Handling Challenges

The trends are visible that India is moving towards a more challenging regime where micro, small and medium enterprises may have to fight for day to day survival. This article presents some trends that show where the world is moving:

Increasing Foreign Competition for Factors of Production

List of brands in top sales number across all sectors clearly demonstrate that directly or indirectly they are already here in large numbers across all sectors.

  • Automobiles
  • Banking & Investments
  • Consumer Durable
  • Fashion & Accessories
  • Food Products
  • Infrastructure
  • Insurance
  • Information Technology
  • Logistics & Warehousing
  • Personal Care
  • Real Estate Development
  • Telecommunication

Almost all top private companies in these sectors have more than 50% foreign shareholding or they work mainly for foreign companies. FDI in multi-brand retail does not make any difference because foreign companies are already here with indirect routes.

In reality, MNCs have first right to all factors of production viz..land (including natural resources), labour and capital. Foreign competition is big challenge

Increasing Burden of Compliances

With increasing computerisation in government departments, the government is asking for more information. Now, there are more than 1000 compliances in over 70 laws applicable to an enterprise. The cost of compliance is actually more than profits of small company. Complying with ever changing legal requirements is big challenge.

Shortage of Skilled Managers

Well qualified young man from business families are seeking jobs in MNCs resulting into shortage of good managers. Engineers and MBAs from most of the technical institutions are not employable and those who are skilled, work for MNCs. Getting skilled managers and retaining them is big challenge.

Technology Obsolescence

Indian enterprises work on decades old production technologies whereas new entrepreneurs are coming with better technologies that consume less energy, less space, less cost and are more productive and environment friendly. Replacement of old technology is big challenge.

Educated Consumers

Gone are the days when everything could be sold at place of business or alternate remote areas where people are less information. Now people compare products online, get feedback, read reviews and do all research before paying anything. Ensuring better quality, price and timely delivery is big challenge.

Building Online Reputation is Tough

Search engines and social media play key role decision making of educated young people. They search internet before buying the product. Online advertising is a costly affair because you have to incur huge investment across 100s of websites and advertisement networks.

Further, you have to deal with anti-competitive practices. You may not even know what information is spread about your business. So, protecting reputation is big challenge.

How to Deal with Challenges

It is not easy. At minimum, you have to do what your large competitors do. 

  • involve more partners (you are not enough to compete with large companies)
  • go to different consultants (you are intelligent but you may get more ideas if you ask someone else)
  • take bank loans (your past savings are not enough)
  • hire fresh talented engineers and give them freedom (you can use IT tools to control things)
  • use information technology tools (your diary is good for secrets but business needs more information)