The challenges of growth

Citation

Sardana, G.D. (2013), "The challenges of growth", Competitiveness Review, Vol. 23 No. 4/5. https://doi.org/10.1108/cr.2013.34723daa.001

The challenges of growth

Article Type: Guest editorial From: Competitiveness Review: An International Business Journal, Volume 23, Issue 4/5

Global business environment provides an opportunity to companies to grow and gain competitive advantage. The genesis of growth is in competition to excel in quality, cost, flexibility, delivery and customer service. The processes involved in the growth of any economic activity are complex. The start of the business views it as a responsive supply chain in the launch of a product or a service hoping to register an impressive entry in the market. A certain organic growth takes place in the initial years. Competition enters and challenges begin. An entrepreneur starts looking for strategies to capture a specific segment of market following concepts of cost leadership, differentiation, creation of niche customers, focus, core competencies, etc. In competitive market environment, the market share is gained following an efficient supply chain. As global markets become more attractive more competition is faced. A solution is sought in economies of scale, technology, innovation, and new product development. To this classical growth scenario several challenges of new inputs creep in and these include challenges of climate change, energy, fresh water, ecological balances, diverse pollutants, and falling reserves of natural resources. The economic growth cannot ignore the quality of life, particularly of the poor and vulnerable sections of the society. The composite growth has to be examined, therefore in economical, social, and environmental dimensions.

Management literature points out several theories of growth. Some of these are mentioned in the lead paper of this issue. Lehtimaki and Karintaus refer to: the integrated network, both internal and external perspective; and competitive advantage resulting from the “organizational advantage”, i.e. the connections within the firm. In the contemporary scenario, it is also mentioned that the growth has to ultimately find roots in social capital perspective to establish its credibility. Deshpande and Neeta Baprikar, authors in this issue refer to the increasing interdependency of enterprises and working together as imperatives to the growth. The clusters are known to have faced the challenges better because they have used collective wisdom and supported each other.

This special issue of the Competitiveness Review provides a balanced mix of cases facing various aspects of challenges of business growth. It presents revised and expanded versions of selected cases presented at the International Conference on Business Cases ICMC2011, organized by Birla Institute of Management Technology, Greater Noida (India), and School of Public Policy, George Mason University, Arlington, Virginia (USA) on December 1-2, 2011 at BIMTECH campus. The dominant theme among these cases is identifying challenges of growth from an emerging turbulent global economic environment as well as from in-house factors. The papers discuss situations arising out of changed dynamics in an external or internal environment and highlight steps for the growth of institutions.

Hanna Lehtimäki and Katja Karintaus in the first paper of this volume explain how companies grow and gain competitive advantage in the global business environment. This paper endeavors to advance our understanding about the functioning of intra-organizational social connections in creating organizational advantage. Much of the research on social capital in MNEs considers the information flow to and from the headquarters as decisive in gaining the benefits of operational efficiency. The challenge in building organizational advantage in MNE’s lies in the difficulty of managing social connections and in measuring the efficiency and effectiveness of the connections. The authors discuss that besides efficient reporting and sharing of explicit knowledge, social capital is also built on the rich variety of social interaction that allows for sharing tacit and complex knowledge. This paper presents a study of three multinational enterprises each of which had set strategic initiatives to exploit customer knowledge more effectively and to build a better understanding of emerging customer needs. In all of the studied MNEs, an increase in global sales was the desired outcome. The focus is on the structural dimension of social capital, and the empirical data comprises interviews and social network surveys which were conducted in all three organizations.

Bala Krishnamoorthy, Smita Mazumdar and Chandrama Mohanty next discuss the Future Group, a leading Indian company in the retail and related areas like finance, insurance, media, leisure and entertainment, real estate, brand development, and logistics. The group operates over 149 store outlets across 85 cities and 60 rural locations in India occupying more than 15 million square feet of retail space. Led by its flagship company, Pantaloon Retail, the group has its main office in Mumbai and employs over 35,000 employees. Over 220 million customers visit the stores every year and the merchandise is sourced from over 30,000 large, medium and small manufacturers and suppliers spread over the country. The Future Group has been opening more retail outlets in tier 2 and tier 3 cities in India and strengthening its position in the urban metro areas. These expansions have burdened its resources and the company has borrowed massively. There has been an eight fold increase in borrowings over a five year period from 2006. Servicing this debt has eroded the net profit. The study highlights steps for further expansion and sale of its non-core businesses. The authors’ analysis reveals that the focus is now shifted to better inventory management, improving sales at their existing locations, developing supply chain capabilities, and sourcing.

Mukund Deshpande and Neeta Baporikar in the next paper highlight a case of successful businessmen who fruitfully formulated business policies at Pune to expand their business globally, utilizing skills of the local populace. The authors point out that the world has grown more mutually dependent. Meeting the challenges brought on by globalization, formulating businesses policy, its implementation at national and international levels have become a matter of developing management competencies. Society’s expectations of the role of business towards environment and community relations are changing rapidly. To address these fresh demands, business has to initiate major actions, such as the global compact. Auto-components manufacturers in Pune cluster situated in the western state of Maharashtra is the oldest and has the presence of well developed mechanical, electronics and IT service industries. As a result, competitive edge is maintained in the development over others. The authors stress that policy designing for business is quite crucial as one instrument may not be able to address all the challenges and may call for two or mixed instruments. Besides, a single instrument is not usually enough to stimulate the long-term growth. As a result mix of instruments selected need be adjusted accordingly. Business policy relies on how business model is designed and essentially meant to show how the firm is going to generate revenues and make the spending for the business.

Michael R. Peterson next reports an action research project using appreciative inquiry (AI) as a methodology for developing an understanding of the socio-technical systems required to effectively understand and manage congregant attendance at a church. The author uses institutional theories that historically focus on social systems explained by a dichotomy between ceremonial behaviors and instrumental behaviors, where ceremonial behaviors tend to be static and past binding, and instrumental behaviors tend to be dynamic and future oriented relying on the will, knowledge, potential and creative aspects of the tool. Instrumental behaviors have been found to be essential for growth and progress of society, and may best be described as our ability to harness technology (i.e. materials, tools, skills, knowledge, techniques, etc.). AI supported identifying core values that contribute to ceremonial and instrumental behaviors effecting attendance at the targeted worship service. The findings have direct relevance to institutions of commerce and business. The conclusions of the study confirm that the growth needs abilities to harness technology and its broad components of materials, skills, knowledge.

The case from Ruchi K. Tyagi and Nijolė Vasiljevienė analyse how Lelija, is a joint stock Lithuanian garment company partly owned by the government realized that being a global organisation, unethical labour practices would reflect badly on human resources management, the company, and the reputation of the country as a whole. With a track record of more than 50 years since soviet era, Lelija employed up to 3,000 people with about 84 percent of its production exported to the West. Most of the Lithuanian company’s business activities reflected both the soviet approach to business and the capitalist system. The case writers have effectively attempted to evaluate Lelija’s case by grasping the deep-laid peculiarities of the attitude of the whole society in relations to ethics and business. In the analysis of social facts knowledge also consists of already existing ethical norms and values derived from practice, definitely designated, explicitly articulated and unambiguously evaluated. The authors describe events that are presented from a certain viewpoint. The major parts of information sources for the Lelija’s case are competing daily newspapers of Lithuania and their web sites. The authors conclude that social realities associated to employment are relations between employers and employees, a labour agreement, working conditions, tasks and compensation for its fulfilment. Irrespective of contradictions of the subjective interests and opinions that accompanied the reality of poor working conditions at Lelija, media outlets has provided a verifiable information about violations of labour laws and payment of fines as restitution.

Natural disasters cannot be forecast. Our present knowledge about the natural disasters such as Tsunami is inadequate to provide any tools of forecasts or evening signals of pre-occurrence. As a result, the disasters come unannounced and we often find ourselves unprepared. However, what is normally expected is our preparedness to start the recovery process without loss of time and assist in mitigating the losses. The paper provides a wake-up call in this context. A number of stark findings stand out which point an accusing finger in mismanagement of recovery process. The next paper in this volume is a study conducted by G.D. Sardana and W.S.B. Dasanayaka six years after the Tsunami stuck with devastating effects the micro, small and medium scale enterprises (SMEs) in Galle district of Sri Lanka. They place several issues in the process of recovery in a proper perspective. With emotional tempers associated with heavy damages cooled down a study of this type can provide useful information to synthesize our knowledge about the effects of natural disasters of this type on economic activity in several ways. First, this study attempts to identify types and extent of losses; second, it ascertains the type of benefits, their adequacy and sufficiency for the affected micro and SMEs from various parties; and third it evaluates problems and difficulties faced by the beneficiary organizations in the benefits distribution process. Finally, the study recommends strategies and policies for such natural disaster impacted economic units to be self-sustained within a short period. The findings provide a wake-up call in this context. A number of stark findings stand out which point an accusing finger in mismanagement of recovery process in a reasonable time period.

Sugar industry is one of the largest agro-based processing industries in India and has been instrumental in accelerating industrialization process, resource mobilisation, uplifting socio-economic status, and creating social infrastructure in under developed rural areas. It offers employment to nearly 26 million small and marginal farmers. Achieving sustainable development goals is must for an agrarian economy like India. An assessment of the sugar mills and setting targets for the relatively inefficient mills to improve their efficiency and productivity is crucial, as the interests of various stakeholders are largely dependent on its performance. In the next paper, Harjit Singh and Nikunj Aggarwal discuss the vital role played by Asia’s biggest sugar mill – Saraswati Sugar Mills, Jagadhari, Haryana (India) in the employment generation and upliftment of the socio-economic status and putting the district on the Industrial map of the country. Steps to increase productivity which ultimately will enhance competitiveness are also highlighted.

India is one of the emerging markets and retailing is deeply rooted in this country since many years. The retail scenario in India is still undergoing the process of transformation from unorganized to organized retailing practices. The root cause of all such problems is improper planning and thus the consequence is decreasing productivity in this sector. In India, retail remains a frontier industry which demands a lot of capital, scarce management skills and pays back over a long period of time. The ever escalating consumers’ demands have resulted in rise of globalize and competitive market where it is extremely difficult for the companies to survive. The function of the retailer involves holding inventory, breaking the bulk and selling of goods to the individual consumer at a margin. Over the years, the global retail market has noticed a successful and aggressive expansion of retail organizations. G.N. Patel and Smriti Pande in the last paper of this study evaluate the performance of 46 pharmacy retail stores and to analyze the impact of non-discretionary variables on the efficiency of the stores through dividing the decision making units (DMUs) into different categories. We trust that the papers in this special issue bring to surface several lesser-known facts about challenges of growth as faced by business and institutions in the context of present day internal and external environment.

We thank Emerald Group Publishing Limited and specifically the journal Editor-in-Chief, Professor Abbas J. Ali for providing us this opportunity to edit this volume.

G.D. Sardana, Tojo ThatchenkeryGuest Editors

About the Guest Editors G.D. Sardana is a Mechanical Engineer and has done his PhD from IIT-Delhi in Productivity and Performance. Presently he is Professor in Operations Management, and Chairman, Bimtech Center for Management Case Development, at Birla Institute of Management Technology. He has industry experience of 42 years chiefly at BHEL, ABB, and Singer. He is in academics for the last nine years. He has published over 90 papers: three papers have won Best Paper Awards from the Indian Institution of Industrial Engineering. His books include, Productivity Management (Narosa, 1998) and Measurement for Business Excellence (Narosa, 2009). He has edited 11 books on business cases.

Tojo Thatchenkery is Professor and Director of the Organisation Development and Knowledge Management Programme at the School of Public Policy, George Mason University, and Arlington, Virginia. His recent books include Making the Invisible Visible: Understanding the Leadership Contributions of Asian Minorities in the Workplace (2011), Positive Design and Appreciative Construction: From Sustainable Development to Sustainable Value (2010), Appreciative Inquiry and Knowledge Management (2007), and Appreciative Intelligence: Seeing the Mighty Oak in the Acorn (Harvard Business Review 2006 Reading List).