The process of globalisation is getting sharper, and this has resulted in unprecedented levels of growth and interdependence. Old developmental models, based on divides between rich and poor countries, have become obsolete. The future will show whether there will be further divisions, or global growth will emerge more inclusive and allow businesses to address global challenges and improve prospects for a more equitable world.
Emerging economies may play the role of economic globalisers, as they have started to contribute immensely to global growth and are even seen by some as possible engines of the world economy. A transformation is taking place in the global financial architecture. Western financial institutions in distress are looking to Asia for support. Oil exporters are making surpluses in excess of $300 billion per year, and, given their stuffed vaults, sovereign wealth funds are playing an important role in the global financial sector. All these moves are being watched carefully by the discerning, since every decision in the public domain has something to reveal. Information sensitivity has risen sharply, and signs of new thinking, analysis and innovation abound that can revolutionise business.
In India, the IT industry is thinking afresh to overcome its current set of challenges. India?s small car sector has stunned the world with Tata Nano, a vehicle that has 34 inbuilt product innovations, showing what R&D can still do in such an old industry.
From here on, investment in R&D will form an important business priority to meet challenges of not only growth, but also inclusiveness. Both are intimately linked in the emerging market context. Keen not to be left behind, global automakers are contemplating the use of India?s skilled labour to make the country an export hub. Global players such as Hyundai, Honda, Renault and Ford want to participate in this small car revolution, something dismissed as ?undoable? till Tata came courageously along with a wonder product, the benefits of which are now thought to outweigh the strains on the world?s energy reserves.
In other ways, too, businesses are being forced to shift direction by true competition. Intense ?core? business focus is out, expanding horizons is in. Thinking outside the box (the old business model) is becoming more than just a clever phrase to repackage the same old thing. Mahindra & Mahindra (M&M), for example, is looking at the Belgian automotive gear company VCST for a strategic partnership of an entirely new kind that addresses a part of the automotive value chain that can be value-re-engineered, thanks to globalisation.
For India to make the most of all opportunities, infrastructure constraints need to be eased. Indian management is still being dragged down by the rigidities and inefficiencies that make doing business in India difficult. The huge sum collected by Reliance Power?s recent IPO is an indication of how desperately the people of this country want power deficits to be bridged. They understand what holds the country back.
The information era is upon us already, and India finds itself at a unique stage of its emergence as an economy that can actually make the most of it. These moments are rare in history, and there is widespread awareness of this. Customer sensitivity is crucial to the success of inclusive business. In aiming new products and services at customers, the need for fresh insights will be ever more pressing. Old patterns of business operation need not be of much use.
There is talk of a slowdown in the Indian economy, but the macroeconomic framework in India, part-managed by RBI, remains conducive to the deployment of business strategies that are in consonance with the new dynamics of globalisation.
The author is with Krishna Securities. These are his personal views