhN4&t=4s and discuss what other issues with regards to the social, political in India should be taken into consideration by Lactalis?

Part 2: Making a Recommendation