Vision has been defined by some as the setting of bold and audacious goals. Prof. Prahlad has indeed set India some challenging goals for 2022, one amongst them being ‘30 of Fortune 100 from India’. Given that today not a single Indian company makes it to the list and only 6 feature in the top 500, it is indeed an audacious goal. At the same, it is not unachievable. Five of the top 20 global companies in 2008, by market capitalization, are already from emerging markets. Fifteen years to 2022 is a long and adequate time in today’s world for Indian companies to break into the Fortune 100.
One of the major reasons cited for Indian companies not being large enough compared to global peers is the relatively small size of the Indian market (the US pet food market size is as big asIndia’s entire FMCG industry, etc.). The trick, however, will lie in identifying opportunities that can leverage our inherent strengths and the rapid economic growth that we are experiencing. By 2022, India would be the third largest economy and will contribute nearly a billion strong workforce to the world. The market should provide adequate (volume) scale to create globally leading business models. Even today, the Indian mobile market is next only to the Chinese, in terms of size, and is growing faster than any other market worldwide. An additional challenge inIndia is to consolidate what are typically highly fragmented and unorganized markets. Leadership, in the true sense, in the home market is essential to achieve the scale that the Indian market can provide. Simultaneously, we also have to be prepared to access and compete in international markets if we truly want to achieve global leadership.
The key task for Indian firms is to leverage the power of the billion in creating globally competitive businesses. In order to eventually become globally leading, we need to first focus on benchmarking ourselves to the best in the world, on service level, cost and productivity measures. This is important for Indian companies so as to even remain competitive in the domestic Indian market which is seeing the entry of several international players. Tata Steel became the world’s lowest cost steel manufacturer several years before it commenced its global ambitions.
Being globally competitive will not be sufficient to achieve leadership. Successful firms lead through innovation, backed by open organization structures & culture and significant investments in research. We lag on both counts, more so on the latter. We have relied far too long on licensing technologies, reverse engineering and services models; now is the turn for us to create products, technologies and business models that will be replicated elsewhere. If over 80% of global incremental mobile adds are expected in emerging markets, who better to lead the implementation of profitable, low cost mobile business models than Indian operators? Why cannot India, a broadband starved country, drive the adoption and lead the growth of WiMax and other wireless broadband technologies? Thus, Indian companies are better advised to seek and succeed in opportunities in other growing, emerging markets rather than rush to the large but static markets of the developed world.
The next few years will be at the same time challenging and full of opportunities. Several markets, including USA and UK, are reeling from economic slowdown and financial crises. Consequently, most MNCs are seeking to grow into India (and other emerging markets) making these markets more competitive. We have to defend our domestic turf, not by creating entry barriers but by taking on global players head-on. At the same time, weak global markets are throwing up interesting acquisition opportunities at attractive valuations, opening up new markets in USA and Europe. This will enable our companies to also enter and take the fight to the global markets. Indian companies will have to master this block (at home) and tackle (abroad) strategy to win in the emerging world order.
So, can we get to 30 of Fortune 100 by 2022? My bets are in favour of us succeeding. BCG’s New Global Challengers report has already identified 20 Indian companies that have the potential to challenge and change the world. We have to just find ten more.
(A version of this article appeared in the Outlook Business June1-14, 2008 issue.)
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