India Competitiveness

THE PATH TOWARDS COMPETITIVENESS
As India opens up to globalization, the competition for the best customers, suppliers, and talent is intensifying. Just about every company in India is asking how it can become more competitive. There are numerous strategic levers that managers can use directly to improve the competitive position of their organizations, including changing their portfolio of businesses, entering new markets, reducing costs, accessing new resources, developing alliances, and changing the rules of the game. A recent study by PSI has shown that Indian companies have been successfully using these strategic levers to defend their turf in the face of intense international competition.
The restructuring of a business portfolio is a quick way to deal with the treat of competition. This could include acquiring businesses to achieve scale or exiting businesses that are uncompetitive. In India, several major corporate groups have sold business units that would not be able to compete on their own against foreign brands. There are numerous examples of this in sectors such as food processing, automotive components and consumer durables. The Indian government’s episodic sale of public sector units indicates that it is increasingly focusing on the business of providing public utilities like infrastructure.

In order to become more competitive, several Indian companies have entered new overseas markets, where they might have a superior competitive position against some of the competitive position against some of the competition. While several global Auto companies have entered the Indian market, Indian chains have also found that they can compete successfully in Middle east, Europe, USA, and Africa
Accessing or creating new resources can be another source of competitive advantage. Indian companies that have been able to source funds abroad (either through private equity or public offerings) have lowered their cost of capital besides scaling up faster.

Strategic alliances help greatly in staving off new competition. Several Indian automotive companies have built up relationships with international design and engineering firms to blunt the technological edge that new foreign entrants have.

India Inc. also realized the importance of controlling costs on the path to competitiveness.

Another effective way of gaining competitive advantage is by changing the rules of the game. Some successful companies have done this by taking advantage of the anomalies in the import duty structure to generate monopoly profits through backward Integration Successful companies use both direct and indirect means to improve their competitive standing. Industry lobbies can influence governments to reconsider policies that diminish the competitiveness of Indian companies, such as high interest rates that result from excessive government borrowing. Managing the external environment to gain competitive advantage is difficult, but it is easier to accomplish when done indirectly, such as through an industry lobby or trade association.

Few recommendation for the Indian auto component sector. The major Global strategies can be

(a) Exporting to the large world market. There are economies like Taiwan; Korea etc., which are, export driven economies. Study of the growth of these economies shall give us insight and customization of these strategies to Indian requirements shall be carried.

(b) Foreign Investments/ Merger and Acquisitions.
It is possible by few Indian organizations to make foreign investments in other countries and take advantage of the market.

(c) Joint ventures
Joint ventures help to receive new technology and an opportunity to export at a cheaper cost.

(d) Strategic alliance
These alliances help to take leverages of strengths of each Organization and optimize the benefits.

There are several other strategies that shall be evolved in order to achieve Global competitiveness for Indian manufacturers.



A/Facilitate consolidation among the Indian Automotive parts sector

B/Build on and coordinate existing Govt policies and programmes.

C/Support strategic alliances and net working between and among small and medium component manufacturers to deliver more extensive component system.

D/To encourage development of new products

E/Supporting supplier development and innovative industrial policies

F/ supporting value chain improvements. Improving logistics/procedures

G/ building Industrial clusters

H/ Build stronger partner ship between industry/academe/Government

I/Improving response to Industry

J/Human resource development

K/General improvement in education system.

L/ Relook into local tax structures to facilitate growth

M/ Auto policy more directed towards growth of component industry

N/ Develop policies to encourage new product developments and research.

O/ Develop single window for export oriented units.

P/ Develop time bound strategies between Industry and association and measure achievements.



Q/ build infrastructure to create demand and attract FDI

R/ Organise low cost funding to promote component sector and enhance competitiveness.