In the present context of liberalization in the Indian

economy, what are the key factors that need

attention from practitioners and policy-makers to
make Indian industry globally competitive ? What
is the role of management institutes in this changing
context ? What are the major gaps in management
research in India and what directions should it take
in future ?

The views of chief executives and leading

academicians on these three themes are featured in
this special Perspectives issueofVika1pa.lt is hoped
that the discussion in the following pages will help
generate a meaningful debate on these important
topics
.

Vol. 17, No.4, October-December 1992


Competition, according to Rahul Bajaj, is the
greatest teacher for improving products,
reducing cost and improving quality. If
Indian industry has to become truly
internationally competitive, he feels its
performance with regard to the three
parameters of products, cost and quality
needs to be strengthened.
Rahul Bajaj is Chairman and
Director,
Managing Bajaj Auto Limited,
Pune.
The primary role of an industry is to satisfactorily meet
the needs of its customers — in India and abroad. This
alone can ensure a company's long term survival and
prosperity. To do so successfully, a company needs to
maintain and improve its competitiveness. In Indian
conditions, having functioned in a protected market
and a shortage economy, the first step, though this will
have to be quick, is to become internally competitive —
to be soon followed by becoming internationally com-
petitive.
Competitiveness is largely a function of a
company's relative performance with respect to tech-
nology, i.e., its products, their cost, and quality. (There
are other areas like distribution arrangements which
are not discussed here). Any company's success will
essentially depend on its performance with regard to
these three parameters. All other factors—providing
employment, exports, contribution to the exchequer,
support to socially important activities—though
important, are spin-offs dependent on a company's
success in performing this primary role.
Challenges
Before discussing how a company in the engineering
industry can perform this role, let us look at some of the
challenges facing Indian industry:
1. Due to the way we had to function during the last
40 years, we arc not internationally competitive.
We have to catch up with our counterparts in the
West, in Japan and the NICs in Asia, Latin America
and Eastern Europe.
2. To the extent we need foreign capital and technol
ogy, the recent liberalization moves of the govern
ment are helpful. On the other hand, foreign
capital and technology arc also being wooed by
all these other countries in the developed and
developing world.
Why should a foreign company come to India? 1
believe that, by and large, what India can offer a
foreign company arc four things:-
a) A large market
b) A cost advantage due to low wages
Vikalpa
 c) A market economy
d) Tradition of entrepreneurship and skilled man
power.
(We also talk of democracy, independent press, etc.
These arc important but we. have our problems
including law and order problems in Punjab and
Jammu & Kashmir).
Hence, if an Indian company wants to be not only
internally but internationally competitive and ex-
port a fairly large proportion of its output, it should
be manufacturing a product for which the market
in India is large enough to enable world scale
manufacturing capacity to be set up. Otherwise, its
cost of production and its capacity to spend on
R&D and international marketing will be
inadequate. Also, the products should be such
that they have, relatively speaking, a high labour
content.
3. Another challenge our country faces is the heed
not only to join hands with a foreign company but
to be able to form a strategic or competitive al
liance with a foreign company to facilitate exports.
Maruti-Suzuki is an outstanding example. The
reason for mentioning this as a challenge is that
due to the four advantages mentioned above
which India possesses, some foreign companies
consider a large Indian company as a potential
competitor and a threat. They do not want to have
an alliance with such a company unless they have
a controlling interest in the company. If at all they
want to have an alliance, it is with relatively
smaller companies which will be under the foreign
company's influence.
4. We should recognize that we arc only at the begin
ning of the changes taking place in the world—
the main changes arc ahead of us.
5. We have to overcome recessionary conditions
through which we have been passing. Industrial
growth in 91-92 was negative. During the current
year, it is not likely to be more than 3% to 4% even
with a good monsoon. Unless we contain inflation
successfully, our international competitiveness
will suffer. The only way to counteract inflation
would be further devaluation of the rupee. How
ever, this will make imports more and more ex
pensive. Also, a weak currency is not the sign of
a strong economy.
6. There arc also certain other challenges which the
world is facing. For instance, the situation in the
former USSR is a cause of concern to the interna-
Vol.17, No.4, October-December 1992
tional community—nuclear arms, civil war and
emigration. The former USSR was India's big trad-
ing partner. What will bo the position tomorrow?
Similarly, our position with respect to Europe 1993
is also a matter of concern. How will the new
regional groupings become part of an integral
global trading system? Where will India stand in
this respect? Will the Uruguay Round of trade
negotiations succeed? This can affect our exports,
specially to the developed world.
7. Environmental considerations.
8. Finally, the challenge of time compression—we
cannot continue to do things sequentially—these
need to be done simultaneously.
These arc some of the challenges facing Indian in-
dustry specially if some of us have to become truly
internationally competitive.
Now, let me examine the three elements of competi-
tiveness in some detail.
Prerequisites for Competitiveness:
Product, Cost and Quality
During the last 45 years, we could not achieve success
in these three areas because the system allowed com-
panies that did not fulfil these requirements to continue
to exist because of controls on both en try and exit. Those
that did achieve success in these areas were not auto-
matically permitted to expand, which would have
facilitated their further improving their competitive-
ness.
The dramatic and fundamental changes in the in-
dustrial scenario over the last few years, specially
during the last year, have resurrected the primacy of
this fundamental role. The barriers to entry and to
expansion have come down and operating freedoms
have been enlarged, for example, through making im-
ports, though expensive, essentially automatic, special-
ly for the engineering industry.
Product
Product is the starting point of a business and the final
outcome of a company's efforts. Products that attract
customers arc the only long-term basis for competitive-
ness. Competition between companies and the rising
expectations of the consumers lead the customers to
continuously want novelty and "more for less." The
changed scenario has increased customer choice. There-
fore, the speed with which products will have to change
will increase.
5
 How does an Indian company improve its derived from a cost advantage. This can be seen
product capability? The key factor, I feel, is
development TELCO
in and Bajaj Auto which increased their
management's
the recognition of the importance of share
marketduring the '80s in the face of competition from
this and then invest in the product
task the
world's best companies. In the past, quality and
capabilities
developmentof its people on a long-term have
cost been seen as inversely related. However, the
basis. production attitude and systems have laid this ghost
lean
Technology alliances, whether strategic or
rest
to
tive,competi-
arc important, both in developing
. To transform ourselves from slow changing
capabilities
internal and in reducing the time required to do
However,
so. the organization should be conscious ganizations
or- to having not merely the. desire but
these
that alliances only complement its efforts. They arc, the
ability to be customer-driven is going to be the
in
the long-run, not a substitute for its own biggest task of this decade. There arc many routes
single
efforts. achieve
to this transformation. I shall refer to just one
Reverse engineering, after identifying the needs Bench-marking. Bench-marking is an approach that
—
the of
market and scanning the international products
is
open minded but disciplined. We should evaluate
technology,
and can accelerate development of
selves
our- against our competitors on the three
capabilities
internal and reduce the risk of failure. Germany
of product, cost, and quality and diagnose where
parameters
did earlier and Japan did it till a couple of decades
this differences
the are the largest and their cause. We have
There
ago. is no need for us to be apologetic about to develop and implement a plan to catch up with
then
it. competitors
our
Cost and Quality . The largest gaps exist in the product
Cost and quality arc the result of efficient area,development
in the quality of our supplier base and in
design
product and manufacturing methods. Product design relations
our with our suppliers. We also have a long
low
for usage of materials and ease of manufacture, to
waygo in systematically developing the skills and
manufacturing
the process employed, make and of our people. These weaknesses arc perhaps a
careers
policies,
buy and productivity and quality of the work reflec-
tion of our inability to work with the future in
are key
force determinants of cost and quality. Japanese Managements
mind. should be judged by the long-term
panies,
com- specially in the automotive industry, have portunities
op- they create and the capabilities
significant
made improvements in the management of develop
they in their
aspects,
these now referred to as 'lean production.' organizations.
production implies that a company should need less
Lean Conclusion
everything
of to manufacture a
product. There arc no magic answers or ready made formulae
It consists of three integrated aspects of achieve
to the goal of being competitive. Each
organization,
philosophy, and tion is
organiza- unique and solutions have to be found
techniques. that uniqueness. While working towards the goal,
within
• A company has to accept the philosophy that
can
we take comfort from the fact that achievement
con tinuous improvement is possible and that resulting
and recognition arc perhaps the most
philosophy
this is shared by the company, its
motivation
potent at all levels of any organization. The
employees, and its
of an organization has to only create conditions
leader
suppliers.
• A company should build an organization based ducive to achievement and build an appropriate
con-
on group working, be it in the plant, product ture
struc- for recognition and
ment or in the supply chain. For this, it is
develop reward.
Competition is the greatest teacher for
to develop appropriate attitudes and skills
necessary improving
products, reducing cost, and improving quality.
employees
amongst so that they breathe this
petition
Com- may hurt us in the short- term but this is
• Aphilosophy.
company may adopt various techniques route
the to sustained growth. During this decade, we
like Kan-Ban, Poka-Yoke, JIT, aface demanding but exhilarating
etc.
We have to, however, keep in mind that the effort journey.
merelyto implement the techniques, which has been
the
focus of most efforts, is likely to
fail. With products which are meant to sell in
volumes,
large significant competitive advantage can
be
Vikalpa
6