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HBR选读:What U.S. CEOs Can Learn from GM’s India Failure  

2017-06-19 02:26:44|  分类: 领导力与管理学 |  标签: |举报 |字号 订阅

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HBR选读:What U.S. CEOs Can Learn from GM’s India Failure

 

 

by Vijay Govindarajan and Gunjan Bagla
 

June 15, 2017

 

 

General Motors, once the world’s largest car maker, has decided to stop selling vehicles in India by the end of 2017, since it considers its India operation to be not profitable. The company re-entered a liberalizing India in 1994, after abandoning the country in 1954. Like its American compatriot Ford Motor Company, GM’s market share in India has always been in the single digits, but recently Ford has reported rising monthly sales of 36% in India.

A few years ago cosmetics company Mary Kay also exited India, blaming local issues for its problems. While India now claims to attract more foreign direct investment than China, American companies have not been as visible as European and East Asian players. Is there something wrong with the India opportunity, or are American companies being unnecessarily restrained about the world’s fastest-growing major economy? We think it is the latter, and that it is correctable with the right approach to India. After all, we have seen dozens of large American players become successful in modern India. Boeing, Cisco, Coca-Cola, Cummins, Dell, General Electric, Google, HP, McDonald’s, and PepsiCo are examples.

Based on our experience in India and with companies such as those named above, we think that GM’s sales failure in India holds five lessons for American CEOs across many sectors.

#1 — Consistent Leadership Over Time Matters in This Market

India is a complex country and has a unique mix of Asian and Western values. Understanding it takes time and focus. For a period of 14 years, General Electric had the same American expat running the India operation, Scott Bayman. But General Motors had nine different people lead its India business in 21 years. A motivated executive needs about three years to become fluent in India, yet GM’s average CEO only lasted a little over two years. It does not matter whether the leader is a local Indian or an expat, in our experience, but consistency in India requires a steady hand at the top.

#2 — Local Leaders Need as Much Autonomy as Possible

Having local autonomy is key to succeeding in India, since its market structure is fundamentally different from the West’s and therefore demands extreme customization. Large American companies have complicated structures that often require international leaders to have regular face-to-face interaction at headquarters; this can take away from being in close touch with the Indian market. To succeed in India, an American company either needs to have robust electronic communication processes at the top management level or must be willing to set its leaders in India free of the bureaucracy at corporate headquarters, so that they can address local issues and opportunities.

Local autonomy makes important decisions possible. PepsiCo developed an entire line of snack foods, Kurkure, just for India, while Whirlpool designed its washing machines to attract Indian buyers who preferred hand washing. Western Union partnered with India’s postal service to deliver payments across the country. One of us (Gunjan) counseled a top video game company to develop collaboration processes so that engineers in Bangalore and California could work on one integrated team over a 12.5-hour time zone difference; improvements were suggested equally by team members in both countries.

#3 — Competition Is India-Specific, and Your Strategy Needs to Be, Too

In many sectors, American entrants to India encounter new competitors, which might be local or foreign players. For example, Suzuki, known in America for its motorcycles, holds 47% market share in India’s car market. Homegrown automotive companies such as Tata Motors can be formidable partners or competitors. In this mix, an American company must develop a unique, India-specific strategy and product road map. Dropping products designed for other markets into India does not work beyond the short term.

Even more important, local firms can become global competitors. Mahindra & Mahindra, a local Indian firm, has risen to challenge John Deere in the worldwide agricultural tractor business. Hyundai has succeeded in India precisely because it developed lower-priced subcompact cars tailored to the needs of the Indian middle class.

#4 — Strategy Also Needs to Be Based on Volume and Scale

Success in India requires a commitment to volume and scale. Unlike Bentley or Rolls-Royce, GM is a mass-market car company in the U.S. To be successful in India, GM must participate not just in the top of the economic pyramid but also in the middle. That is how you build scale and volume that allows the company to leverage assets like dealerships.

As recently as 2015, when Mary Barra, CEO of GM, committed to investing another $1 billion in expanding Indian operations, the company seemed to understand the impact of scale. However, it has now decided to pull back its investment and run its Talegaon factory in western India, to make cars primarily for the Latin America market. GM will keep its technology center in Bangalore. But we won’t be surprised if good managers at both of these locations soon find more-promising opportunities at employers that are more committed to the Indian market.

#5 — It’s a Long Game

Companies such as PepsiCo and Boeing took the long view of India, and have reaped profits due to persistence as much as vision. Over time, India’s car market will be among the top three, after China and the United States. Even more crucial, the future of mobility will be shaped by three disruptive forces: electrification, shared ownership, and driverless technology. India has the promise to be a low-cost laboratory in which to experiment with new business models. A future GM CEO will have to re-enter India both to leverage its huge consumption market and to tap into the country as a source for global innovation. But Indians have long memories, and GM’s last two forays into the country will not be forgotten. The cost of re-entry will be much, much higher in the future. Success in India is a marathon, and while giving up in the middle may seem like a good short-term tactic, it is not a good long-term strategy.

A business-friendly government, simplified indirect taxation (in the form of a national good and services tax), and soon-to-be-ubiquitous smartphones are forces that will transform and grow the Indian economy dramatically over the next decade. American CEOs need to take heed of these five lessons and embrace engagement with India. Ceding what will soon be the most populous country on the planet to Asian and European competitors could have disastrous long-term consequences.

 

 

 

以上内容摘自:

https://elb.hbr.org/2017/06/what-u-s-ceos-can-learn-from-gms-india-failure 

 

 

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