Lakshman Doing Business in India

A Framework for Strategic Understanding
1. Auflage 2015
ISBN: 978-1-78063-455-5
Verlag: Woodhead Publishing
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, Band 0, 224 Seiten, Format (B × H): 156 mm x 234 mm

Reihe: Chandos Asian Studies Series

A comprehensive look at understanding India with a strategic framework that can be readily used for doing business in this market is needed. Doing Business in India discusses the cultural and consumer profile of the people of India and how these fit into the macroeconomic context. The analytical framework provided and illustrated with real case examples spans domains such as the institutional context of the country (full of voids and amazing peculiarities) and the interesting federalist political framework in a country with many states. Based on this foundation, the book introduces the business strategies appropriate for both rural and urban markets in India. The following chapters cover the successful implementation of these strategies in India. The remaining chapters focus on successful cross-cultural management of Indian managers and employees, the appropriate types of leadership required for managing the Indian workforce, the types of managerial control systems likely to be successful in this country, and the HRM practices that can help companies to win in this market.



- offers a unique and exclusive focus on India
- focus on political particularities in India crucial for understanding success models
- explores the overall strategic framework for better strategy formulation in context
- focus on strategy implementation issues (leadership, HRM, organizational systems)
- includes cases not found in other sources

Autoren/Hrsg.

Lakshman, Chandrashekhar

Fachgebiete

• Wirtschaftswissenschaften Betriebswirtschaft Management Internationales Management

Inhaltsverzeichnis

Why India?; Emerging market, liberalized, significant middle class, consumerist society, access to other countries in the region; The institutional context: Institutional voids, business groups, legal institutions, financial institutions, regulatory framework; The macroeconomic context: economic stability and growth, economic policies and outlook, informal economy, increasingly services driven; Political particularities in India: federalism, states and central government devolution of authority, legal framework in the states, Implications for businesses; Profile of consumers and markets in India; India's culture, consumer culture, Urban and rural markets: Two faces, purchasing power and preferences, marketing and advertising in India; Strategies adapted to Indian needs: cost and differentiation based strategies for manufactured goods, strategies for services markets, pan-India strategies (with a detailed Retail sector case), overall business strategies, corporate level strategies; Rural India and bottom of the pyramid markets: BoP markets in India, leveraging resources to target BoP in India (full-length ITC case), the role of IT in BoP, expanding telecomunnications market in BoP; Competitive advantage of India: India's increasing advantage in services sector, BPO, KPO, health-care, analysis of factor markets conducive to services in India, implications for MNCs in this sector; Leadership of intellectual capital: What is leadership?, leadership in India: indigenous leadership, global models of leadership, leadership for rural and urban workforce, special focus on knowledge work and knowledge leadership; implications for MNCs in establishing leadership systems in India; Organization and control systems for India: cultural influence on organizations and their structures; legally feasible set of merit pay and bonus plans to accompany business strategies; performance appraisal and control; output versus based control systems; overall implications for successfully implementing strategies; Successful HRM for India: Uniqueness of Indian HRM systems; HRD: a truly local concept; recruitment & selection: the numbers challenge; critical laws; compensation strategy in India; management challenges

Leseproben

1 Why India?
Abstract
In this chapter, I provide an understanding of why companies around the world are clamoring to enter India. The best time to enter India is now. India represents one of the biggest and fastest growing markets in the world today. India has the potential to become the third largest economy in the world (in U.S. dollar GDP terms) by 2050, behind only China and the U.S.A. India is an emerging economy that is likely to sustain its growth well into the future; it is run by democratically elected governments open to globalization; it possesses a huge middle class that has sufficient levels of disposable income and is increasingly consumerist; it also provides easy access to a host of countries in the region. This chapter provides a strategic framework to understanding this highly competitive market and provides a roadmap for the rest of the book. The framework should help readers formulate and implement the most appropriate strategies in the Indian context. Keywords Indian economy Indian markets growth potential what India offers to the world framework for strategic understanding roadmap of subsequent chapters “India isn’t a sweatshop for hands; it’s a sweatshop for brains.” Anand Mahindra, CEO, Mahindra & Mahindra McDonald’s opened its first restaurant in India in October 1996 and by November 2004 had opened a total of 58 restaurants, mostly in the northern and western parts of India. It is now reported to be operating more than 250 outlets in the country.1 Although it opened its first store only in 1996, it spent a full six years, prior to the establishment of the first outlet, studying Indian consumer preferences, developing the local supply chain’s ability to deliver consistently high-quality products on time, and creating its overall business approach to the market characterized by a high level of citizenship (Dash, n.d.). Given that a significant majority of the Indian population does not consume beef or pork-based products, it was important for the company to establish a clear strategic plan that would not hurt the religious sentiments of Indian consumers. More importantly, given the political activism and resistance faced earlier by KFC, it was important for McDonald’s to avoid political confrontation with either the government or one of a range of activist groups, including but not limited to those against globalization or foreign direct investment (FDI), those against Americanization, and environmental and animal activist groups. Instead the company highlighted the employment opportunities it provided, contributed to green movements, promoted sports events and healthy lifestyles, and got involved in community-related projects, mainly involving children. It transferred technology to the different players it helped develop in the supply chain for fast food, making some of them successful exporters of processed food, in an effort to overcome the poor transport and storage infrastructure in the country. Overall, McDonald’s has achieved a great deal of success in this country. This example, however, raises a very important question. Why would a company, whose core competence centers around beef and pork-based products, want to operate in a country where a significant majority of the population does not consume these products? More importantly, why would a company want to go to such great lengths (six years spent in planning activities alone) under such circumstances? This relates to the broader question of why businesses the world over are not only looking at but entering India at the earliest possible opportunity. The answer, very simply, lies in the fact that, as an emerging market, India represents one of the biggest and fastest growing markets in the world today. Thus, for India to not be part of any company’s strategic plans would simply be anathema to business. According to a Goldman Sachs report, over the next 50 years, Brazil, Russia, India, and China (i.e., the BRIC countries) could become a much larger economic force than the G6 (top 6 economies of today) in U.S. dollar terms. Specifically, India is cited in this report as having the potential to become the third largest economy in the world (in U.S. dollar GDP terms) by 2050, behind only China and the U.S.A. Although this shift in economic terms is likely to be gradual over the course of 50 years, it is likely to be more dramatic in the first 30 years. In the latter part of this 50-year period, although the other three BRIC countries are likely to slow down, only India is likely to grow at a better than 5 percent annual rate over the entire period (Goldman Sachs, 2003). Thus, despite the fact that India is growing at the so-called Hindu rate of growth (Panagiotou and Story, n.d.), this growth is likely to be much more sustained than any of the other emerging markets. The reason India is likely to outperform other BRIC nations and current G6 nations over this time period is that it is the only nation whose population is likely to continue its growth for the next 50 years and the only country where the proportion of working age people will increase for the next 20 years. In addition to real economic growth, the economic force of the BRIC nations, in general, and India, in particular, is likely to be the result of currency appreciation, thereby considerably increasing the purchasing power of consumers in the country by up to 35 times current levels. However, per capita income levels in all the BRIC nations will still be lower than other nations, making life difficult for businesses and their strategy developers. In essence, businesses and their managers the world over will lose out significantly if they continue to ignore India and its markets for too long, notwithstanding the challenges on the road. The success of McDonald’s in India illustrates the change in social values and attitudes of consumers in Indian society. Although the significant liberalization and privatization program begun in the early 1990s has changed the attitude of successive governments, some experts rank India lower on openness than the other BRIC nations. However, the attitudes of consumers and individuals in society are in complete contrast to the cautious optimism of the government. Indian society is moving away from traditional values of non-materialistic spiritualism and is increasingly reflective of materialism and consumerism. This shift in values is accompanied by higher levels of Westernization and the belief that the West represents and symbolizes innovation, productivity, and progress. The U.S.A. is the largest trade partner although trading relationships with EU countries are also relatively higher than most other nations. Compared to the few decades immediately following independence from the British in 1947, the latter part corresponds to growing acceptance of American and Western values, lifestyles, and general influence. India also contains perhaps the largest pool of English-speaking managerial talent anywhere in the world, in addition to an increasing proportion of the population with a similar capability. Consumers in India have always been interested in global brands – there was a huge black market for these products between 1947 and 1991 when the economy was closed – but buy local brands as well. A growing number of Japanese, Korean, American, and European multinationals have an established presence in the country as a consequence of the increased openness and favorable social attitudes that prevail. Fast food restaurants such as McDonald’s, Domino’s, Pizza Hut, and KFC have become very popular in the country as a result of their ability to offer consumers products that are not based on beef or pork. Despite the food service industry being the most affected by consumer preferences driven by cultural values and traditions, the potential for success for most multinational businesses in India is great. However, the road is likely to be rough and full of challenges for companies wanting to do business in India. For instance, according to some reports McDonald’s made no profit in the first ten years of operations in India, while it took an average of five to seven years for each McDonald’s outlet in the country to break even. Although this compares favorably to the average of 12–13 years for the company in any new country (Dash, n.d.), it points up the presence of significant challenges and the need for a clear and strategic framework for understanding Indian markets and its consumers. Among the most important of these challenges is the need to understand the local business ecosystem and players that multinational corporations (MNCs) take for granted in their home environments, which are simply non-existent in India (Khanna et al., 2005). This book is aimed at providing a strategic framework for understanding the more critical factors in India’s markets to enable companies to devise effective strategies and to implement them well, given the particularities of Indian business ecosystems. First, however, one needs to consider the increased levels of openness of the Indian government, its progressive economic policies of privatization and liberalization, and the progressive opening up of different sectors of the economy to global competition. Although India’s economy officially opened up to international competition after a wave of economic policy and regime changes in the early 1990s, the seeds for these changes in government and social attitudes were planted well before that time. The Japanese...

Über Autor(innen)

Lakshman, Chandrashekhar
C. Lakshman is currently Professor of International Management at Tongji University, Shanghai, China. Lakshman's work has appeared in various journals such as Journal of International Business Studies and Journal of Management Studies. His main areas of research interest are leadership, knowledge management, decision making in organizations, Strategic HRM, and Organizational theory.