OPPORTUNITIES AND CHALLENGES FOR ENTREPRENEURSHIP IN GLOBALISING INDIA

By: V S RANGARAJAN Posted on: 2008-02-27 ** Print Article ** ** Copy Article ** - Category Feed

Article Summary: Globalisation is the process of removing the territory boundaries of the countries for the purpose of trading and making the entire space as one territory

OPPORTUNITIES AND CHALLENGES FOR ENTREPRENEURSHIP IN GLOBALISING INDIA

A)INTRODUCTION

Globalisation is the process of removing the territory boundaries of the countries for the purpose of trading and making the entire space as one territory

Globalisation process on one hand has created ample opportunities and on the other hand it has posed lot of challenges for the Indian entrepreneurs to face.

Entrepreneur has to perform SWOT analysis to assess his strengths and weakness and to make use of strengths by tapping the opportunities and to overcome the weakness in the Globalisation environment

Strengths of the entrepreneurs determines the scope of tapping the opportunities that exists in the Globalised environment

Lesser the weakness of the entrepreneur more is the power to protect himself from the challenges that he may face in the globalised environment

Benefits

In the process of Globalisation opportunities have grown to a considerable extent to everyone in the world

The entrepreneurs are benefited in terms of technology imports, funds mobilisation, raw material procurement, machinery imports, etc

The Indian exporters are benefited in terms of market expansion, entering and marketing their production in new markets more freely and easily

The Indian importers are benefited in terms of importing products without much hurdles and more economically

The Indian consumers are benefited in terms of availability of quality of products at competitive price, more varieties of products, lot of choices, etc

The Government is benefited in terms of collection of more revenue through taxes and duties

The general public is benefited in terms of better standard of living like better transportation facilities, communication facilities, better services provided by foreign companies , etc

This has created ample opportunities for the Indian entrepreneurs to earn more and grow

Following are some of the Opportunities being utilised / could be utilised by the entrepreneurs

Opportunities exist both for the entrepreneurs with technical skill and for those who do not possess technical skill.

B) OPPORTUNITIES IN THE ENVIRONMENT

The opportunities available are discussed in the following paragraphs

For Technical Entrepreneurs

The following types of business are growing and expected to grow in the globalised environment

Normally this area is tapped by the entrepreneurs possessing technical knowledge
1) Job work for Exporters
2) Ancillary unit to parent companies
3) Production Coordinator / Merchandiser
4) Purchase Agent
5) Consultancy services
6) After sales services activities ( Authorised service agents )
7) Quality testing laboratories
8) Training centres
9) Ware house and Cold storage facilities


A brief discussion on how these activities are gaining importance in the globalised economy is given below

1) Job work for exporters

The exporters with the globalised economy are in the process of increasing their exports by entering new markets and penetrating into the existing markets.
Due to the constraints that they have they may be interested in outsourcing their requirement of production. The entrepreneur can find out from his reliable contacts the units which are interested in giving job work and its requirement in terms of the quality of the product and the quantity and set up factories to do the job work. The entrepreneur has to work in consultation with the unit providing job work from the day of inception of the project viz selection of machinery, quality control methods, etc. In these type of industrial activity the raw material, drawings, etc are supplied by the unit giving job order. No sale of products taking place only execution of job is carried out. The profit on the job work done is determined ( to a considerable extent ) by the unit providing job work

2) Ancillary unit to Parent company

Many foreign companies ( example automobile industry ) have set up their own production facilities in India. In the process of Make or Buy decision in procuring components and to take advantage of the buy decision they are interested in out sourcing components used for production of their final product. Entrepreneurs with required technical knowledge and finance can establish tie up arrangements to function as an Ancillary unit to the parent company
The entrepreneur should have enough working capital funds towards procurement of raw material, packing and forwarding cost, etc. For the extra investment and the risk taken the entrepreneur can expect to earn more profit than the unit doing job work

3) Production coordinator / Merchandiser

The entrepreneur can act as a Merchandiser ( Buyer’s agent ) to the foreign buyer. In the globalised environment bulk buyers are interested in buying products directly from the manufacturers eliminating middlemen. Since the products bought are manufactured by many small scale units they need knowledgeable persons to act as their representative to co ordinate the function of production activity at the supplier’s units in India. Based on the expertise they have they can take up job like production co ordination, export documentation with the authorities, etc. For these type of services they will get more commission than the broker middlemen. Not much of investments required except little investment on computers, fax machine, well furnished office, etc

4) Purchase agent

The entrepreneur can act as an agent middlemen for procuring certain raw materials like agriculture produce, medicinal plants, minerals and metals, etc The production plants of the multi national companies are normally large scale plants and it requires huge quantities of raw material unlike the small plants of Indian companies. MNC companies need agents to facilitate supply of quality raw material regularly without affecting their production schedule To become the Purchase agent for the MNC companies the entrepreneur need to convince that he has the required relationship with the agriculturalist and the knowledge on the product If required he may be ready to make deposit with the company

5) Consultancy services

The entrepreneur can set up office to provide industrial and technical consultancy services to the entrepreneurs. The entrepreneur should establish all the services like market survey, finance, etc

6) Authorised service centres for MNC Companies

Many MNC companies are selling their production to Indian market. Those companies are interested in selling their production to rural market The entrepreneurs can have tie up arrangements with the leading companies ( like SONY, HUNDAI, and others ) to provide After sales service to their customers.

7) Quality Testing Laboratory

The technocrat entrepreneurs can start quality testing laboratory to test the products produced by companies
Four or five technical engineers ( from varied fields like Chemical, Textile, Leather, Minerals and Metals and others) can start a Testing laboratory to test the products produced by industries and act as a certifying agency.

Well equipped testing machines, qualified and trained personnel, un biased systematic procedures followed can provide excellent results

8) Training centres
The entrepreneur can establish training centres to train the technical skills of the manpower with the latest Technology. The entrepreneur can establish tie up with type with the leading companies in getting the required candidates. Only after ensuring the area in which the training is needed the entrepreneur should go in investments on infra structure, equipments, etc For meeting the cost of installation of the machines the company can approach banks.

The varieties of products being imported / exported have increased to a considerable extent and the industry ( domestic and international )needs reliable reports about the quality of the products being imported / exported

9) Ware house and Cold storage facilities

The quantum of raw materials processed and the quantum of finished goods need to be stored has increased in the present environment. Entrepreneurs can start cold storage facilities in villges
For Non Technical entrepreneurs

The scope for non technical entrepreneurs in the globalised environment have also increased considerably.

Based on their strengths they can start any activity from some of the business mentioned below

The activities could be classified into two types

1) Personalised ( catering to one or few companies only )
2) General ( catering to any company in the industry )



Personalised services a) Merchant middlemen
b) Agent middlemen
c) Service providers
a) Merchant middlemen The entrepreneur can consider acting as merchant middlemen for the foreign company / companies in marketing the production of the company. If the entrepreneur is financially sound having the required infra structure show room and the required expertise can consider taking this type of business venture. Even though the risk involved is more compared to other type of marketing middlemen (agent middlemen and service providers) the profitability and the scope of earning more in the long run exists. Entrepreneurs can start retail shops / show rooms / service centres. b)Agent middlemen Entrepreneur can consider acting as an Agent middlemen for the foreign companies in two ways Buyers agent / Merchandiser The entrepreneur can do Merchandising job of procuring ( by doing the job of co ordination of production and procurement ) to ensure quality production and timely delivery of goods as per the conditions stipulated by the foreign buyer. For this the Agent’s commission is paid by the buyer . The entrepreneur is also acting as an consultant. This activity is considered one step more than just broker. In this activity the entrepreneur extends professional expertise To do this job the entrepreneur needs to be a person familiar with the technology of production of the product, influential, and having enough contacts with the suppliers / industries producing the product, having required infra structure to facilitate easy and quick communication, etc. I f the entrepreneur works for an importer based on his capabilities he can consider taking up the job of executing export documentation formalities in arranging the goods getting delivered at the importer’s port Example Merchandisers engage themselves in acting as a Buyer’s agent for Readymade garment importers. Seller’s agent / Merchandisers Some foreign companies may be interested in appointing seller’s agents to market their production in India. Merchandisers job here is to monitor ( or) to assist and motivate the functioning of their Marketing distribution net work / marketing middlemen / company’s marketing net work This way the Merchandisers give suggestions to improve the functioning and increase the sales of the company Entrepreneurs can establish tie up with the companies interested in selling in India The entrepreneurs need to have excellent marketing skills, contacts with the bulk sellers of the product, and others in the field , good financial background and the required infra structure and man power resources. Brokers The entrepreneurs who is not having the required financial strength can consider acting as a Broker for the foreign supplier He can just identify the buyer and can do the sales talk on behalf of the seller and act as a mediator without taking much risk and remain contented with the brokerage commission. c) Service providers Entrepreneurs can consider providing the following services to the foreign companies as well as the Indian companies. Foreign companies are in the process of expanding their markets want to enter Indian market. At the same time the domestic companies are also showing interest to expand their markets locally. With the changes taking place in the Government policies, Procedures followed by Banks, and others the type of services being offered by the old companies have no relevance. The Globalised economy needs changed type of services. The entrepreneur can provide any one ( or ) more of the following services for both the Indian and foreign companies operating in India legal services transportation services warehouse / storage services company auditing services market research study services, etc collection agents ,etc


2) General services

The Entrepreneurs can start Services industry business to cater to many customers
The demand for Services industry is on the increase.

Business like

Travel agency,
BPO
Medical Transcription services
Security services
Building maintenance services
Secretarial services, etc has increased considerably due to Globalisation

C) CHALLENGES TO BE FACED

On One side the globalisation has increased the opportunities of Indian entrepreneurs and on the other it has created a challenging situation to the entrepreneurs of India and if they are not well equipped to face the challenges survival may be come tough for them.
The following are the challenges which are being faced.
1.Technology
2.Scarce of human resources
3.Positive of funds
4.Increased Quality Consciousness of Consumers
5.The Consumers wants more varieties in a product
6.Environmental protection
7.Non-ethno centric Indian Consumers
8.Marketing Middleman Services taken away by foreign Companies
9.Reliable suppliers taken away by the foreign Companies
10.Infrastructural facilities being bought by he foreign companies with high purchasing power

1) Technology

Technology is fast changing .The rate of change of technology is very high.The Investors even in the tiny small scale sectors are not able to predict the future changes that are taking place.
The technology obsolesce makes even the wise investment a wrong decision for no fault of theirs.

Even the technology being adopted by the large scale industries are changing very offend in turn affecting the technology being adopted at the small scale Ancillary level.

The technology adoption at the user point level is also fast changing.

The foreign companies due to sophisticated technology avail the advantages of mass production, improved productivity, improved quality product production, etc which results in reduction in cost of production, increased selling price of the products and profitability of the companies.

2) Scarce of Human Resource

The change of technology, business strategies being adopted by the MNC Competitors, etc demands man power with varied skills to cater to the requirements of the changes taking place.

Since this changes in the external environment are very frequently happening the task of man power
Planning becomes difficult for the entrepreneurs. The availability of trained man power for the sudden changes taking place makes the human resource planning jobs more difficult.

3) Paucity of Funds

The minimum level of operation requires to cope with the changing business scenario has increased considerably resulting in ploughing of huge additional capital. The funds are required for upgrading the technology of the machines, towards increased working capital, training of manpower, etc
Entrepreneurs who cannot mobilise the require funds will find it difficult in the environment.

4) Increased Quality Consciousness of Consumers

This globalisation process has really helped the customers of both the underdeveloped and developed countries. Because of the increased competitions the customers are able to get improved quality products at reasonable price. They are able to achieve higher value realisation for the cost that they incur. Their expectations on quality parameters of the products has increased considerably.

The Indian entrepreneurs / manpower employed by them generally lack quality culture and to attune to the requirements for the present day consumers, needs lot more good production practices to be followed.
The entrepreneurs should inculcate the practices of production of good quality products.

This change in attitude cannot be achieved overnight and needs time and effort.

5)The Consumers wants more varieties in a product

The consumers are left with more choices .They want more varieties. They are offered with more varieties by the competitors from abroad. The Indian entrepreneurs with their constraints in terms of technical aspects, financial aspects ,professionalism etc., are unable to provide more varieties like their competitors.


6)Environment protection

The foreign buyers are very particular in buying eco-friendly products to protect the environments in which they live. After the removal of bilateral agreements buyers are free to buy from any country to satisfy their needs.

The manufacturing technology being adopted by the Indian companies for manufacturing products does not suit production of eco-friendly products .Also ,the Indian companies lose the cost competitiveness in the market if products are manufacture in the eco-friendly manner.

Thus the Companies of other countries capable of producing eco-friendly products with minimum costs enjoys the export markets.

7)Non-ethno centric Indian Consumers

Indian consumers preferred to buy foreign goods then the goods produced in their own country.
Especially goods produced by the developed countries like U.S.A,U.K,Japan and other countries
is liked by the Indian consumers. This goods have already created and positive impact among the Indian consumers and its entry to Indian markets will be very easy compared to Indian companies which wants to sell its products in the developed countries markets where the brands / products/companies may be new and not relished by the consumers their.

The Indian consumers do not bother very much about the industries of India as long as their requirements are met unlike the consumers of other developed countries.

The Indian companies need to work very hard to retain its market share which is likely to be grabbed by the foreign companies very easily.

Also Companies from countries like China,Korea and other countries trying to supply to Indian markets with cheap costs challenging the Indian industries.
Under the above circumstances the Indian entrepreneurs have the challenge of convincing their own country consumers to sell locally and also put in lot of effort in removing the mental block of the foreign buyers who are ethno centric in behaviour to sell Indian products.


8)Reliable marketing middlemen taken away by the foreign Companies

Because of the better strength of the MNC’s the efficient Marketing Middlemen have started marketing products of MNC’s and the Indian entrepreneurs are finding difficult in appointing marketing middlemen to market their production.

9)Reliable suppliers taken away by the foreign Companies

Similarly the Indian companies are facing the problem of getting reliable raw material suppliers because they are taken away by the MNC’s having high financial power

10)Infrastructural facilities being bought by the foreign companies with high purchasing power

The foreign companies have started buying the immovable properties / infra structure facilities in India. With their high purchasing power they are able to purchase land and building by paying more price to the sellers than the prevailing market price. The Indian entrepreneurs with their limited purchasing power are unable to bid more than the foreign buyers to acquire any fixed asset for the company towards developmental activities.

D) STRENGTHS AND WEAKNESS OF THE PROMOTERS

Having understood the dynamic environment the Promoters should consider matching their business functional capabilities / strengths and weakness like marketing distribution network, technical capability, liquid funds availability, local contacts with the Government authorities, etc before identifying the business to set up. As we know ‘One man’s food is another man’s poison’ business which is suitable for one promoter may not suit the other.

E) CONCLUSION

From the above discussion we are able to understand that SURVIVAL OF THE FITTEST is the essence of the present day environment

The entrepreneur first has to understand his strengths to tap the opportunities that exist in the environment

The entrepreneurs have to adopt any one of the following strategies without delaying to avoid incurring financial loss

Join hands with the MNC’s
Equip yourself to fight with MNC’s
Withdraw from the race now itself

Article Source: http://www.upublish.info

About the Author:
V S RANGARAJAN
EDUCAIONAL QUALIFICATION B TECH, MBA, M PHIL, ( PH D ) EXPERIENCE INDUSTRIAL CONSULTANCY 18 YEARS INDUSTRY 3 YEARSTEACHING 5 YEARS

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