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Succeeding in India |
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India is currently the 10th largest economy, fourth in terms of purchasing power with growth for this year alone at over 8%. The current, estimated GDP is around $719.8 Billion. Since becoming an open economy in 1991, India has worked to make its mark in the global market. With the average age of its citizens at 27 years, many of whom are well educated, married and without children; India has the ability and resources to be among the top four nations in terms of economy. The following are ten lessons to follow when beginning business operations in India. Many companies enter India thinking they know how to be successful. They may have a successful global brand and believe that the name alone will ensure success. The first lesson for succeeding in India is to assume that you know very little. Making a bad assumption on a target market, business function or the necessities of a population is one hundred times worse than ignorance. This arrogance and authoritative nature will get you nowhere. Past travel in a country, a taste for the local cuisine or a family friend that is from the area does not mean that you know about the culture and business practices of a nation. Learn about the cultural differences and adjust your business style and marketing strategy accordingly. These simple actions will place you one step closer to success. The second lesson for succeeding in India is to set up your own structure. In India, a company owned structure outperforms third party distribution by a factor of four to seven. Businesses that have their own “eyes and ears on the ground” tend to be more successful and adaptive to the home site and the local site. The failure rate of a joint venture exceeds 90%. Given this fact, lesson three is no joint ventures. Over three to five years, a 100% subsidiary will outperform any joint venture. Lesson four relates to acquisitions and does not necessarily apply to associations, but is a good guideline to follow. An acquisition strategy is only as good as the target available. The majority of acquisitions are over priced and end up as a can of worms. Therefore, be prepared to walk away. Lesson five covers one of the most important resources needed, money. Whether your organization makes a loss or a profit during the first couple of years, you will need larger amounts of cash in subsequent years. This lesson advises to plan for this element. Lesson six relates to corporate and product branding. This is often the most effective source of competitive advantage in the Indian marketplace. Push over the line marketing in this marketplace. Finding a person to be head of the new operation is often the most difficult decision you will face. The life and death of an organization lies with this person. The person best fit for this role has execution and operations experience and isn’t necessarily an expert on strategy. Lesson seven is finding an individual with the characteristics necessary to be successful. You want to find an individual who has “hands on competent leadership”. The most effective at this position are the ignored hungry souls at the 2nd or 3rd rung who have the desire and competitive spirit to succeed in a foreign environment. Lesson eight for succeeding in India is centered on innovation. Develop a business model that incorporates innovation and market adaptations. It is necessary to adapt the product or service to the local market. Know the cultural differences and adapt a concept for the new market. The supply chain will need to be altered in order to accommodate this new market. This idea of innovation is captured with the term; “LOGAN”, which stands for localized global innovation. Logan is also a new model of Renault car that was specifically created for a local target market and is now being distributed in other markets. This car shows how Renault adjusted its model to fit the needs of the market. Lesson nine is an important link to global operations. You can capture value for your organization by linking your business in India to your global operations. Create a hub for global research and development and make India a source of components and materials. The resources needed are available to make it a center for IT development and support as well as a service center for HR and Finance. The main idea derived from this lesson is to leverage the advantage, make use of the resources and opportunities that have been made available to you. The final lesson for succeeding in India is that in order to capture
India’s full potential, the branch must report to the world headquarters,
not the Asia structure. The operations in India should be positioned
within the whole organization.
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