India Inc. & Globalization DR. JAGDISH N. SHETH Charles H. Kellstadt Professor of Marketing Emory University

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Forces Shaping Global Economy AGING OF AFFLUENT MARKETS WHY FOCUS ON EMERGING MARKETS WORLD IS FLAT COLLAPSE OF COMMUNISM ECONOMIC PRAGMATISM

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Economic Growth Engines for the World WESTERN EUROPE U.S. / CANADA LARGE EMERGING NATIONS 1800s 1900s 21st CENTURY

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April New Measures of World Economies The new measure is Purchasing Power Parity (PPP) U.S.$12.4 trillion China$ 8.2 trillion Japan$ 3.9 trillion India$ 3.7 trillion Germany$ 2.5 trillion U.K.$ 1.9 trillion France$ 1.8 trillion Italy$ 1.6 trillion Brazil$ 1.6 trillion Russia$ 1.5 trillion Source: CIA Factbook THE BRIC REPORT 2005 (estimated)

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April New Measures of World Economies (cont.) China is the second largest economy based on PPP index and just surpassed Japan. It will be the largest single economy by the year India is the fourth largest economy, and it will become the third largest economy by the year BRIC Report (Goldman Sachs)

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Repositioning of India, Inc. FOCUSED GLOBAL BUSINESS INTEGRATED GLOBA ECONOMY New India DIVERSIFIED DOMESTIC CONGLOMERATE ISOLATED DOMESTIC ECONOMY Old India

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Global Evolution of a Company Global Evolution TIME SUBSIDIARY BASED GLOBAL INTEGRATED GLOBAL COMPANY EXPORT BASED GLOBAL

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Global Evolution of a Company (cont.) Export Based Global –French Champagne, Rolex watches, Indian diamonds, Granite, Leather goods, Textiles Subsidiary Based Global –General Motors, Siemens, Wipro, Infosys, Mahindra & Mahindra, Tata Motors Integrated Global Company –Toyota, Microsoft, Mittal Steel

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April What Makes a Truly Global Company or Brand? A truly global company or brand loses its country of origin identity among all its stakeholders: customers, employees, suppliers, investors and communities. A brand or company becomes truly a global brand or company when the whole world embraces and takes ownership without country of origin bias. –Olympics, Internet, MTV New technologies and products often become global faster than brands or companies. –Television, Mobile phones, Broadband

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Why are the Heavyweights of India Lightweights Abroad? Domestic diversified business Lack of global mindset Lack of scale Lack of capital Lack of global strategy Government rules & regulations Ethnocentric culture Limited experience in international marketing

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Global Repositioning of India Inc. HighLow High PREMIUM MARKET VALUE MARKET HIT & RUN COUNTRY (Emerging Economies) PRICE MARKET Low Quality Price India Inc. must aspire and globally compete in Best Value as well as Premium markets.

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April What Will it Take to Succeed? Global mindset Global acquisitions & integration Quality reputation Differentiation through design & innovation Nurture worldwide talent & leadership Global branding & positioning Global segmentation & targeting Worldwide supply chain

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April How Can Marketing Play a Key Role in Globalization of India Inc.? Identify targeted geographies and segments based on market attractiveness. Develop competitive brand positioning. –Price –Value –Presitge Prepare entry plan including market access.

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April How Can Marketing Play a Key Role in Globalization of India Inc.? DifferentSimilar Different Similar Customer Resources Product & Promotion Adjustment Adjust All 4 Ps of Marketing Extension of Marketing Price and Distribution Adjustment Customer Needs Extend or adjust the marketing mix depending on customer needs and customer resources. Manage local suppliers. Marketing is the most outsourced function.

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April How Can Marketing Play a Key Role in Globalization of India, Inc.? Is the acquisition for growth or transformation of marketing? Prepare a blueprint for integration of acquired companies. Integration will impact branding and product rationalization. How to integrate outside suppliers of marketing services, ad agencies, public relations, direct marketing, web based marketing and merchandising. BOTH ORGANIC AND INORGANIC OPTIONS FOR GLOBALIZATION WILL REQUIRE MARKETING TO BE AT THE HEAD TABLE.

©2006 Dr. Jagdish N. Sheth. All rights reserved. India Inc. & Globalization April Conclusions India is destined to become a major economic power in the 21 st Century. The heavyweights or India are lightweight globally primarily because they lack global mindset, global strategy, scale and capital. However, India Inc. will aspire to compete globally. To be globally competitive, Indian industry needs to invest in quality reputation, global branding, design & innovation, worldwide talent and global supply chain. Marketing will play a key role in identifying the right target market and competitively positioning the companys brand. If the strategy is inorganic growth, marketing must integrate brands and products as well as outside suppliers of marketing services.