Competitiveness the buzz word - in the global economy

By
M. Subramanian
Faculty in Finance
RL Institute of Management Studies
Madurai, Tamil Nadu-625022
Phone : 0452-2690623/614 (O) 0452-2564660 (R),
E-mail : madurai_subbu@yahoo.co.in

Introduction

The metamorphic changes in the world economic situation are bearing upon all economies. We are all being compelled to operate within a global economic framework, which is being fundamentally altered. India too has to meet the challenges being thrown up by the changing market environment.

Indian economy stands today, more than ever before, at a crucial turning point. It is in the midst of the process of macro-economic stabilization and has simultaneously undertaken measures to bring about structural adjustment, thus paving the way for a sustainable economic growth with better macro-economic balance. The emphasis of the reform program is to improve the economic efficiency and competitiveness of the system, by strengthening the market forces and helping the business and industry to reduce costs, upgrade technology and improve quality.

In early 90's the policy environment in India has undergone a dramatic change under the New Economic Policy (NEP). The NEP seeks to impart a greater element of competition. Competition however is not the sole answer. The very fact that some industries in India are more efficient than others, indicates, that competitive environment by itself may not be adequate. Firms need to react appropriately. Ultimately, an efficient industrial structure can be built up only if the firms provide the necessary response. As has been said, firms, not nations, compete in international markets.

So far, a fair measure of success has been achieved in regard to economic reforms, especially in the matter of controlling the rate of inflation, achieving price stability and in reaching a comfortable level of foreign exchange reserves. Firms in India must develop a global vision and design appropriate strategies to carve out a niche in the global markets. This is possible only when they develop and market products, which meet international standards.

Modern management has become a dynamic process seeking to align firms' internal resources with the external environment. The extent to which a firm is able to attain its objectives, depends critically on its ability to understand the opportunities presented and constraints imposed by its environment and respond with appropriate policies at the corporate and functional levels. This is summarized in the well-known strategy of SWOT. Only increasingly the environment that is relevant is not domestic but global. Successful corporate strategy therefore, rests on the interplay of the competitive advantage of firms and the comparative advantage.

For example, to quote on the under-gone dramatic changes in the world of economy - look at the formation of single European market, unification of Germany, economic reforms sweeping across the East European countries, changes in erstwhile USSR, rising economic power of Japan and, last but not the least, the gradual opening up of China offer enormously challenging problems as well as opportunities to international Business and Industry.

In this LPG (Liberalisation-Privatisation-Globalisation) era to become an integral part of the global system, nations are opening up their economies at a rapid rate, which were hitherto protected from world markets. The removal of artificial barriers to trade has and should made it possible for innovative companies to go in search of new markets across borders with improved efficiency and greater competitive strength.

The Real Global Competition - Where we the Indians are???!!!!

* An interaction between business and industry in a global perspective has become imperative because of the need to upgrade regional technologies and maintain the competitive edge in the international markets. Today's consumer is more demanding than yester-years'. He is not content with the second best in technology and is reluctant to pay for a product or a service just because it comes from a particular region or a country. This, understandably, has led to business and industry across the world to make use of technologies and resources worldwide to upgrade their products and services.

* India, unfortunately, has been slow to foresee the accelerated pace of growth in international trade. In fact, in postwar years, the proportion of world trade to world output has progressively increased. But, somehow, in our economic planning we failed to take not of this significant reality. We planned on the assumption that world trade of the type of goods in which we have comparative advantage had reached its optimum and did not have much of a future. Our policies were inward-looking and the ultimate test of efficiency, viz., to compete effectively in the international markets, was not available to us. The result is that we today an industrial infrastructure which is technologically less efficiency than that of most newly industrialized countries of the world.

* Times have changed. In international affairs, it is not possible to reverse the tide of history. Global processes that have set in would inevitably follow their course, and to go against them would only be at our cost. If we have to progress and keep pace with the global developments, there is not other alternative except to upgrade our technological capability, industrial efficiency and competitive strength in the world markets. It is only on the basis of technological expansion and industrial efficiency that India can increase its exports and attain competitive position in world markets.

* Competitiveness is a state of mind. In times past, we had a feeling that everything we produce is sub-standard. We have to shed this inferiority complex. During the sixties, India and Korea had the same per capita income. But to South Korea's income is more than 10 times than that of India while it does not have industrial resources of the kind India has. The message is loud and clear. We must get out of the mentality that we cannot meet world standards. We have to think afresh on many fronts. We have to bring ourselves to believe in our tremendous strength and potential for growth. Our mind set should be that we are second to none and that we have tremendous creativity and potential for growth. We have to make our products and services internationally competitive. This is a test, which India's business and industry can contribute more than the Government.

* India has vast natural and human resources at its command. Our people are enterprising and have more than average technological IQ. There is no dearth of managerial or technical innovators in the country. In fact, many Indians are working in other countries and contributing significantly to the industrial output of these countries. What then is holding us back? Why have smaller countries with much less resources out placed us in the development process? Countries like Hong Kong, Singapore, and Malaysia rank first, second and third by way of their competitiveness in the international markets while India ranks ninth out of the ten newly indstrialised countries.

* With out natural resources and technical experience, we certainly have the capacity to become an economic entity to be reckoned with. We have the capacity to be economically and industrially strong. What we need is to have updated technology, and an infrastructure to utilize such technology to the optimum. We need to have a better share of the world market in terms of our exports than what we have today. This means, in the first place, that we have to have exportable goods and services that are acceptable in an increasingly competitive world market. Across the world technologies have taken great strides, and have been developed in different countries depending upon the resources and the expertise available. India's business and industry today face the twin challenges of utilizing updated technologies and competing in world markets with products and services that are good as the best in world.

Conclusion

* We are now in the process of restructuring our economy at a rapid pace. State controls and regulations that we had till recently had outlived their utility, and we have overhauled the system. We have recognized that Indian industry has come of age and Indian entrepreneurship needs to operate in a competitive market to find its feet in adulthood. Large sectors of industry have been thrown open for foreign investment and tariff restrictions have been lessened. These steps have been taken make India's internationally competitive.

* Globalisation and competitiveness is not merely a choice before business and industry; it is more of necessity in today's world. We have before us the example of Japan, which has become the fastest-growing-grown economy in the world today. With almost no natural resources, Japan has emerged as an economic Super-power just because its industry functions on the premise that its market is global, and that it has to produce a product which is better than the best to stay as the number one globally. Now, China has become a key-neighbour competitor for India.

* Competitiveness is the key for success. Our mind-set should be to develop the competitive advantage of India, as a nation. Striving for and maintaining competitive position in world market is the major challenge facing us. Indian business and industry should respond to the challenge with a new commitment to compete successfully in the rapidly evolving global environment.

References / Sources

Dr. C. Rangarajan-Ex-Governor, RBI, Foreword-Competing Globally  - Book-Allied Publishers Ltd.
Prof. C. Neelamegham, Preface-Author - Competing Globally  - Book-Allied Publishers Ltd.
Text of inaugural address delivered at the International Conference on "Global competitiveness: Challenges"-Dr. Manmohan Singh

About the Author

M. Subramanian, Faculty in Finance, RL Institute of Management Studies, Madurai, Tamil Nadu-625022, Ph. No.0452-2690623/614 (office) 0452-2564660(res); email id: madurai_subbu @ yahoo.co.in.
The author has 8 years of teaching experience in management subjects and 4 years of industrial experience. The author has published Course materials on 'Management Accounting' and 'Financial Management' as an in house publication (private circulation only) for benefits of students.
Authors' Qualification: B.COM, BGL, MFC, MBM, MBA, (M.Phil-Management)

M. Subramanian
Faculty in Finance
RL Institute of Management Studies
Madurai, Tamil Nadu-625022
Phone : 0452-2690623/614 (O) 0452-2564660 (R),
E-mail : madurai_subbu@yahoo.co.in

Source : E-mail

 

B A C K

 

Important Note :
Site Best Viewed in Internet
Explorer in 1024x768 pixels
Browser text size: Medium