When we talk about big Indian companies, we think of Reliance Group, Reliance Industries, Tata Group, Birla Group, etc but when we look at their reach, they are mostly limited to India.
One of the reasons is the consumer market of India. India is about quantity and not high prices. Every segment is crowded with n number of companies. Let’s take the telecom market for example. At first we had Bharti Airtel, VSNL, MTNL, etc. Later we had around 14 telecom companies. Each company came with highly competitive prices and the end result debt. The entire telecom market is in huge debt. Consumers will never look from this aspect. They will always want economical prices. This is a common mentality across the world.
Its like if company A offers you service at INR 10 and company B offers the same service at INR 100, you are more likely to choose A. Very rarely you will opt for B. Very few companies have succeeded being the B. One such example is Apple. The primary reason for their success is not innovation. Its simplicity combined with high quality and good service. Not to forget the brand value. This can be developed over span of few years with the help of marketing campaigns, new products, etc. For a tyro, it can be a difficult task and hence very few succeed being B.
Another example for this is the airline industry. When it became crowded, companies started facing losses but when few companies went bankrupt due to increasing expenses, companies still in the market saw growth. Jet Airways saw a huge bump in their occupancy thereby generating profits.
- Ego…(कुछ भी करने का था लेकिन जयकांत शिखरे का ईगो नहीं हर्ट करने का था।)
Second reason for failure of Indian companies is their ego. Indian companies are more keen on defeating local competitors. It’s like, if I lose against others it doesn’t matter but I have to win against him (Just like in Cricket World Cup, India has to win against Pakistan even if it loses against others 😜 😝 ).
Most of the Indian companies think locally not globally. They want to be India’s best company not world’s best. When the thinking is such, you experience short term success. When you think globally, you think of diversity among people and customise services as per region and end result is huge profits and the tag of being the best company.
Indian companies want to scale rapidly. They don’t want to start small. Managing a huge business is always difficult than a small one. Why not start small? Capturing attention of masses in a smaller market is much simpler than a larger market. When Indian companies want to scale, they think of reach. Reach is just one aspect. What about other things such as scaling the product line, etc.
Third reason for failure is how these companies measure growth. Everyone wants instant profits. Everyone wants to boast about the numbers (profits, subscribers, etc), the company has successfully generated. This makes the thinking process parochial. They look at short term goals rather than long term. What if the numbers you are boasting about today may not be achievable in the near future? Many companies start their ad campaigns saying “Fastest Growing Company…” but then start experiencing decline. Reliance Communication was one of the fastest growing telecom companies in India in 2007 but what now. They aren’t growing as fast as they were in 2007. Zynga started experiencing rapid growth with Farmville but then failed to capture the market. They too fell prey of the numbers game. Indian companies fail to understand durability of the business. They often forget to ask themselves the following question, “Can this business endure in the future?”.