This is a follow-up to my previous blog, wherein I want to provide my views on how the world is changing all over and the emerging world finds itself at the focal point.
It was during the 1980’s that the US carmakers were shocked to find out that the Japanese car makers had overtaken them surprisingly in terms of reliability, performance as well as price. The natural conclusion to this phenomenon was favorable Industrial policies and government subsidies. However, the most striking realization for the Americans was that, it was more of business innovation than the peripheral factors. This business innovation was commonly referred as “Lean Manufacturing” and “Total Quality Management”. This phenomenon is similar in other products like Computers, Mobiles wherein the emerging world achieved business efficiency through revamped production and distribution systems. These emerging organizations have proved their competitiveness not only in the home markets but also abroad. We have a significant proportion of MNCs in the developing countries. The best examples are India’s Bharat Forge in Forging, China’s BYD in Batteries and Brazil’s Embraer in Jet Aircrafts, these are easily the best in the business worldwide.
The reason for the rise is that the developing world doesn’t just remain the source of cheap labor, but also economic growth and high quality manpower. We are the source of economic growth because the emerging world represents the majority chunk of the world population with rising spending power with each passing day. We are a source of quality manpower of the continuous investment in education in the past decades, India & China combined produce close to 0.15 Million graduates with professional degrees in Engineering and Computer Science. This is the reason that the biggest and the best firms set-up their most advanced R&D centers in the emerging world. Companies in the Fortune 500 list have 98 and 63 R&D facilities in China and India respectively. Bangalore hosts one of the finest research centers for GE Healthcare and Cisco. Shanghai is the home to the biggest R&D center for Microsoft outside the US.
Organizations all across realize it that it’s not sustainable just to target the Gucci and Audi market segments. They have to learn to appeal to the vast populations present in the second tier cities across the world. However, this does not represent a bed of roses due the lack of many basic amenities in the vast emerging world like Pollution, Infrastructure, Corruption, Piracy, etc. But, what the emerging world has to offer is – POTENTIAL, which compensates for the sea of problems surrounding these countries. The incomes of the population in the emerging world is rising faster than that of the developed world. The market sizes are already significantly higher than the developed world.
The point here is that, we are slowly moving towards a state of Economic equilibrium wherein the economic disparity among the world population on grounds of imperialism and slavery is gradually narrowing. It is perfectly inline with mother nature’s law of equilibrium. It is high time people realize that the emerging nations are not a source of cheap labor, but incremental and disruptive innovation.
Its a Paradigm Shift - Embrace Change!!!
Tuesday, June 29, 2010
Monday, June 28, 2010
Transitions...
Living in the modern day India at the age of 25, I do feel that our lifestyle has changed like never before.
Who envisioned the fact that we would be the second largest telecommunication network containing 584 million mobile phone connections with forecasted growth rates of 26% YoY in just about 20 years after the first non-commercial mobile service began in New Delhi….
Starting from naught some 20 years back and with growth rates of 8 – 10%, the number of homes that have access to cable television in India is close to 70 million. That’s about the population of the Islamic Republic of Iran, one of the more populous countries in the Middle-East.
The facts and figures are very similar and astonishing for Usage of Internet in India, Fuel Consumption, Carbon Emissions, number of Passenger and Commercial Vehicles, etc.
The above fact do re-affirm that we as a country are economically growing leaps and bounds….
The examples of transitions is very evident in the cities of India wherein relationships are different and complicated than probably our parents would have seen. Live-In relationships, Break-Ups, Divorces, etc is not something that is alien to us. One could say its towards the better as people are uncompromising now unlike yester years, or one could say its towards the worse as we’re losing the culture that had held us all through the years of the existence of our civilization. Only certain thing is that that we cannot refuse change!!
I sometimes get amazed by the magnitude of changed that has happened to me intrinsically, and this might be the case with many of us. This makes me question my fundamentals at times.
However, I guess this is the holistic dilemma that each person in every generation faces and we have to accept the transition.
Who envisioned the fact that we would be the second largest telecommunication network containing 584 million mobile phone connections with forecasted growth rates of 26% YoY in just about 20 years after the first non-commercial mobile service began in New Delhi….
Starting from naught some 20 years back and with growth rates of 8 – 10%, the number of homes that have access to cable television in India is close to 70 million. That’s about the population of the Islamic Republic of Iran, one of the more populous countries in the Middle-East.
The facts and figures are very similar and astonishing for Usage of Internet in India, Fuel Consumption, Carbon Emissions, number of Passenger and Commercial Vehicles, etc.
The above fact do re-affirm that we as a country are economically growing leaps and bounds….
The examples of transitions is very evident in the cities of India wherein relationships are different and complicated than probably our parents would have seen. Live-In relationships, Break-Ups, Divorces, etc is not something that is alien to us. One could say its towards the better as people are uncompromising now unlike yester years, or one could say its towards the worse as we’re losing the culture that had held us all through the years of the existence of our civilization. Only certain thing is that that we cannot refuse change!!
I sometimes get amazed by the magnitude of changed that has happened to me intrinsically, and this might be the case with many of us. This makes me question my fundamentals at times.
However, I guess this is the holistic dilemma that each person in every generation faces and we have to accept the transition.
Wednesday, August 26, 2009
Clustering...
Why do you think that all the investment banks are concentrated on the Wall Street? Why are all the revolutionary Technology Companies bunched together in the Silicon Valley? Why are all the Film Production Studios heaped up in Hollywood?
Why are the competing peers are clustered into a close proximity? It is pretty natural to think that the convergence of competitors into a the proximity of each other could lead to the loss of competitive advantage for all. However, This is NOT the case, Counter-intuitive but true!
What do companies gain by congesting into one location? See below:
1. The pool of expertise is easily available for all companies, and the mass availability of skill leads to the reduction of cost per unit of skill.
2. The cost of goods or services sold is reduced as the concentration of all players leads to the suppliers setting up their units near the clusters to gain a source of competitive advantage.
3. Clustering presents a huge opportunity for thriving of a vibrant Ancillary industry.
This means that the clustering of industries leads to better achievement of economies of scale for the competing players.
This is the reason that regions like New York City, London Metro pole, Bombay and many more, have thrived and grown into huge economic powerhouses over time.
Why are the competing peers are clustered into a close proximity? It is pretty natural to think that the convergence of competitors into a the proximity of each other could lead to the loss of competitive advantage for all. However, This is NOT the case, Counter-intuitive but true!
What do companies gain by congesting into one location? See below:
1. The pool of expertise is easily available for all companies, and the mass availability of skill leads to the reduction of cost per unit of skill.
2. The cost of goods or services sold is reduced as the concentration of all players leads to the suppliers setting up their units near the clusters to gain a source of competitive advantage.
3. Clustering presents a huge opportunity for thriving of a vibrant Ancillary industry.
This means that the clustering of industries leads to better achievement of economies of scale for the competing players.
This is the reason that regions like New York City, London Metro pole, Bombay and many more, have thrived and grown into huge economic powerhouses over time.
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