The Myth of Indian Globalization (Business India - Dec 2011)


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Innovation drives economic growth and globalisation drives innovation through deployment of global resources particularly of human capital

This Article covers following:
Is India globalising?
What is a ‘globally integrated
company (GIC)?
Why a GIC?
Why India must increase pace
of globalisation?
Challenges for business leaders and policy makers
Cultivation of ‘global mindset’

Published in: Business, Economy & Finance
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The Myth of Indian Globalization (Business India - Dec 2011)

  1. 1. `20 CyruS MiStryMay 30, 2010 2011 Ratan Tata’sDecember 11, successor Subbaraoed! Sinking rupee and stubborn inflation are D. Subbarao Governor, derailing the Reserve Bank of India economy. Does this man really know what he is doing?
  2. 2. Column B u s i n e s s i n d i a u december 11, 2011 The myth of indian globalisation Global strategy framework Strong Globally Innovation drives economic growth and globalisation Global vertically global Globally drives innovation through integrated structure integrated integrated company deployment of global resources particularly of human capitalGlobal investment and High Standardised products, R&D, high collaborative strong global supply-chain, virtual networks tele presence,is india globalising? Global structure They strive to enrich the communities they serve (CSR) collaborative technologies, corporate social responsibilityit is not, from a global benchmark perspective. and they care for the ecological environment. virtual team management with a global mindsetit is, but at a slow pace not commensurate with They do it with a genuine intent and have Home country centric; Good local adaptation,available resources. This is despite the pioneer- discoveredsupply-chain, good local that the workforce engagement and multi-domestic operation,ing effort of aditya Birla who ventured out four retentionmanagement program also improves investment in host countries with these activities.decades ago in southeast asia and replicated These policiesfocus on for outsourcing, concurrently enhance globalthe indian success story. The aditya Birla group Low mindset of these corporations. international salesis an excellent example of what we term as a Strongglobal horizontally integrated company. Lak- Why a gic? International International Global horizontally integrated adaptationshmi Mittal acquired a company 20 years later market The following table illustrates the success pattern to local focus Low High culturealso in southeast asia but with a global mind- of the Aditya Birla group (Globally horizontally Global cultureset. His approach created a truly globally inte- integrated company’) and two truly ‘globallygrated company, arcelorMittal, the largest steel integrated companies’, ArcelorMittal and ibm. Theenterprise worldwide. data presented is from our own research findings:We believe that globally integrated companies The myth of Indian globalisation(gic) create true globalisation and havedefined the characteristics of four types of The success pattern of the Aditya Birla group’global organisations: (Globally Horizontally Integrated Company’) and two truly ‘Globally Integrated Companies’, Arcelor Mittal and IBM Global strategy framework Global Focus on Think Global Global mindset Strong Globally mindset India story Act Local institutionalised global Global vertically Globally integrated structure integrated integrated company Global 1969 1989 1940 Global investment and opeartions High Standardised products, R&D, high collaborative Revenue $30 billion $78 billion $100 billion strong global supply-chain, virtual networks tele presence, Global structure collaborative technologies, corporate social responsibility (CSR) Top 99% Indian 80% Global 90% Global virtual team management with a global mindset management Home country centric; Good local adaptation, good local supply-chain, multi-domestic operation, program management investment in host countries for outsourcing, focus on Why india must increase pace Low international sales of globalisation? Global organisation examples Strong International International Global horizontally adaptationGlobalindia’s share of world trade is about Globally cent vertically integrated 1.5 per integrated market integrated despite huge advantages inclusive of population to local Cisco focus Low High culture and demography. it will again be a land of missed IBM Boeing P&G Global culture Intel opportunities Apple if indian companies are not in GE Oracle Nokia the race for excellence in technology,Toyota Microsoft productiv- Global structure ity and creating competitive value for Coca Cola Bollywood GM, Ford custom- ers byAMD global benchmarking. TheirGoogle domesticWhat is a ‘globally integrated market shareDr. Reddy Suzlon Lupin Tata Mittal will decline, growth prospects will Wal-Mart Mahindracompany? myth of Indian globalisation The diminish,RIL ICICI and the advantages Aditya Birlaoffering Wipro Infosys of size Group McDonald economies of scale which reduce cost of provid- L&T PolarisGlobally integrated companies (Aditya Birla group’ The success pattern of the gic) operate HCL Dabur goods and services worldwide will not be ing TVS Starbucks (Globally Horizontally Integrated Company’) and two truly Bharati RPGwith a global mindset and optimise costs for IBM ‘Globally Integrated Companies’, Arcelor Mittal and available. innovation drives economic growth HDFC SBImovements of goods and services by leveraging and globalisation drives innovation through NDTV IITs, IIMsglobal resources of capital especially human deployment of global resources particularly of International Global horizontally integratedcapital, global markets and global supply chains. human capital. Global culture Global Focus on Think Global Global mindset mindset India story Act Local institutionalised u 102 u u Global 1969 1989 1940 opeartions
  3. 3. The myth of Indian globalisationB u s i n e s s i n d i a u december 11, 2011 Column The success pattern of the Aditya Birla group’ (Globally Horizontally Integrated Company’) and two truly ‘Globally Integrated Companies’, Arcelor Mittal and IBMChallenges for business leaders Tata group have started demonstrating the suc- cess of true globalisation and innovation by suc-and policy makers cessful management of mergers and acquisitions.Business leaders must have a vision of achieving, Global in spite of theThink Globalthe big-ticket acquisitions Focus on hiccups, Global mindsetsay, 30-50 per cent of revenue and profits from mindset of Jaguar/Land Rover, Corus and Tetley by Tata, India story Act Local institutionalisedoperations outside of india. We suggest: ssangYong Motors by Mahindra and novelis by Global 1969 1989 1940u Launch a major initiative to cultivate a global the aditya Birla group are to be admired. Huge opeartionsmindset in the organisation; collateral advantage is that indian managers areu Hire and retain global talent by creating a Revenue $30 billion $78 billion $100 billionmulti-cultural environment; Top gics with a global Global 99% Indian 80% mindset 90% Global enable higher growth,u implement global best practices/benchmarks profitability management and sustainability. Following chart isin products, services and operations; and our understanding of some global organisationsu Leverage international finance by forming sub- as per the criteria of global strategy frameworksidiaries in overseas locations and joint ventures presented earlier:domestically and internationally. Policy makers must create a level playing field Global organisation examplesfor indian companies by providing infrastruc-ture, taxation and regulatory reforms in legal and Global vertically integrated Globally integratedaccounting systems, industrial health and safety Cisco P&G IBM Boeingstandards. We suggest: sustain and increase lead- Intel Apple Nokia GEership in talented manpower of engineers, sci- Oracle Global structureentists and the work force through maximising Toyota Microsoft Bollywood GM, Ford Coca Colafunding of education and learning at all levels. AMD Suzlon GoogleThere is a crying need for improving infrastruc- Lupin Tata Mittal Dr. Reddy Wal-Martture, roads, ports and airports, communication, Mahindra RIL Wipro Aditya Birla Groupinternet, digitalisation and energy, especially ICICI L&T Infosys McDonaldclean energy. China has shown the way. Dabur HCL Polaris Starbucks TVS To support innovation, government must Bharati RPG HDFC SBIearmark highest possible resources for research NDTVin public and private institutions. To tackle cor- IITs, IIMsruption recent moves to enact the Lok Pal Bill International Global horizontally integratedare a good start, given the huge scams which Global culturehave had worldwide publicity. Bringing back theunaccounted money stashed abroad is a goodbeginning but policy makers must address the inculcating the global mindset.root cause that creates the land grab, mining or and we close with the following two quotes thatsimilar scandals. show the power of a global mindset for creating growth, profits and a sustainable organisation.Cultivation of ‘global mindset’ “And we had to sell our credentials, we had to sellGlobal mindset is the cultivation of a thought the group, we had to sell India. The India story…so Iprocess which enables the global company to think the India story is much better known the worldsuccessfully navigate through national bound- over. I think India, as a nation is far more respected.aries and cultures by being inclusive of people As a people who are a very enterprising lot. Andadding knowledge and deeper understanding of I think it is the sheer spirit of enterprise that Indiainternational markets. brings to the table.” Creation of the ‘global mindset’ depends Kumar Birla, chairman,on the business philosophy primarily of aditya Birla groupthe ceo and, to a large extent, the top manage- (Cnn interview april 8, 2011)ment team. ibm, P&G, Tata and unilever, thoughat different stages of globalisation, are excel- “I am a global businessman, from Indian roots oflent examples. investing in continuing educa- which I am proud and our company has as muchtion and training to enhance abilities for creat- right as any other to make an offer for anothering corporate global citizens (cgc)‟ has to be a company in a global industry.”deliberate strategy. Lakshmi Mittal, in an interview indian businessmen are slow in developing with The Times of India (July 2006)trusting relationships and the importance of u Written & researched by d i n e s H C H a n d R a , V i B H a Y s i n H a andhaving a globally diversified team is not per- a V i s H d a H i Y a , dnaGlobal network (,ceived. Fortunately, a few organisations like the e-mail: u 103 u u