Dr. Rojers Joseph is a faculty in the Strategic Management Area at IIM Rohtak. He has nearly 14 years of experience in academics. He has also worked in industry for a short duration. Besides, he has 5 years of academic research experience at IIT Bombay as a Teaching Assistant. He was awarded the SJM Endowment Scholarship during his doctoral studies at IIT Bombay. He has also worked at IIT Bombay as a research associate. He has conducted Management Development Programmes for participants from several private and public sector organizations. He is a reviewer for conferences and journals such as MIPS and IJIPM.
1. Greetings from Public Relations Cell, IIM Rohtak. Please tell us something about your doctoral research paper.
The focus of my research was basically on digital business strategy and business innovation. From the past couple of decades, owing to digitization, there are tremendous changes happening in this industry. When it comes to content reproduction and distribution, the changes are manifold. That’s one of the reasons why I wanted to study this. If you look at the publishing and content industry, there are different ways through which you can save cost- through digitization. Cost of reproduction will almost be nil, once you have the master copy. There is minimum cost of inventory. You do not have a large distribution cost as well. Books, particularly, have 15-20% cost of distribution. If you have digitized content, the books can be sent directly to the customers by-passing these intermediaries. Fourth is the transaction cost, on both sides – companies looking for customers and vice-versa. So what motivated my study was, even when there is content digitization in higher education- the text books, reference books, the journals etc., there is little price reduction. Particularly the journal prices have gone up- even after digitization, which is unjustified. I focused my study towards higher education- text books, reference books and journals. I was looking for reasons for which prices were not coming down. The publishers do not want to break the whole ecosystem of publishing. There is lot of trust deficit in the industry- piracy, competition etc. And text books have a very inelastic demand. The result is, there is no reduction in prices.
2. What is the reason behind Patanjali’s spectacular and unprecedented growth in the past five years? What strategies worked in favour of Patanjali in its battle against established FMCG Giants?
Patanjali was established in 2006. But if you look at the history of this company, it was started in 1995 as a small pharmacy by Acharya Balakrishna and Baba Ramdev. Though Baba doesn’t claim any stakes in the company today.
There are several reasons for the success of Patanjali in the Indian market. One, the P’s of marketing. Apart from the 4 P’s or the 7 P’s, a ‘P’ which now is very crucial is personality. Baba Ramdev’s personality has actually got reflected in Patanjali’s products and transformed the brand. He became quite popular in the last decade through his yoga activities and the channel Astha. It was thus an uncanny mix of yoga and Ayurveda, that made the products of Patanjali sell very fast. Also, now people are becoming very health conscious. The Indian population is sitting on a kind of time bomb; everyone is suffering from chronic diseases like diabetes, high B.P., lung problems etc. Actually, there is a concept called playing with the lizard brain of the people. You attack the brain stem, which is associated with fear and aggression- the most primitive characteristics of human brain. Otherwise, there is no reason for people buying mineral water bottles in the United States. Because tap water is as clean, if not more, as the packaged drinking water bottles.
Apart from the two factors mentioned above, there are several others like the media attention Baba Ramdev gets, the Indianization of the products etc. that has led to the success of the company.
3. How essential do you think is disruptive innovation essential for the survival of a company?
Disruptive innovation is indeed very important these days.
We need to understand what exactly disruptive innovation is. Let me take you back to my research paper. Content digitization is also a disruption, because hard book to e-book is, basically, a disruption. Disruption will happen, whether you like it or not, so if you are doing it, it is good for you, otherwise someone else will eventually take the plunge. The economy today in a knowledge economy, a digital economy where information is a product, it is no more a tool. This actually was adapted by a company like IBM, they had gone almost bankrupt, when they came up with providing solutions. Companies today, no longer sell products, they offer solutions. Had they not gone for it, it is difficult to imagine how they could have survived.
Disruption can be looked at from different angles. One is new market disruption like iTunes. iTunes, which Apple created, is for everyone. You do not need an iPhone to download songs from iTunes. And you can download a particular song from an album at a cheaper price, instead of downloading the whole album. Then you have low end market disruption based on low cost products and services and convenience. For example, SouthWest airlines or our own Indigo.
Disruptive innovations are all about cheaper, simpler technologies, which existing players do not value.
4. Coming to International Business, what do you think are the factors behind a company going abroad?
Let me take an example. In the early 1980’s, GE wanted to go global to achieve economies of scale. The US market was flooded with products from the Asian manufacturers. Now, GE wanted to compete in other markets as well. And later they realized that it’s not only for markets that they need to go global, but also for resources. Resources of probably the best quality could be bought at a cheaper price. In fact, GE is one of the first Fortune 500 companies to have established an R&D facility in India. These days, companies don’t want to put all their eggs in one basket. Also, there is a transportation cost. So companies have to establish their manufacturing units in the markets where there is high demand. For example, the cement industry has a very low profit margin and it would be a loss making proposition to manufacture cement in a particular country and sell it elsewhere. These are some of the basic reasons why companies want to go global.
5. Africa is now emerging as a huge, untapped market. But the political situation in almost all Central African countries is unstable. What measures do companies take before venturing into these markets to ensure minimum losses in case a conflict arises?
If you look at the African market, it is indeed growing. Coming to the concerns, you may call it institutional voids, not only in Africa, but also in other developing economies. Institutional voids are in terms lack of proper regulatory mechanism. Also if some turmoil happens, who will protect your assets? There are no stable governments, also there are civil wars raging in many countries. Some of the costliest cities to place your expatriates are in Africa. And that is due to the security concerns. Because if you want to place your expatriates there, you have to pay huge sums for security. Still the natural reserves, example oil, and other business prospects lure the companies to go there. The companies go for kidnapping and ransom insurance. Also if there is a bilateral treaty between the host and the home country, that is certainly going to help. And businesses also go for some kind of association with local political leaders and NGOs. It’s also good to have local partners. Take the example of Walmart. Walmart had several partners in various parts of the world. These approaches provide you with local support, and distribution networks.
6. Microsoft is the top MNC operating in India. Nestle, P&G, Coca-Cola etc. have stood the test of time as well. While there are several others who could not make it big here and had to pack up. What according to you is crucial for a company to succeed in the Indian market?
A one-word answer to this would be adaptiveness. Adaptiveness to the Indian market in terms of the government regulations, market dynamics etc. In India, infrastructure is always a problem. For example, if you look at retail, it does not have full access to the Indian market yet. We still do not have FDI in retailing. That, in itself is a problem. And even if you get entry, how would you get access to the rural markets? Therefore, a unique approach has to be taken by companies, see what Unilever did. They involved women of the villages as their distributors and created awareness about the company’s products through a programme called Shakti Amma.
Take the example of Cummins, one of the major players in probably the second largest market for trucks in the world- India. In India, drivers use river water as a coolant for the radiator. If you manufacture an engine using the same standards that you use in the US, it would go for a toss anytime. But Cummins understood that this is highly an unforgiving market where drivers overload trucks, use dirty river water for cooling and at the same time expect the same longevity. They adapted well, and has thus far done well in the Indian market. Look at the companies that could not make it big here- Toyota, Sony, Apple. Apple has had a late realization. Probably they were playing a waiting game, thinking that India would become a developed market in 10 years. But that is not going to happen in another 20 years, for obvious reasons. Still there would be demand for moto bikes, mobile phones and other technologies.
7. How does exposure to International Business help students who are pursuing different fields of management?
International Business is just as any business, it is across functions. Today, you will find more often than not that businesses are present globally. Even companies like Nirma have gone global and diversified into cement and other industries. Any company which recruits graduates will look at their technical competence, adaptiveness and leadership skills. And adaptability is very important these days, due to globalization. Feeling at home in a foreign environment, ease of acclimatizing with the host country culture and people are the sought-after qualities. Every company that recruits you, at some point of time, will send you abroad. Look at GE, which adopted this approach very early. From ethno-centrism, they moved to geo-centrism very fast. We used to talk about cross functional teams (CFTs), now we talk about cross border teams (CBTs). People from different countries work as a team and coordinate. Learning International Business is surely going to help you align yourself with the companies’ global approach.
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