India offers immense opportunity for making and selling products and services. But Satish Mehra suggests you learn some key facts about India before you open shop there.
It seems that ever more multinational corporations want to operate in India. Swiss power and automation leader ABB, Swedish telecom giant Ericsson, Spanish confectionary maker Joyco, Siemens from Germany, and many others have been explicit about the importance of India to their global portfolio. Yet, research is only beginning on how multinational corporations have mitigated the challenges they face operating in such a unique country. Could your company prosper in India? To do so requires a new way to look at decision making and a strong willingness to customise products and services for this huge marketplace.
A transfer of power
One major challenge faced by multinational corporations is that global management’s perspective about the challenges and the opportunities in India is often quite different from the reality on the ground – leading to differing views on the appropriate business model for India. Situations may arise where the local team feels that they neither have the autonomy to run the local business as needed nor that they have the support from global management to make India-relevant decisions. This hesitance can lead to an increasing communication gap as well as lack of mutual faith and credibility.
Successful companies have been able to create a deeper understanding of the Indian environment and to align organisational objectives by encouraging frequent and high-level interaction between the global and local teams at various levels of the organisation. For example, Wartsila, the world’s leading ship power supplier, has arranged formal transfers of management authority at both mid-management and engineer level between its Indian and Finnish operations. This helped the company to:
- streamline its communications and create organisational alignment
- form working-level relationships that facilitate ongoing work
- create mutual understanding of the systems, constraints, and trade-offs for each group
- empower local management, developing local autonomy and capability.
But what should be the role and structure of local management in multinational corporations? How much autonomy should the Indian team have in strategic and operational issues?
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