The global passenger

IIPM, GURGAON

A buyer in a foreign market, like in the case of India, is lured by the brand image and credibility of the manufacturer. At present, Brand India has yet to make a name in the manufactured products’ arena. Thus, Ratan Tata may find it difficult to sell in the developed market. The McKinsey study highlighted this problem. One Indian manufacturing head admitted that “establishing our brands in key markets is going to be huge challenge.” He added that Indian companies have to do things to overcome “perceptions on performance and quality.” And one has invariably heard that while “it takes years to establish a brand, it takes minutes to blow it to pieces.”

Most of the executives interviewed by McKinsey were categorical that “expansion of foreign sales beyond 20% of total sales for the top five Indian automakers would require more aggressive expansion abroad.” A fifth of them thought that Indian firms have to “invest in more sales subsidiaries abroad.” Over 40% were convinced that “foreign sales growth can only be achieved through M&As.” And almost a third blamed the lack of adequate infrastructure as an impediment in boosting exports.

If you look closely at the Tata strategy over the past few years, he has been able to solve many of these problems. After the Corus takeover, Brand Tata was established in Europe. For once, despite the racist comments, an Indian entrepreneur was looked at with awe and fear in Europe. Ratan Tata has further consolidated his global position by becoming the ‘most preferred bidder’ in the Jaguar-Land Rover auction. If he manages the Jaguar deal, he will have access to high-end models, and also be the owner of brands that are known and revered across the globe. In one stroke, he would be way ahead of other Indians in terms of branding, foreign distribution network and technology.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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