‘India Inc. differs in corporate strategies’ (With Image)May 31st, 2009 - 11:44 am ICT by IANS
By Madhusree Chatterjee
New Delhi, May 31 (IANS) Three of India’s leading Indian business groups can be distinguished by their corporate strategies, says corporate researcher and strategic management veteran Rajnish Karki.
“While the Tatas and the Mahindras are similar in many ways, the Birlas are very different. The first two are more refined, modern, flexible and socially inclined, having diversified into common terrains like information technology, automotive industry, tourism and hospitality.
“The Birlas, however, are more centralised, account-driven and traditional in their business approach,” Karki, a former teacher at the Indian Institute of Management-Ahmedabad, told IANS here.
The centralised corporate strategy benefited the Birla group in the pre-liberalisation years when it diversified into several small and big sectors taking advantage of the licence-permit raj, Karki explained, “but the model did not work post-liberalisation”.
“I think the Aditya Birla group is the only Birla group which has converted itself into a professionally-managed corporate entity - a classical professional organisation,” the corporate management strategist said.
Karki’s maiden volume on corporate strategy, “Competing With the Best:
Strategic Management of Indian Companies in a Globalised Arena”, was released in the capital recently.
Published by Penguin Books-India, the book bridges the theory and practice of strategic management, focussing on under-developed yet globally significant aspects of Indian companies.
It uses eight case studies of companies like Bharti, Pantaloon, ITC, the Tata Group, Larsen & Toubro and Jindal Steel to identify viable management configurations for Indian companies.
Outlining the emerging imperatives that Indian companies have to grapple with in the new global market scenario, the book says “firms will have to capitalise on growing and internationalising Indian economy, exploit information and communication technologies, internalise tenets of capital markets and governance, recognise the centrality of management capability and relate to socio-political realities”.
It also traces the “transformational and incremental changes” that Indian companies have undergone over the last three decades.
Karki rests his arguments on the premise that when after 40 years of licence permit raj India opened up its markets and forayed into the global marketplace, no one could imagine that it would be able to influence the global markets in less than two decades with enhanced capacities, beliefs and aspirations.
“One of the reasons could be that Indian companies have been traditionally more diversified because of the licence permit raj. Some of them could recoup their investment even before they went into production.
“But post-globalisation, especially in the years between 1993 and 1998, companies had to restructure and rationalise their diversification strategies,” said Karki, who has worked for the Tata Group and the Mahindra Group as senior corporate strategist.
Pantaloon grew with the growth of retail in the country whereas the Tatas entered into retail in the course of diversifying, he illustrated. “Infosys was synonymous with the growth of software in India, while Wipro diversified into software from its core of hardware.”
According to the author, significant growth in the future would come from mergers and acquisitions. “We have just taken off. Mergers and acquisitions (M&A) in our country are still very conventional but the early strands give hope.
“I think Vodafone and Essar have grown through M&A while HDFC Bank has merged and acquired new banks. But Tata Tea’s acquisition of British tea major Tetley has been the most successful acquisition of the decade,” Karki said.
The author is now working on his next project - a book that will capture India Inc. in the context of its socio-cultural milieu.
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