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AIMA – Robert Bosch 36th NATIONAL COMPETITION FOR

YOUNG MANAGERS

THEME: “Managing Organisational & Management Challenges in India.”

Team Details:

Team Leader Shekar Subramanian Internal Auditor – South Asia


+91 9003036830 shekar.subramanian@abmauri.co.in

Member 1 Sridevi Kesavarapu National Key Accounts Manager


+91 9500013926 sridevi.kesavarapu@abmauri.co.in

Member 2 Rahul Shrimali Procurement Manager – S & W Asia


+91 9500023927 rahul.shrimali@abmauri.co.in

Organisation: AB Mauri India Private Limited

Address: 2/15, Ganapathy Colony

Teynampet,

Chennai – 600 018, India

Tel No.: +91 44 2432 0321 / +91 9677088982

Fax No: +91 44 2432 0311

E-mail: ramapriya@abmauri.co.in / hr@abmauri.co.in

Number of words: 2,891 words

Date of Submission: June 25, 2010

Signature of the Team Leader or a Member: __________________________________


Introduction
Few countries have improved their economic prospects as dramatically as India has in the last twenty years.
Today, one would be hard-pressed to read long-term forecasts that do not view India as a large and growing
force in the world economy. From being an enormously populated country which was essentially insulated
from world markets, India’s transformation into a prospective superpower is a big story in itself.

It may be difficult to believe but the Total Foreign Direct Investment


equity flows into India increased from a paltry US$ 100 million in 1991-
92 to a staggering US$ 25,888 million in 2009-101 . Despite being all but
irrelevant to the world economy just two decades ago, India has clearly
become a force to be reckoned with on the global stage. Given that a
growth of 9% per annum (from 2004 to 2009) has been achieved, India
is now a land of innumerable opportunities – looked upon to provide
directions to the world economy in the years to come.

1Source: Fact sheet on Foreign Direct Investment (FDI) – August 1991 to March 2010, issued by the Department of Industrial Policy &
Promotion (DIPP), Ministry of Commerce and Industry, Government of India.

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Synopsis
The belief that India today presents a huge and unprecedented economic opportunity for organisations is
almost a cliché. But within India, the term ‘Economic Opportunity’ has somewhat been given a nebulous
meaning. For generations, opportunities in India were determined by the socially
cially stratified caste system.
The economic climate was also not helped by diversity issues [[North versus South,
outh, Hindus versus Muslims,
Fair skinned versus Dark, Mainlanders
ainlanders versus Northeastern tribals],
ibals], widening market divide and
infrastructural challenges.

The business landscape in India


ndia has definitely changed. However with root cause issues still prevalent,
organisations in India have to face mutant varieties of these challenges.

Whilst there are innumerable organisation


organisational and management challenges in
n India, this paper seeks to
document only a selection
ion of key challenges
challenges, which may be internal or external. It also lists out some
workable and practical recommendations – original ones, as well as innovative ideas to manage challenges
without interrupting business continuity
continuity.

People Challenge - Managing the diversity

Existing Market - Changing consumer landscape

New Markets - Huge untapped potential in Rural India

Prioritize Spends - Optimizing Working Capital

Transform Culture - Family Business to Global MNC

Managing Talent Flow

Being a Socially Responsible Business

Showcasing Brand India - Ability to think differently

For any business to establish itself the


he first challenge relates to its people.
Managing the diversity in an Organisation
2
With organisations growing at
exponential rates worldwide,
people of different cultures and
backgrounds are interacting with
each other every day. In India
especially where religion, culture,
etc. play an influential role in
shaping an individual, one of the
biggest challenges is to efficiently
manage these differences to
optimize efficiency.

Recommendation
It has been scientifically proven that people connect strongly when they
encounter similar challenges. Capitalizing on such a premise, it is suggested
that employees are given an option of forming teams with their colleagues
(preferably not in the same department or region) and participate in online
business simulation games.

These online games could help handle diversity, foster team spirit and
also train people for future strategic roles. The games should

2
Independent study commissioned by Accenture on Cross cultural communication problems-reported by Hindu Businessline-31s July, 06

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potentially replicate the business model and subject participants to varied market challenges. The teams
should act as General Managers of the virtual organisation and translate all their strategies into critical
decisions for various business aspects like operations, strategy and marketing.

Organisations could use such games as a tool to identify future leaders and will in turn motivate employees
to present innovative and out-of-the-box solutions. Needless to say, this will be a fun-filled activity too.

Once the right internal environment is set, the whole focus then shifts to the most critical aspect of the
external environment, The Market.

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Changing Consumer Landscape
It is difficult for organisations to be able to keep pace with the changing consumer needs, demands,
perceptions and knowledge due to changing lifestyles.

 A large chunk of the urban population consists of


the young enthusiasts who have disposable money
and a will to try the unbeaten path. These
consumers of Generation-Y have no history to
forecast their consumption patterns, yet are a big
market. The challenge is to get into their minds and
predict the future demand patterns 3

3 http://kwlvarun.blogspot.com/2009/08/changing-consumer-landscape.html

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 The Woman in India has come out of the veil and is standing on an equal pedestal with the Men, thus
challenging a lot of old fads. Women are now playing an active role in family decisions. This has a
direct impact on the business space right from design of product to the choice of communication
channel and the message to be delivered.

Recommendation
The changes in the consumer landscape can be either technology lead or demographic. The idea to tackle
these kinds of changes is to understand that India is a developing country and there has been an inward flow
of trends from the developed west.

Hence, it will be a good idea to observe the demographic changes in the developed countries and pre-empt
such changes to come to India after a certain lead time. For example, Insurance, Mortgage, Loans, Credit
cards, Holidaying abroad, Exotic foods, etc. have all been championed in the west before we adopted it
from them. The present fashion in the west becomes the future trend in the east. This will continue till
differences between the developed and developing nations exist.

Alternatively, the solution lies in the ability of organisations to show the ‘extent of connect’ with change.
The dynamism and flexibility to change in an organisation will define their success. Old rules are constantly
being challenged and updated/adapted to changing needs, desires and aspirations of the consumers. Hence,
the idea is to be as open ended and modular in approach as possible – for example, do things not done
before, accept seemingly unlikely ideas or encourage quieter employee groups like junior staff, women,
trainees and fresh graduates to speak up in management forums, etc.

While this is a section of the market whose demands are difficult to predict, there is yet another larger
segment in India that stays untapped.
Untapped Rural Market
With almost 60 % of the Indian population living in
villages,
illages, rural India proposes a huge unmet market.

The challenge fundamentally lies in the failure of:

- The distribution system to Indian hinterland,


making sales push difficult.
- The communication mode that is not able to create
brand visibility in Rural India.
- The communication itself, that is not able to create
an impact and generate the demand pull in Rural
India.

Recommendation
 The distribution challenge can be resolved by addressing the problem in smaller clusters with small
carrying
ying capacity being fed from district feeder
feeders on continuous replenishment basis. The Hub and
Spoke Model as it called, is illustrated hereunder:
Fig 1: Example to illustrate Hub and Spoke model which facilitates improved Logistics/Distribution

Small Hamlet of
4-5 Villages
with population
between 100-
200 households

Central Feeder
HUB at
Panchayat Level
being fed by a
larger feeder at
Taluk level and
Small Hamlet of so on Small Hamlet of
4-55 Villages 4-5 Villages
with population with population
between 100100- between 100-
200 households 200 households

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 People have a tendency of flocking around the more influential one- The Leader. This tendency is even
more pronounced in the rural areas where people are closely bound. The hub and spoke model above
can leverage on the influencing capabilities of people in the Panchayat / Doctor in the dispensary /
Lady in the Anganwadi/ Big Landlord, etc.

 The strong telecom boom has mapped almost every village of India on mobile networks and this can be
used as a powerful mode for communicating with the rural market either by way of simple SMS or
Value added services. The Mobile phone has enhanced the reach right up to the rural customer which
can amicably resolve the communication challenge.

 The challenge of making a brand connect to Rural India should encompass the entire marketing space
right from design to delivery of the message/product including branding and advertisement. This kind
of an integrated approach is required to bring the feel that the product is truly designed and delivered
for the rural masses and includes their aspirations, expectations and ethos.

Having a huge workforce and a big market, it is important for organisations to manage their working capital
and prioritize spending.

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Optimizing Working Capital
Making Working Capital work for you is a smart business practice today. Most organisations compromise
on cash flow with a view to enhance profits, which is not always beneficial. How do you overcome this
challenge?

Recommendation
The way forward in working capital in India, could be to focus on the following: 4

Debt Factoring – Financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a
third party (called a factor) at a discount, in exchange for immediate money with which to finance continued
business. In 2009, while India was rated 4th in terms of GDP
value of the world5, in terms of factoring, the total turnover was
an insignificant 0.2% of world factoring volume6.

Significance in MIS – Though many organisations focus on


reducing their working capital, formalized documentation of the
same as a part of management information systems is debatable.
Thorough evaluation of transactions/projects analyzed in terms
of not just profitability (Ex: new product line) but regular monitoring through effective reports is essential
to operate on optimum working capital.

Even while managing all these challenges, not every potential business is able to scale up and transform
itself into a global MNC.

4 Source:- Lagu Udyog Bharati - www.lubindia.org


5 Source: IMF List 2009
6 Source: Factors Chain International

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Transformation of a Family Business
Culture into a Global Culture
Families rule business world-wide and more specifically in India. Such family businesses have consistently
been plagued with the following issues which cripple their transformation into global organisations:

- Lack of global thinking


- Lack of meritocracy and proper succession plans
- Conflict of interest among family members
- Family emotions

Statistically it has been proven that family business have not succeeded well beyond the third generations.

Recommendation
Business/Trade Associations already use various bilateral and trade ties with other countries to discuss
common challenges and share best practices. Considering that more than 90 % of India’s businesses are
family owned these forums could convene special modules for family businesses. The bilateral ties could be
utilized to compare success of family businesses between member countries and maybe develop rankings
within the group (for instance, the top 5 family businesses within SAARC). The idea is to communicate to
our family businesses that peers in other countries (with fewer resources) are faring much better than our
home grown companies and that there is a lot more left to conquer.

Successful organisations have transformed themselves from family to corporate powerhouses.


Organisations (like the Tata’s, Dabur, Wadia’s, Reliance, and Kirloskar) have successfully built viable
business models with external talent. Some firms have also designed modules before inducting family
members into business (like Godrej where the fourth generation is taken at operational positions after
acquiring necessary educational qualifications).

As an organisation matures, it faces the challenge of managing the flow of talent through an organisation.

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Managing Talent Flow
Right Job fit is where the passions and talents of the individual
match those required by the work and where the values of the
individual are in sync with the values of the organisation.

A recent survey7 revealed that 86% of employees did not have a clear understanding of the responsibilities
and/or duties required of their role or the expectations of their manager in fulfilling these responsibilities.
With role clarity being a key driver to employee performance, it should not be surprising that 64% of
performance-related issues stem from the employees lack of understanding of the requirements of their role.

This lack of understanding creates disconnect between expectations and performances thereby leading to
issues in retaining ‘star’ talent.

Recommendation
Job Fit Recruitment should not be based on just people’s IQ, past experiences and companies worked
for. It is recommended that selection criteria include self discipline, interpersonal skills, leadership skills,
empathy and motivation.

Talent Retention

If we are interested in maximizing the value of our employees, we have to maximize opportunities for
enabling them to use their intrinsic talents at work. For employees at strategic and decision making
positions, flexible job roles, which cut across diverse functions can be provided along with linked-
compensation plans. Each job role should be split into various tasks and the employees should be given an
option of picking up the job roles that they wish to perform. When an employee designs his own job
description, he is obliged to fulfill his responsibilities. The organisation can define limits in terms of the
number of job responsibilities that an employee could select and time limits to prove his/her
capabilities. The organisation can also assign a ratio of preferred jobs against non-preferred jobs that an
employee should take.

7
http://www.strategyperformance.com/content/page/ID/23

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All such positions can report to a steering committee nominated by the Board of Directors/Top
management. This solution could potentially facilitate collective decision-making and reduce
indispensability of senior managerial staff.

Eventually, no matter how you satisfy your stakeholders internal or external, businesses have to be socially
responsible.

Being a Socially Responsible Business


8
We are in an age where an organisation’s
responsibility extends beyond just
manufacturing, distributing/delivering
goods and making profit. Organisations
are now required to have a conscience,
develop good community relationships
and shrink the size of their carbon
footprint.

Indian consumers will soon follow the above trends

Recommendation
Organisations can take active part in aiding the government’s community welfare schemes by providing
adequate funding and advisory services. In India, relationships run deep. Therefore, instead of additional
investments into Corporate Social Responsibility (CSR) organisations could take up one of the activities that
are directly linked to their business as well as the community at large. These activities could be any of the
following:

8
Source - Corporate Social Responsibility Monitor 2001: Global Public Opinion on the Changing Role of Companies

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- Buying raw material produced in neighboring villages, by which businesses can save freight cost as
well as act as market space for villagers.

- Taking up infrastructure development (building roads, community centers, hospitals, schools, etc.),
to facilitate development of villages and in turn enhance Supply/Distribution Chain.

- Creating corporate/employee financed pools of microfinance institutions to make cheaper credit


available to rural communities.

- The corporate could also provide the necessary firepower to government schemes targeted towards
the upliftment of the community or the area at large. The challenges faced in the implementation
phase of such schemes can thus be overcome.

It would greatly benefit if organisations received recognition for such initiatives.

While it is important to be socially responsible, it is also critical for organisations in the new generation to
stay ahead of its large Indian Customer Segment and come up with the ‘Brand India’.

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Showcasing the Brand India
While India is being associated with economic growth, it is still perceived as a low cost provider of goods
and services.
India runs the risk of falling prey to the cheap, cheaper & cheapest trap like China. Although Indian
companies are no longer willing to bite the dust as low cost service centers of the world’s leading brands,
they are still to find its place under the sun as manufacturer for leading products.9
The challenge is to break the global myth surrounding us and showcase India globally.

Recommendation
To enable the Brand India experience, all organisations and the government need to gear up – to take
products and services to the right price point, with the full portfolio of delivery, service and buying
experience, all this within the context of the profit architecture demanded by the category or the company.

Indian companies need to seriously look at the aspect of quality, as one cannot get away in international
markets by providing substandard products.

Korean brands like LG and Samsung, adapted to the needs of the Indian customer to emerge as market
leaders, beating the domestic companies like Onida and BPL in their own markets.10

Indian companies will need to project their brands on all global platforms available, to ward off the negative
context surrounding our products and services. Wipro has done well with its “Applied Innovation” global
campaign. This task is not the responsibility of just the brand or category heads – it is the collective
ownership of the entire organisation, since the delivery of a promise is a must in every experience, to retain
loyalty and trust.
A Bose or a Hotmail were products of an Indian mind, albeit created and grown elsewhere. But we still
need to put our money where our mouth is. India is definitely on the move.

9 The Financial Express, Can Indian Brands make Brand India Global, August 20, 2005
10 Business Standard, Challenge Old Brand Wisdom by Murali Sivaraman, May 10, 2010
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Conclusion
Considering the global business scenario as well as the unique economic environment in India, organisations
will have many more challenges to overcome in their journey. The issues of creating/preserving value and
ethics in highly competitive environments, navigating through waves of new regulations and even larger
threats emanating from terrorism and dwindling ecological balance need to be managed to survive.

Although many of the recommendations provided in this paper may not signify conventional corporate
solutions, we believe that every once in a while it can be helpful to step back from the normal agenda and
take stock of your challenges which have direct implications on businesses.

We do not claim these to be fool-proof solutions but only a perspective towards practical solutions. These
perspectives are however important as often hidden within them are great opportunities for revitalizing
companies, awakening even greater commitment and enthusiasm of people and managing the broad internal
and external organisational and management challenges.

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