How an MNC took Indians for a RIDE… literally.
It is natural that each and every one of us want an advantage over the others to do better than the rest. We grow up with the thought that the advantage is something that we need to work towards developing. It comes with handwork, Learning, Continuous learning, thinking differently, challenging the status-quo, pushing our own assumed limitations. Striving harder than anybody else.
In India, apart from the social challenges particularly for the people coming from non-business communities (For the benefit of non-Indian audience) India has a very in-famous Verna system, which classifies humanity to four categories. Among them, ‘Vysya’ is the trading community or Business community. Among these communities, it is common to look down upon some one from the community who ends up with a job (instead of being an entrepreneur). This is broad community is spread widely across India and have different specific identities regionally. Some of them have a great system to help each adult member of the community in becoming an entrepreneur, while the rest provide a healthy eco system for their community member to be an entrepreneur. Birla, Bajaj, Khaitan, Biyani, Bansal and many such second names may be easy for one to identify with. But anyone coming from the other communities, do not have such an advantage and they face a lot of difficulties socially.
As we get beyond social challenges for Entrepreneurs, largely it is believed and expected to have a level playing from the system. That is where Entrepreneurs have multiple unknowns to encounter. Policies, Compliances, Market, Customers, Competition, Resources, Infrastructure.
Most times Entrepreneurs are trying to build the “Competitive Advantage” so as to create the entry barriers for others. There are larger companies who are also at it. Some of them build their ‘Competitive Advantage’ thru’ their access to Politicians and Bureaucracy. Nothing wrong, if one can. But When does the Competitive Advantage become ‘Unfair Advantage”?
When the Government and its machinery aline to favour One Enterprise against the interest of the Citizens or all other Enterprises. It does become “Un-Fair Advantage”. What makes it worse is when the Citizens, oblivious of the fact patronage such Brands and Products.
There were Brands, There were companies in a sector, which made some Products not great, they were a start, The very automotive sector was in its infancy in India, some entrepreneurs dared to change the status-co. Today many of those brands don’t exist. It would be quite unfair to blame the only surviving Brand for their failure. They made far too many mistakes. A few of the erstwhile companies in that space took almost 30 years to make a mark in the Industry and make a mark globally. Staying Power helped them sustain and also not to take away the credit, the people who were running them were smarter and better than those who failed.
Look at the one who survived thrived and grew at the cost of all others. That company, with all its “Competitive” advantage was importing over 26% of the components from outside of India even till 7–8 years back (after 30 years in India). Needless to say, company enjoyed the Tax and Customs exemption all thru’ which was not available for other players.
Would it be a surprise? if you were to learn that, the company files lowest number of Patents in the Country compared to all multi nationals and Indian Automobile companies in the country.
Inspite of enjoying a market share close to 50%, they are not able to create value for its Indian entity.
How could anyone be surprised, when they sold their products with the promise of a service network every 25 kms across the country. It was almost to say, our Product will fail for sure but we have some one to fix it just around the corner.
It is audacious, when, after being in India for more than 30 years,taking all the benefits at the cost of so many other Indian Entrepreneurs and Enterprises, the company gets 15 years of TAX Holiday. A Startup gets 3 Years.
Top it all, the company manages to force shut a plant against the interests of its own employees and the Government supports the move.
Indian listed entity morphs itself to be the sales agent and allowing the parent to take all the TAX benefits and Profits to its Global base. Reminds me of a song “How BAD can I be?”
Few changes from the Originally published at https://www.linkedin.com on August 1, 2016.