Five Most important Post-globalization Corporate Developments in India


It is a total metamorphosis. No less. Corporate India has undergone sea changes since 1991 when the then Prime Minister, Mr. P.V. Narasimha Rao, and the then Finance Minister, Dr. Manmohan Singh, unleashed the most significant reforms in independent India. Five most important Corporate developments, post-Globalization, are discussed in this article.

Introduction

The most important post-Globalization Corporate India, post Globalization, are a) Advent of a new range of Multinational companies everywhere b) Emergence of the low-cost Indian competitors in every business segment c) Co-existence of highly focussed and highly diversified companies d) The Great Managerial famine and e) The decline of strikes and the increase of lock-outs.

Advent of a new range of Multinational companies everywhere

Years ago, when the first outlet of KFC was opened in India, in Bangalore, there were tremendous protests. The State provided protection. The outlets multiplied not only in Bangalore but elsewhere too. Not many gave it a chance in Chennai. Today, it is one of the fastest growing markets for the multinational company. IBM has entered India. Apple is everywhere in India. Microsoft has dominated the Indian scene for decades. The very mention of the word Google is music to the ears of even native Indians who know only their mother tongue. Google has made it possible to get information in Tamil or Hindi or whatever. They have increased the reach of Google so much that it is now the greatest weapon in the hands of the most ordinary Indians.

There are multinational competitors everywhere. Haier is a Chinese company. LG and Samsung have dominated the television industry. Videocon is now an "existence" company. So is Onida, which is now a shadow of its former self. The once mighty BPL is now gone. Hindustan Unilever now straddles the entire market of any Indian's kitchen, restrooms and what have you. The "rest is history" stories abound. Indians do not mind buying any product from any player, as long as it is good. For example, Samsung literally dominates the mass market for cellphones. In every home, when there are six family members, each will have a cell phone and at least two will have the Samsung models. The MNC revolution is still a work in progress. There is no doubt that there will be a huge number of multinational companies entering into every market, as the real estate market. The range of multinational companies coming into India will only increase by leaps and bounds in even markets like the real estate market. The FMCG market is flooded with a huge range of products and this will continue beyond all limits.

Emergence of the low-cost Indian competitors in every business segment

Jyothi Laboratories is a very famous company that has several low-priced products in the dishwasher segment. Pril, which comes in the form of a dish bar, is a direct competitor to the liquid called Vim from Unilever. A huge majority of customers buy both Vim and Pril, more so, as the latter is very much used by the house-maids. There are low-cost competitors in the shampoo segment as well. Cavinkare, a Chennai-based company, with a turnover of over two thousand crores, has several products with the herbal variant as well. Meera is a very good shampoo and it is growing day after day. Similarly, it has wisely entered the pickle market segment, after it acquired the brand called Ruchi. It has entered the milk segment as well. While Unilever is present in icecreams, it has a fabulous competitor called Arun icecreams in the whole of South India, to compete with. ITC is an Indian multinational. It has entered the ready-to-mix powder food segment as well. However, it does face huge competition from Aachi a very famous brand and another brand called Sakthi Masala. In the pain balm segment, there is this very famous brand Amurtanjan, from Chennai. This is a big pan-India brand as well. In the same segment, but with a huge number of other products is a company called Emami. Fogg, the famous perfume brand is from an Indian company.

These kinds of competitors give the MNCs a run for their money. For example, Domex, from Unilever India ( formerly Hindustan Lever) has now come out with an Rs.2 pack. The other big player, called Harpic, from another MNC, has an Rs.5 pack. There are too many unorganized players, each of whom competes in every single metro, small city, and the villages. The reach of Youtube is so big. There are thousands of new remedies being dished out in the form of "do it yourself" products. Even these products are direct competitors, as they can wreak havoc with the market shares of the big companies.

Co-existence of highly focussed and highly diversified companies

The Tata group is now having some temporary trouble in several markets like Steel and cars. This is a cyclical problem and since the global markets are a bit sluggish, the problem has occurred. The lack of new jobs in India is a big problem and there is a near saturation of new regular jobs that will enable the employees to take loans. This is a problem that eats into the growth of say, cars. However, the group itself is solid. It is a highly diversified group. Mahindra&Mahindra is into real estate, into SUVs, tractors and even resorts. It has wisely into businesses where it is easy to buy competencies or build them from within. For example, it did take the best of brains from the resort industry and has made Mahindra Resorts a big player. It is a big player in SUVs and it exports tractors to even the US. Such highly diversified conglomerates also operate in India.

Within the same India, we have highly focussed conglomerates like the TVS group and the superb paint company called Asian Paints. Companies like Jain Irrigation that entered new businesses have come out and even the Chennai-based Murugappa group has come out of so many businesses. The Aditya Birla group is bleeding money in the cell phone market and may soon exit the market. Wherever the profit margins are very less ( the cell phone market is a perfect example) the companies have suffered a big deal. The other companies that have had a big focus and have never entered very new businesses where they have not had any core competence, that is, traditional strengths that cannot be exploited by new competitors, are BHEL and L&T. The co-existence of the highly focussed companies and the diversified conglomerates will continue in India. However, within the conglomerate, those businesses that do not yield any money will be sold out to competitors who have been in the same business for a long time.

The Great Managerial famine

This is India's biggest paradox. On the one hand, we have over three thousand B schools in India. The University-affiliated B schools that offer the MBA are outdated by decades. The MBA degree that they give is not even worth the paper that they are printed on. The products get employed in positions normally reserved for fresh graduates. On the other hand, in spite of a rapid explosion of IIMs, the number of good managers with experience is very hard to find. There are locational preferences too. For instance, those who are based in Mumbai, do not want to move out to Bangalore and Chennai, as the exposure that they get to the most modern Western Management practices is very big in Mumbai, as compared to the other two metro cities.

Other reasons are the preference for start-ups where the empowerment is very high, the reluctance of MBAs to enter the manufacturing sector, the not-so-professional approaches of the younger lot of the owner-managers and so on. The fact is that the best of managers have also migrated to the US, most of Europe, Singapore, Malaysia, Dubai and countries in Africa like Nigeria and Kenya. They get very fat salary packages that cannot be compared with those in India. This is also one reason. Most companies also do not have effective schemes to train future managers.

The decline of strikes and the increase of lock-outs

The rapid decline in the most violent form of strikes and the increase in lock-outs does indicate that the working class is no more interested in long-drawn strikes. Yes, there have been strikes at Maruti Udyog that ended up in violence. The same thing happened even at Pricol, in Coimbatore, where the HR Chief was murdered. However, these are few and far between. The younger lot of workers are hooked to advanced technology, want good careers for their children and see a huge amount of unemployment all around them. On the other hand, employers have become bolder and can easily enforce lock-outs in the new scenario. The advent of new forms of exploitation of labor, in the form of the atrocious NEEM scheme, which causes a huge amount of heartburn, after the NEEM trainee gets to do regular work, is always an advantage to the employer.

Conclusion

Five major Corporate developments, post-1991, have been described in some detail above. There have been other developments too. These will form the focus of other articles to follow. Globalization is still a work in progress, in most parts of the world.


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