Answer the questions below using the case study.

M M In India: small players frock to India India wants to be the Western world's sourcing hub. It's the country's cheap workforce that attracts Lee encourages Australian organisations not to fear doing business in India and that the differences business. But it seems there are some daunting challenges in doing business with the world's largest be overcome Companies planning to do business in business practices, environments and culture can fast-growing economy in India need to be prepared for delays (mostly The managing director of Melbourne Fashion due to bad weather), varying degrees of quality retailer Leethal Fashion Accessories, Gail Lee, has and craftsmanship, a different style and manner of experienced language and communication barriers, negotiation, and sometimes hard to understand religious and cultural differences, corruption in English business and government, and finds costly delivery Lee reflects that Indian manufacturers might delays are common hindrances for Australian struggle to meet delivery dates and the finishing Importers. standards required in Australian retail. Consequently, India is a difficult place to do business, Lee says, Lee has all her imports quality-checked before they It can really test your patience. But I haven't been are shipped. This is required since, airfreight being turned off She insists it is worth the extra effort to do expensive, faults need to be discovered before business with India, suggesting it has been a 'saving shipping as the resending of items causes delay and grace' for small businesses operating on tight margins.increases costs. For the past ten years, Lee has been sending In order to avoid delays, she recommends designs to Delhi to be transformed into wearable supplier audits and obtaining references from other items, as well as importing jewellery to be sold in companies. Another cautious strategy is to deal only major local department stores. Indian manufacturers with government-recognised export houses, starting may miss the occasional deadlines, misinterpret out with small trial orders and frequent visits, and instructions and send the odd mouldy delivery using digital photographs and samples to verify during the monsoon months, but Lee argues progress. Lee recommends giving a closely detailed that they offer a real alternative for Australian's time line for the project, understanding the supplier's abandoned textile and fashion industry. With the capabilities and setting very clear goals. One of the cost of labour being high in Australia, designers issues is that Indian companies will give assurances like Lee have had to source overseas for cheaper of their abilities without having the infrastructures to manufacturers of garments. meet these high standards, so inspection of factories India's economy has grown at about 8% a is crucial year, with a middle-class population of more than While Indian industry plays catch-up to 100 million people, while the manufacturing sector Western standards and expectations, the country has grown at a rate of about 10% a year and services continues to grow its export markets and attract by a little less than 9% new business. Dealing with India is attractive to Lee started with about $200,000 capital and now small business as it enables them to get price points has turnover of about $2 million, employing 11 staff. low enough to sell into department stores which She would probably be considered a pioneer in continuously squeeze supplier margins, India is business on the Indian frontier, as major retail giants good for small business because it still consists clamour to break ground. She says there is a general largely of cottage industries. In accepting smaller reluctance in Australian business and the community orders and being willing to do development and to accept India as a source of good quality custom work, it differs from China which has a mass merchandise, but the flip side is that everyone wants production focus and is out of reach for smaller to sell goods there producers. In 2005/06, Australia imported $1.2 billion worth of merchandise from India, but exported goods worth more than $7 billion continued Activities for discussion, analysis and further research 1 Identify the external environment factors that would have impacted the ability of a business like Leethal Fashion Accessories to access the Indian manufacturing scene for its production. 2 What are the issues that make India a desirable outsourcing destination? How do these factors impact on Australia? 3 Do a search on the Austrade website for the regulations for import to and export from India. What are the advantages for outsourcing to India as compared to other countries you might identify? 4 Conduct some research to determine whether the trends evident at the time this case was written have continued or altered. What are the factors that came into play to either maintain or alter the environment for a firm like Leethal Fashion Accessories? Source: Hatch, B. 2006, "Small players frock to India The Australian Financial Review, December, p. 50