New strategic methodology

Traditional, strategic management processes are making way for new, strategic methodology that is more inline with contemporary management practice.

A new class of company is arising in the world today, a group of emerging challengers that are becoming important players in both developing and developed markets around the globe. The advent of the internet and communication has already redefined business across the world.

The 1990s were an epoch-making decade –one that not only closed down a millennium, but also brought into vogue a new technology considered by many to be revolutionary in human history. The workplace and working lives of people have been radically transformed by the internet and also by other net-centric innovations that came in sequel.

As the desktop gateway to the world, the internet changed the very concept of work and business. It became a catalyst for new business models, competitive strategies, and organizational restructuring. The internet brought to the surface a new business landscape, new pressures and new rivalries.

Companies based in rapidly developing economies such as Brazil, China, India and Russia have to cope up with more new pressures and new rivalries. These economies yearned to expand overseas armed with ambitious leaders, low costs appealing products and services and modern facilities. The dramatic surge in low-cost communication technologies, internet and economic reforms has spurred the trend.

The Indian market itself has been a strong enabler for the creation and growth of globally ambitious companies. The rapid growth of the economy has meant that domestic companies have an opportunity to become quite large on the home turf that is achieved, the focus shifts to the foreign markets for new challenges and opportunities.

Tata Steel, Aditya Birla Group and ONCG Videsh are a few examples of Indian companies that are going global after gaining a strong foothold in the domestic arena. Not content with a small pie, Indian companies have also started assuming leadership positions in lucrative developed markets. Many have established beachheads in other rapidly developing economies.

Bharat Forge is now the world’s second largest forgoing company. Ranbaxy Pharmaceutical is among the top ten generic pharmaceutical players in the world. Wipro has become the world’s largest third party engineering services Company.

Incidentally, Indian firms can also access significantly more capital than in the past. The increase of foreign direct investment (FDI) inflow by 151% in the year’ 06-07 over the last year, reiterates the growing rate of return on investments offered by Indian economy. A number of companies are underleveraged and can therefore borrow sizable amounts of cash, which can be deployed for acquisitions.

Much of the focus is on acquisition, globalization is largely being driven by organic growth either by exporting from India or by establishing international operations, in some cases through joint ventures.

Indian companies are also showing an equal preference towards the low risk approach of setting up marketing or distribution operations along with the relatively higher risk approach of acquisition or joint ventures with competitors, suppliers or distributors. In addition companies such as Bharat Forge have used merger and acquisition (M&A) activities to obtain immediate access to vital technologies.

The new competencies and expanding business ties have brought enormous advantages to the business world there is a flip side to the story. In the highly volatile, electronically networked global business environment where any form of long term stability is the exception to the rule, traditional strategic management processes are being questioned.

Clearly emergent technologies are not only impacting on the business environment of modern day public and private sector business institutions, they are in effect changing the very way that things are done within and outside the organization.

Technology has also brought to the core as variety of cross cultural management relates issues. The extreme volatility of the business environment confronting most enterprises has brought many challenges. Companies can no longer insulate themselves under subsidies or shy away from competition – which is set to be international in nature.