Indian Economy, MNCs and Foreign Products: A Reflection

Logic of International Trade

A long time ago, the world was a simpler place. Almost each country or kingdom used to depend upon whatever it could produce. Then some brave people started exploring and many countries discovered each other. During their exploration, they also discovered that many of the new places they had discovered had goods which they had never seen or heard of before. Imagine how Alexander the great must have felt like when he tasted a Banana for the first time at the banks of river             Satluj! Many of the explorers also saw that there were many things that were very difficult to produce in their own country but was available in abundance in the new lands they had discovered. I saw the reactions of some students from Punjab when they first visited Kerala and saw that cashew and black pepper growing in abundance in our backyard! The explorers took some of the new and exotic stuff back home and earned a lot of money from selling that. All countries understood that it is better to procure what was difficult to produce and export what was easy to produce as somewhere else, it is difficult to produce the same thing and that the are willing to pay for it. In technical language we call it the “Theory of Comparative Advantage”. Soon international trade was born. Long before these debates on globalisation, MNCs etc. began, India like many other countries was actively involved in trade. We used to import a lot of stuff and we used to export a lot of stuff too. Imagine, we had so many kings and all of them had so many queens, now we needed to import a lot of silk from China to dress all those beautiful ladies! Similarly, we had lot cotton, spices, gold, diamonds etc. and many countries in the west and east paid a lot to traders to get them the material from India.

The East India Company and the British Rule

My father is a communist at heart and contrary to what it may seem, I too am a socialist, if not a communist (Yes, communism is different from socialism!!). Most of the Left oriented people and most of the uneducated masses look upon the modern multinational and transnational companies (yes, they are different) as modern reincarnations of the East India Company! Any foreign company is viewed with suspicion and ethnocentric (be Indian buy Indian type attitude) orientation is common.

It is correct that companies like East India Company who came to trade often had the invaders in tow and soon a business deal would become something more serious. If you look at history, everybody without exceptions was doing the same thing at that time. Do you really think that the kingdoms in India were very people friendly and were helping the people? Then why do we single out the British or the East India Company? Simple….. Because they could do it and we could not.  Then the question arises, why were we conquered? The answer is again pretty simple; while most of the western countries were busy utilizing science and to build boats, ships, print books, use the compass and travel, we were busy doing something else. We were busy discussing how it was against the religion to cross seven seas! We were busy building and strengthening feudal and casteist social systems. We were busy because India had more that a 1000 kingdoms and each was busy fighting the other! So the British came, they saw and they conquered. We never had a strong leadership to counter them. See…. So Simple! The revolt of 1857 and names like Rani Jhansi are very romantic, but it is truth that most kingdoms were fighting for their freedom, freedom to keep doing what they had been doing in the past. In fact you should know that India as we know it today came under one flag only after 1857, when Queen Victoria was proclaimed the empress. Till then were small principalities fighting each other.

Even though the British did rule us for 200 years or more, we need not curse them for that. Yes they took away diamonds from the Taj Mahal, they took away the Koh-i-Noor. But I really don’t think those diamonds would have helped us in any way. Instead look at what they gave us. They gave us great dams, roads, bridges, medical technology, education system, civil services, the postal system, the railways and most importantly, they gave us English! Of course you can debate that they hurt us by partitioning us, but I will say thank God they did! Otherwise whatever is happening in the NWFP and the tribal areas in Pakistan would have been happening to us! Yes, you can debate that the education system they gave us is inferior, I say prove it. In my opinion the educations system in India is very good but the sheer number of people means that there are so many failures to see around us and far few success stories. But you see, the population is our own gift to ourselves!

The Indian Economy: A Brief Flashback

When India got free, the government was left with a huge nation with a huge population to take care of. The economic policy our leaders designed was heavily influenced by the colonial experience (which was seen by Indian leaders as exploitative in nature) and by those leaders' exposure to Fabian socialism (look up Fabian society). Unsurprisingly the government policies were protectionist in nature to give maximum encouragement to the domestic industry. The main emphasis was on reducing the import bill and ensuring food security by driving agricultural growth. The planning and regulatory functions were centralized and a huge public sector came up. Obviously, we needed the PSUs as the private sector at that time did not have the money or the will to participate in nation building exercises! 

 

I can bore you wit the details of how the socialist model in India was different from the more radical model in Russia (USSR at that time) and how Friedman disagreed with the policies of how McNamara made fun of us!! But the fact remains that even though the government policies were borne out of necessity and were (we assume) designed with national interest in mind, it failed to offer India anything more than the ever so shameful Hindu rate of growth (3-4%... by the way why is it called so??)

We stagnated. Protectionism bred incompetence and state monopoly gave birth to a socially accepted “corruption-incompetence” complex.

The so called process of liberalization actually began way back in the 1980s, but the real concerted, overt and public effort began in 1991. Successive governments have tried to do whatever they could to liberalise in the face of coalition politics, powerful lobbies, vote banks and a massive inefficient aged public system. Overall the efforts at liberalization, privatization and globalisation (LPG) have been in spurts and often as compromise formulas even then, since 1990 India has emerged as one of the wealthiest economies in the developing world; during this period, the economy has grown constantly, but with a few major setbacks. This has been accompanied by increases in life expectancy, literacy rates and food security. I guess that is a fairly good outcome considering the point of start and the magnitude of the task!

Are Not Using Foreign Products the Answer?

The mail that made me do this write prescribes the use of products made in India by companies that are purely Indian as a panacea for all the troubles our country is facing. Unfortunately this is wrong. The multinational companies are a result of the obvious advantages we disussed in the very beginning of this article. The impact of MNCs on host countries is very much open to debate. In many cases many MNCs have acted as villains (eg of Union Carbide) comes to mind and in most cases, MNCs have provided growth in employment, income and standard of living to the host countries. Yes….. you should always remember, globalisation like any other business strategy without consideration for the local community or a “human face” will always result in trouble. Of course the mere size of multinationals in developing marketslike India makes them very powerful. There is this concept called “Threat of Market Withdrawal” where a big MNC can hold a country to ransom by threatening to pull out and thus collapse the market. But in a fairly mature democracy like India with so many checks and regulators in place, the probability of any company resorting to that is remote. Moreover, modern multinational understand one simple truth: Do not cut the branch you sit on and do not kill the goose laying the golden eggs. The size of the Indian market for any product is so huge that right from auto to IT and now even nuclear MNCs would love to be in India. What do they bring? Great products, excellent services, competition (which ultimately helps you…. The consumer) and of course great jobs! Again you can debate that the MNCs are spoiling the culture etc. but I am sure most of the readers of this piece are mature enough to stay away from such meaningless rhetoric.

 

·         I will take an example and let it be Coke. According to the mail, if you drink Jaljeera instead of Coke, the money you send stays in India and all will be well!

 

Coke is manufactured by Coca Cola India Ltd. and yes the parent company is a foreign company. They came to us as they like the massive thirst of the massive population of India. Now imagine the number of people who are directly employed by Coca Cola India and imagine the kind of money they earn. Now compare the money they earn to what they would have earned in a “pure” Indian company. Imagine the number of businesses, big and small, that use Coke to earn money.

Where do you think an MBA like you working with Coca Cola or a dhabawala serving coke wil spend the money the earn I am sure a very large percentage in the Indian market. So the economy of which country is benefitted? I am sure you are logical enough to say: India! So what if the parent company earns money after providing money making opportunity to so many Indians?

Yes…. You can argue that they used unclean water for production. Again, they use the water that is available and if they are going out of their way for clean water in EU, that is because clean water is there and the strict EU regulations makes it mandatory not a matter of choice. Now ask yourself, why cannot we make a law that explicitly forces them to use clean water? And why the hell do we not keep our lakes, rivers and ground water clean. By the way do you know that traces of pesticides are commonly found in mother’s milk in Indian women??? Imagine the stuff we eat and the stuff we drink. Why blame the MNCs for this? So how would you saving Rs. 10 and drinking Jaljeera help the economy. In fact if you save rather than spend it is trouble for the economy (remember leakages??). It is your spending that runs the economy. Now consider this: Instead of drinking the Jaljeera, why not package it, brand it and export it as an exotic Asian drink and earn foreign exchange for the country. Doesn’t it make sense?

The troubles facing India are far more complicated to be solved with such simple solutions. Our economy is doing fine! We are looked upon with respect now. Yes……. there are minor hiccups on the way but they are not serious. Ok……… at the way the Indian economy held its own during the current global meltdown.

Not using foreign products is not the answer. Hell…. We are not even asking the right questions. I personally am not worried about the Indian economy one bit. What worries me is the rising fundamentalism and extremism, the rising example of lawlessness, corruption, the politicians…… I can go on and on….

But I am sure I have made my point…… Let us not spread myopic ideas. There is no foreign” market now. I own products that are made in Japan, Germany, USA, Malaysia, Taiwan and India and I live in a city. LG and Samsung have huge markets in rural India. These days you do not buy a TV only because it is “Phoren”, you buy it because it is good and yet cheap. Remember now each customer anywhere in the world is equidistant from sellers anywhere. So if Sony can come to India to sell TVs, Videocon is free to go Japan too. But have you ever wondered where Japan buys iron ore from to make such magnificent products and sell them in India??? 

Is National Anthem in Praise of George V?

Why do we have Jana Gana Mana as our National Anthem? After all according to one school of thought, it was penned to honor the King of England……

As one of my good students has asked me if this is true…… I must confess, I don’t know. But I will quickly add, I don’t care. For me, Jana Gana Mana….. is one piece of verse that stirs up patriotism and nationalistic pride. Imagine, in a world where almost everything we see or hear makes an incremental addition to “our” desires, ambitions, fears, insecurities…… anything that can make me feel good about the country is more than acceptable.

But, It is in honor of an English King!!! One might argue. But then come to think of it, if memory serves me correctly so is the Gateway of India, and half of Lutyen’s Delhi we are so proud of. Would you guys want to pull down the Parliament House too??? After all the British made it to sit there and rule India. Oh!! How about the beautiful Vice Regal Lodge in Shimla???

If I am not wrong, the British occupation of India began when the mughal occupation of India ended and if I am not wrong, mughal occupation lasted longer and they were foreigners. So…….. I guess, Taj Mahal has to go, so does Fatehpur Sikri, the Red Fort…….. we can go on......

Controversies are always there…… about anything and everything. Look into the national anthem, song, animal, flag….. you will find one thing or the other to criticize….. and many do. There was an episode in mid eighties, when a well meaning gentle man filed a PIL to get the name of “Sindh” deleted as it is in Pakistan now….. Then there was a controversy that the national song is actually a religious song and non hindus need not / should not / not made to sing it. Our flag contains green, which is characteristic to a particular religion and if fundamentalists have their way, they will change it to saffron.

My message to my student. I do not know if our national anthem was penned to honor George V. But I know how it feels when you listen to it on Republic Day.

Look at this ad. Try to understand. Respect your national anthem. Respect your nation. Respect yourself.

The Siachen Rendition

The Rehman Version!

4Ps, 4Cs and CCDVTP

The concept of 4 Ps has been here since the late 70s courtesy Dr. Kotler and since then anyone who has done any degree or diploma in management has studies it. So complete is its penetration it is not surprising to come across non MBA people being aware of it. In fact, IIPM, which is known to be non conformists and innovators call their flagship magazine 4Ps!!

Then why did revered Dr. Kotler need to stir the pot and come out with CCDVTP. Of late he has come very close to debunking the whole concept of 4 Ps itself. But considering that the staple text on marketing by Kotler stll carries the stuff and considering others like Professor Jagdish Sheth are still busy bringing out 4 As rather than debate the Ps, the dated concept of marketing mix might be in for a silent, gradual low key burial.

What was missing?? Nothing much. In fact it was working pretty fine….. Yeah, a new found “focus on the consumer”, “experience is everything”, “holistic marketing” etc. was making it difficult to continue using 4 Ps without a massive overhaul. Consider this: Every marketing text since the 80s has been screaming that customer should be the focus and in the same breath they were talking of marketing strategy without the consumer anywhere in the equation (Do you see consumer anywhere in 4 Ps??). Yes, the 4 Ps Vs 4 Cswere definitely a step in the right direction, but even the concept of 4 Cs was based on the interpretation of 4 Ps rather than wiping the slate clean and inking strategy from the scratch.

CCDVTP is what Kotler now calls is marketing and it seems to make a lot of sense.

·         C: Create

·         C: Communicate

·         D: Deliver

·         V: Value

·         T: Target Market (to the target segment)

·         P: Profitably

So according to CDVTP you crate value by conceding of, designing and manufacturing a product which will seek to satisfy an observed need in the segment of the market you are targeting. Of course creation of value is not enough, you need to communicate it to your target audience by the way of product design, features, UMP (unique marketing proposition, again USP vs. UMP!!), the price, service levels and extent, the positioning etc….

Delivering the value is self explanatory. In fact effective delivery at the desired location is itself a major value addition. This becomes even more important considering that distances in the virtual world have died but the physical distances still remain. So it has become infinitely easy for me to reach a seller online, place my order and pay through my papal account. But the moment money goes out, the countdown begins. The seller better be fast, so what if he is book seller somewhere in Philadelphia and I am in India. Now the seller has to deal with the real distances and the sometimes (in act often,,,, or maybe always) un realistic expectations of the customer!!! So delivery is a very important part of the setup.

The “T” stands for your target market. I am sure we all know what a target market is and I am sure most of us will accept that technology has made it easier to tap into target segments easier and at the same time more complicated!!). In fact now service organizations are being matched by manufacturers to manufacture in “batches of 1”!! Consider logging on to Dell’s site and custom building a DELL PC!!

P is of course for profitably. Needless to say, business is business. You do not make and sell stuff to please people. You do it to make money. Yes, you would love to make money and to see the customer happy. Why? So that he comes back, brings a couple of friends along and you make more money!!! In this new age, all business organizations have access t the same technologies and market resources. The costs of manufacturing and operations have been controlled so tightly that corporations are almost at the limits of squeezing the last drop out of every penny. Profitability has become a variable that needs to be kept in focus right from the very beginning. Ad hoc and isolated actions to “boost” profitability by “cutting costs” often results in sub optimal marketing conditions.

The CCDVTP as you can see is more “targeted” and “specific”. It talks of a specific action (creating value) by the organizations to specific people (the target segment).

So CCDVTP it is!!! At least till me or Mr. Kotler conjure up some other ore exciting combination of letters!!! 

 

Office Bullies and Angry Bosses!!

In most cases such unpalatable characters are emotionally weak individuals who lack courtesy. Office bullies or “tough” bosses who are given to chronic bouts of public display of anger are in fact cases of abnormal psychological orientation. This abnormality in most cases is a result of exposure to such similar emotional stimulus during the formative years of a human being.

In plain language; bullies and short tempered people are nut cases who lost it due to having had to be with some family member who was either very violent or exploitative.

 

The best way to handle them is to confront them and take them head on!!

 

Of course I am not asking you to “react”, I am asking you to “respond” in a calm, professional and confident manner. Never allow the designation or fear of losing a job or fear of reprisals stop you from standing up for yourself. You will be surprised to know that most such bullies bank on you not responding and hope that you will react in an in appropriate manner. But if your respond calmly and confront them with poise, they crumble fast!!

In the end remember, they are insecure, scared, weak people who are looking for support and unfortunately are looking to “command” help when they should have been asking for it. 

Pity Them.

Practicality & Meaningfulness of Life

The motivation for this outburst was a discussion with two dear colleagues of mine. The discussion was a wide ranging one that covered almost all aspects of life; career, money, life, philosophy, family etc…. There was a divergence of views on the question of practicality of ideas and what can be considered a philosophical approach to life and a practical one.

I personally consider all those people successful who spend more time happy than worried or scared. I consider a person successful if his or her work makes any difference to anybody, big or small. I consider that person successful who has the courage, conviction and the opportunity to follow his or her own heart.

If you are successful, then the debate on whether your ideas are practical or not will never even arise. Read on but be warned, it is more of an outburst than a literary piece.

·         Who am I?

·         What do I want?

·         Is there my meaning to my life?

·         Am I doing anything for anyone?

·         There is a lot of pain in this world. Am I doing anything to lessen that?

·         Every minute people are dying of hunger, disease, violence. What am I doing that will help them?

·         Am I creating something new?

Have you ever wondered on these lines??? Or are you “sensible and practical” therefore are busy working hard to become “successful”???

After all most of us are so busy in the day to day issues in real life, we rarely have the luxury of debating what we consider is “philosophy”. In a country like India, we actually train and prepare children to think in a “socially acceptable manner” and stay away from “impractical ideas”. Most children are brought up with a scarcity mentality and are discouraged from dreaming big. Even today parents will motivate children to go for safe government jobs and even if one wants to do something out the place and risky, he or she will be discouraged. The training to “fake it” is intense that you have a nation of people who are so comfortable with pretensions that it is unbelievable.

 

Add a good dose of judgmental attitude, tendency to stereotype and hypocritical out look, you have the perfect recipe for an average Indian.

 

Is it a mere coincidence then that most people are least aware of themselves? Most people have so easily accepted the widely held views on life that they do not have one of their own. On the surface everyone appears happy and “successful”. Scratch a little and out erupts a volcano of fear, regret, ego, insecurity and hurt. This is true irrespective of the person’s socioeconomic or educational standing. In fact I submit that the more educated and “successful” you are, you will be forced to live according what “others” will consider right.

To illustrate the point, I have worked in the glitzy world of media for sometime and I have seen and have worked many of the so called celebrities. Imagine a well known actress who was in Delhi for a shoot was craving to have her morning green tea sitting in the balcony but could not do so because her “brand managers” did not allow her to. Why? How can a girl who is supposed to be a diva appear on her balcony with hair undone and without that two mm thick layer of make up. So her day to day life is spent in maintenance of the “image” others have of her. In a way she has sold her life.

We are all like that. You wake up when you are feeling sleepy, you go to sleep when you want to do something else, you do not laugh loudly in public, why? Because it is not considered “good”……… Now imagine……. If after so much effort, I cannot even stand the way I want to, sit the way I want to, eat, drink, laugh the way I want to…… What is the point of such an effort? Then my lack of freedom in such simple things will pour into more important areas like not having the freedom to marry who you want to, not having the freedom to pick a career you want.

The self imposed sensible guardians of the society say that is the way “practical and real people” live and I beg to differ. I say that is how “sheep” live. In a herd, eat what is given and others are eating, go where others are going, do what others are doing, think the way others do.

Then what is my prescription for life? Ans: Follow your dreams and do what you really want to do. Have enough courage and conviction to live life the way “you” want to live not the way “others” wanted you to. Do not do anything only to earn money, look inside first, ask yourself, then decide. Yes, if your passion is earning money, go right ahead and do it. But if you passion is something else, find a way to that. Doing that you truly want and are passionate about will bring excellence in your work and money is always a by product of excellence.

 

Career is very important. After all without money you really cannot do much. But decide what cost are you willing to pay for it.

 

Practicality is very good but unfortunately life does not remain one. We are slaves to our thoughts and to our relationships and neither thoughts nor relationships are truly yours if you have owned them only because of practicality. Tell me what is the practicality in looking after your old financially unviable parents? Tell me what is the practicality in faith? After all god won’t appraise you, at least not this year!!

What matters most is whether you are at peace with yourself. Who matters most are the ones who live for you not the ones who live with you. Money and society are important but more important is “you”.

Until and unless you know yourself and are doing what you want you will never be able to achieve anything significant.

 

Look back in time…… All those who made a difference were all dreamers. Look back in time…….. Bhagat Singh, Gandhi, Nehru….. they had all one could ask for then left all that and the gave all that away. So according to the sensible people these people would be called foolish……… Right??? Were they?????

 

Look back in time……… Bill Gates, Steve Jobs, Ambani….. How dare they dream when they had nothing?

 

Look back in time…………… Ramanujam, Einstein, Galileo, Hawking………. Could they not just have concentrated on their careers rather than running after ideas which have not been proven till now………..

 

Now look at people around you…… What do those “sensible”, “practical” people do? Crib most of the times……. Against their job, the system, the economy and maybe their destiny………

 

Where do you want to see yourself? With the ones we discussed earlier or with the “sensible and practical” people around you??????

 

So to be successful go out and enjoy……….. go crazy, do something you always wanted to do………. Take a trip……….. Dance, hug someone you love…… Get a pet……….. Scream….. do anything that sets you free!!!!