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CyruS MiStry
May 30, 2010 2011 December 11,

Subbaraoed!

Ratan Tatas successor

D. Subbarao Governor, Reserve Bank of India

Sinking rupee and stubborn inflation are derailing the economy. Does this man really know what he is doing?

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B u s i n e s s

i n d i a

december 11, 2011

The myth of indian globalisation

Global strategy framework
Globally global Innovation drives economic growth and globalisation Global vertically drives innovation through integrated integrated structure deployment of global resources particularly of human capitalGlobal investment and Global structure
Strong Globally integrated company

it is not, from a global benchmark perspective. it is, but at a slow pace not commensurate with available resources. This is despite the pioneering effort of aditya Birla who ventured out four decades ago in southeast asia and replicated the indian success story. The aditya Birla group is an excellent example of what we term as a global horizontally integrated company. Lakshmi Mittal acquired a company 20 years later also in southeast asia but with a global mindset. His approach created a truly globally integrated company, arcelorMittal, the largest steel enterprise worldwide. We believe that globally integrated companies (gic) create true globalisation and have defined the characteristics of four types of global organisations:

is india globalising?

High

Standardised products, R&D, high collaborative strong global supply-chain, virtual networks tele presence, They strive to enrich the communities they serve (CSR) collaborative technologies, corporate social responsibility virtual team management with a global mindset and they care for the ecological environment.

They do it with a genuine intent and have Home country centric; Good local adaptation, discoveredsupply-chain, good local that the workforce engagement and multi-domestic operation, retentionmanagement with these activities. program also improves investment in host countries These policiesfocus on for outsourcing, concurrently enhance global Low mindset of these corporations. international sales illustrates the success pattern to local High culture of the Aditya Birla group (Globally horizontally Global culture integrated company) and two truly globally integrated companies, ArcelorMittal and ibm. The data presented is from our own research findings:

International International market The following table focus Low

Why a gic?

Strong Global horizontally adaptation integrated

The myth of Indian globalisation

The success pattern of the Aditya Birla group (Globally Horizontally Integrated Company) and two truly Globally Integrated Companies, Arcelor Mittal and IBM

Global strategy framework

Strong global structure

Global vertically integrated

High Global structure

Standardised products, strong global supply-chain, collaborative technologies, virtual team management Home country centric; good local supply-chain, program management for outsourcing, focus on international sales

Globally integrated Global investment and R&D, high collaborative virtual networks tele presence, corporate social responsibility (CSR) with a global mindset Good local adaptation, multi-domestic operation, investment in host countries

Globally integrated company

Global mindset Global opeartions Revenue

Focus on India story 1969 $30 billion

Think Global Act Local 1989 $78 billion

Global mindset institutionalised 1940 $100 billion 90% Global

Top 99% Indian 80% Global management

Low

International International market focus Low

Strong 1.5 per integrated Global horizontally Globalindias share of world trade is about Globally cent vertically integrated adaptation integrated despite huge advantages inclusive of population

Why india must increase pace Global organisation examples of globalisation?

Global culture

High

to local culture

What is a globally integrated The company? myth of Indian globalisation

The success pattern of the Globally integrated companies (Aditya Birla group gic) operate (Globally Horizontally Integrated Company) and two truly with a global mindset and optimise costs for IBM Globally Integrated Companies, Arcelor Mittal and movements of goods and services by leveraging global resources of capital especially human capital, global markets and global supply chains. Global mindset Global opeartions Focus on India story 1969 Think Global Act Local 1989 Global mindset institutionalised 1940

Cisco P&G and demography. it will again be a land of missed IBM Boeing Intel opportunities Apple if indian companies are not in GE Nokia Oracle the race for excellence in technology,Toyota Microsoft productivity and creating competitive value for Coca Cola customGM, Ford Bollywood ers byAMD global benchmarking. TheirGoogle domestic Suzlon Mittal Lupin Tata Wal-Mart market shareDr. Reddy will decline, growth prospects will Mahindra diminish,RIL and the advantages Aditya Birlaoffering of size Group Wipro McDonald ICICI Infosys L&T economies of scale which reduce cost of providPolaris Starbucks HCL Dabur goods and services worldwide will not be ing TVS Bharati RPG available. innovation drives economic growth HDFC SBI and globalisation drives innovation through NDTV IITs, IIMs deployment of global resources particularly of International Global horizontally integrated human capital.

Global structure

Global culture

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The myth of Indian globalisation

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december 11, 2011

Challenges for business leaders and policy makers

Business leaders must have a vision of achieving, say, 30-50 per cent of revenue and profits from operations outside of india. We suggest: u Launch a major initiative to cultivate a global mindset in the organisation; u Hire and retain global talent by creating a multi-cultural environment; u implement global best practices/benchmarks in products, services and operations; and u Leverage international finance by forming subsidiaries in overseas locations and joint ventures domestically and internationally. Policy makers must create a level playing field for indian companies by providing infrastructure, taxation and regulatory reforms in legal and accounting systems, industrial health and safety standards. We suggest: sustain and increase leadership in talented manpower of engineers, scientists and the work force through maximising funding of education and learning at all levels. There is a crying need for improving infrastructure, roads, ports and airports, communication, internet, digitalisation and energy, especially clean energy. China has shown the way. To support innovation, government must earmark highest possible resources for research in public and private institutions. To tackle corruption recent moves to enact the Lok Pal Bill are a good start, given the huge scams which have had worldwide publicity. Bringing back the unaccounted money stashed abroad is a good beginning but policy makers must address the root cause that creates the land grab, mining or similar scandals.

Tata group have started demonstrating the success of true globalisation and innovation by successful management of mergers and acquisitions. hiccups, Global mindset Global in spite of theThink Globalthe big-ticket acquisitions Focus on mindset of Jaguar/Land Rover, Corus and Tetley by Tata, India story Act Local institutionalised ssangYong Motors by Mahindra and novelis by Global 1969 1989 1940 the aditya Birla group are to be admired. Huge opeartions collateral advantage is that indian managers are
Revenue $30 billion $78 billion $100 billion Top profitability management

The success pattern of the Aditya Birla group (Globally Horizontally Integrated Company) and two truly Globally Integrated Companies, Arcelor Mittal and IBM

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gics with a global Global enable higher growth, 99% Indian 80% mindset 90% Global

and sustainability. Following chart is our understanding of some global organisations as per the criteria of global strategy framework presented earlier:

Global organisation examples

Global vertically integrated
Intel Boeing Apple Cisco Oracle

Globally integrated
P&G Nokia IBM GE

Global structure

AMD

ICICI Dabur HDFC IITs, IIMs

GM, Ford Bollywood Suzlon Mittal Lupin Tata Wal-Mart Dr. Reddy Mahindra Wipro Aditya Birla Group RIL McDonald Infosys L&T Polaris Starbucks HCL TVS Bharati RPG SBI NDTV

Toyota Microsoft Coca Cola Google

International

Global horizontally integrated Global culture

inculcating the global mindset. and we close with the following two quotes that show the power of a global mindset for creating growth, profits and a sustainable organisation. And we had to sell our credentials, we had to sell the group, we had to sell India. The India storyso I think the India story is much better known the world over. I think India, as a nation is far more respected. As a people who are a very enterprising lot. And I think it is the sheer spirit of enterprise that India brings to the table. Kumar Birla, chairman, aditya Birla group (Cnn interview april 8, 2011) I am a global businessman, from Indian roots of which I am proud and our company has as much right as any other to make an offer for another company in a global industry. Lakshmi Mittal, in an interview with The Times of India (July 2006)
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 and a V i s H d a H i Y a , dnaGlobal network (www.dnaglobalnetwork.com, e-mail: info@dnaglobalnetwork.com)

Cultivation of global mindset

Global mindset is the cultivation of a thought process which enables the global company to successfully navigate through national boundaries and cultures by being inclusive of people adding knowledge and deeper understanding of international markets. Creation of the global mindset depends on the business philosophy primarily of the ceo and, to a large extent, the top management team. ibm, P&G, Tata and unilever, though at different stages of globalisation, are excellent examples. investing in continuing education and training to enhance abilities for creating corporate global citizens (cgc) has to be a deliberate strategy. indian businessmen are slow in developing trusting relationships and the importance of having a globally diversified team is not perceived. Fortunately, a few organisations like the

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