A NEW CHAPTER IN GROWTH AND PROSPERITYOne of our recently conducted large scale empirical studies, a joint project with the Swiss State Secretariat for Economic Affairs (SECO), involving more than 80 Swiss corporate houses, reveals that Swiss companies are increasingly pursuing organic, equity-based growth models for their international expansion into India. Thereby, strategically intending to either replicate the entire or major parts of the value creation process onshore in order to more strongly leverage on country-specific and locational advantages. In comparison to that, India Inc., fuelled by a new buoying corporate confidence, sparkling industrial earnings and vibrant capital markets, more frequently applies inorganic overseas expansion strategies, while targeting developed, saturated markets. This is found to be particularly valid for infrastructure related sectors such as steel, automotive OEMs and suppliers, pharmaceuticals or biotechnology for instance.
Results of our investigations, however, further reveal two major strategic challenges faced by the majority of our sampled companies: (1) From an internal perspective, despite their intention of transferring business to India, most of the companies, particularly from capital and technology intensive industry groups like machinery & parts, instruments & appliances practically still source major portions of their value creation from outside India; and (2) From an external perspective, many of those companies fail to successfully penetrate into the lower, actual high-volume segments of their markets and to subsequently tap into the potential inherent for real growth and profits. This being also due to an internationally standardised, partly conflictive, product and pricing policy as well as a less conducive cost structure.
Therefore, what is needed is a more indigenous quality of responsiveness and organisational adaptiveness, which on the one hand not only demands a more profound understanding of local characteristics, but also on the other hand, necessitates distinct business metrics as well as an appropriate differentiation in structure like multi-centred, regional corporate architectures which endorse operational and organisational flexibility, managerial latitude and strategic initiatives at foreign subsidiary level. All these will not only require each one of us to intellectually challenge ourselves as individuals, but also corporate houses to more strongly question their own corporate mindsets.
In this spirit, we look forward to welcoming you to the upcoming India Symposium 2008 to jointly discuss new ideas and to co-create fresh impetus of thoughts for a new chapter in growth and prosperity.
Dr. Sigu Muringaseril
Founder & Chairman India Symposium
Asia Research Centre, University of St. Gallen, Switzerland
Source: INDIA SYMPOSIUM 2008
Programm for 22nd August 2008
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