Make in India has brought in the required thrust for Indian Manufacturing. This has pushed many MNCs intensify efforts in setting up manufacturing facilities across India. To a large extent, this has benefited Indian value chain.
Make in India has brought in the required thrust for Indian Manufacturing. This has pushed many MNCs intensify efforts in setting up manufacturing facilities across India. To a large extent, this has benefited Indian value chain.
It is natural for MNC OEMs to bring in their current suppliers elsewhere as preferred Tier 1 sources. Depending on Investment and volume value estimates many such OEM suppliers have either set up companies on their own or have formed JVs with Indian entities.
While the World integrates into Uni-polar Geo-economically, Products and Services will naturally be of Global standards. Given the value chain dynamics, many Indian suppliers have acclimatized themselves with International standards and specifications.
Traditional exporters look at safe and developed markets. Smart exporters look for un-explored territories and under developed markets for first mover advantages.
The Base:
Going Global is not new to Indian Manufacturing. In Garments, many Global brands source from India and Indian makes are sold all over the World. Of course there are many challenges exporters need to be aware of and overcome. Nevertheless it is worth emulating the way Indian Garment Manufacturers have gone about in becoming Global.
It is to be remembered - there is always an incentive to sell in our own Brand rather being contract manufacturers. Strategies defer and decision should be completely rational after due analysis of risks and returns.
The Beginnings - SWOC Analysis
Vulnerability of Global markets is manifold compared to domestic. In domestic markets, mostly we operate in similar business environs and a few un-known factors. Selling in other countries is a lot different due to many un-known factors. Responding to changes may not be as quick as in known, familiar domestic markets. Such delays may have a significant impact on business.
Global integration of Manufacturing has to be looked at positively, despite many developed economies shifting rightwing. Indian manufacturing offering significant value proposition will outweigh the benefits of looking inward and such rightwing economies will be forced to open up more due to social pressures and demographic preferences.
First step to Go Global is to do a diligent Strength, Weakness, Opportunities and Challenges analysis from Product-Process perspective. Both are important as they are mutually dependant and cannot be seen in isolation for sustaining business.
Strengths and Weaknesses are mostly internal compared and benchmarked with peers - usually focused on Capacities and Capabilities taking into account Infrastructure, Technical, Financial and HR competencies.
Opportunities and Challenges are external - both controllable and non-controllable. It is important to control controllable factors and influence the non-controllable factors. Opportunities should be looked at from - Market & Product / Application and/or jointly with other perspectives as below:
‘Market’ can be substituted with ‘Application’ and/or such analysis can be multi-dimensional too.
SCPELT Factors:
After SWOC, natural analysis is Socio Cultural Political Economic Technological and Legal environment in Target Markets. To begin with is to look at Indian Exports across segments and target similar markets/ environs. One should be open to speak to and about the Choices and Challenges.
Mostly organizations base their export decisions on Economic analysis. This is ok for one time. For sustained exports, it is important to look at a market holistically as above.
Step:
After SWOC & SCPELT, next step is to go in for Market Segmentation, Target, Enter, Position and Penetrate. This can be done both for and within the market after we narrow down on the market to export. This exercise usually involves micro analysis and planning. If need be, external agencies can be involved before decisions are made - like Dun & Bradstreet.
The Differentiators - SQCDLM
First and foremost question is why would a market import? And that too import from India? This question needs to be addressed truthfully. Some of the aspects which will help us to define the need for exports are Safety, Quality, Cost, Delivery, Logistics and Management. Though it is always a combination of all the said aspects, there will have to be one core differentiating factor. Usually it is total cost of buy and/or as an alternate source - especially when the market or customer is import dependent.
It is to be reckoned - despite regulatory pressures for working with organizations of certain standards, decisions to buy are generally made on landed cost, after discounting for Forex variations.
Operationalising Exports:
Strategies as above apart, an exporter is to be aware of:
There are certain licenses like EXIM required for import export and organizations like EPCG / FIEO usually render help. It will also be good to know about the functioning of ECGC and/or other Banking schemes related to exports. When operating in direct consumer markets, especially in developed economies, sufficient insurance cover (indemnity cover) for product related performance is better. Therefore costing for exports should reckon all the said factors.
It is to be noted that logistics cost is very significant to certain markets and this is usually variable depending on multiple factors, mostly circumstantial.
Beginnings shall always be to look at export opportunities with our existing customers. This will offer necessary cushion in case of need as at least the product and customer are familiar. If not, it is important to know the reasons why such opportunity does not exist.
Large OEMs usually have the bandwidth to source from anywhere. There are many SME organization which do not have such bandwidth and are good targets for Indian Manufacturers.
Conclusion:
Exports should be based on business fundamentals - Growth & Profits. Exports for sake of Exports are risky. All costs and benefits after suitably discounting for Forex variations should reckoned exclusively for exported products and services. Choice for Indian Manufacturers is limited and every manufacturer should look for export opportunities irrespective of products they operate in. Long term benefits of such market expansion could be Cross Learning, incremental cost advantages and shared best practices.
Lets Go Global with Focused efforts and Targets.
It is natural for MNC OEMs to bring in their current suppliers elsewhere as preferred Tier 1 sources. Depending on Investment and volume value estimates many such OEM suppliers have either set up companies on their own or have formed JVs with Indian entities.
While the World integrates into Uni-polar Geo-economically, Products and Services will naturally be of Global standards. Given the value chain dynamics, many Indian suppliers have acclimatized themselves with International standards and specifications.
Traditional exporters look at safe and developed markets. Smart exporters look for un-explored territories and under developed markets for first mover advantages.
The Base:
Going Global is not new to Indian Manufacturing. In Garments, many Global brands source from India and Indian makes are sold all over the World. Of course there are many challenges exporters need to be aware of and overcome. Nevertheless it is worth emulating the way Indian Garment Manufacturers have gone about in becoming Global.
It is to be remembered - there is always an incentive to sell in our own Brand rather being contract manufacturers. Strategies defer and decision should be completely rational after due analysis of risks and returns.
The Beginnings - SWOC Analysis
Vulnerability of Global markets is manifold compared to domestic. In domestic markets, mostly we operate in similar business environs and a few un-known factors. Selling in other countries is a lot different due to many un-known factors. Responding to changes may not be as quick as in known, familiar domestic markets. Such delays may have a significant impact on business.
Global integration of Manufacturing has to be looked at positively, despite many developed economies shifting rightwing. Indian manufacturing offering significant value proposition will outweigh the benefits of looking inward and such rightwing economies will be forced to open up more due to social pressures and demographic preferences.
First step to Go Global is to do a diligent Strength, Weakness, Opportunities and Challenges analysis from Product-Process perspective. Both are important as they are mutually dependant and cannot be seen in isolation for sustaining business.
Strengths and Weaknesses are mostly internal compared and benchmarked with peers - usually focused on Capacities and Capabilities taking into account Infrastructure, Technical, Financial and HR competencies.
Opportunities and Challenges are external - both controllable and non-controllable. It is important to control controllable factors and influence the non-controllable factors. Opportunities should be looked at from - Market & Product / Application and/or jointly with other perspectives as below:
‘Market’ can be substituted with ‘Application’ and/or such analysis can be multi-dimensional too.
SCPELT Factors:
After SWOC, natural analysis is Socio Cultural Political Economic Technological and Legal environment in Target Markets. To begin with is to look at Indian Exports across segments and target similar markets/ environs. One should be open to speak to and about the Choices and Challenges.
Mostly organizations base their export decisions on Economic analysis. This is ok for one time. For sustained exports, it is important to look at a market holistically as above.
Step:
After SWOC & SCPELT, next step is to go in for Market Segmentation, Target, Enter, Position and Penetrate. This can be done both for and within the market after we narrow down on the market to export. This exercise usually involves micro analysis and planning. If need be, external agencies can be involved before decisions are made - like Dun & Bradstreet.
The Differentiators - SQCDLM
First and foremost question is why would a market import? And that too import from India? This question needs to be addressed truthfully. Some of the aspects which will help us to define the need for exports are Safety, Quality, Cost, Delivery, Logistics and Management. Though it is always a combination of all the said aspects, there will have to be one core differentiating factor. Usually it is total cost of buy and/or as an alternate source - especially when the market or customer is import dependent.
It is to be reckoned - despite regulatory pressures for working with organizations of certain standards, decisions to buy are generally made on landed cost, after discounting for Forex variations.
Operationalising Exports:
Strategies as above apart, an exporter is to be aware of:
- Black listed countries
- Preferred and enemy countries
- Multilateral Trade Agreements if any
- Export incentives like EPCG Benefits, IT Benefits, MEIS Schemes, Advance License schemes, SEZ/ EOU Benefits, etc..
There are certain licenses like EXIM required for import export and organizations like EPCG / FIEO usually render help. It will also be good to know about the functioning of ECGC and/or other Banking schemes related to exports. When operating in direct consumer markets, especially in developed economies, sufficient insurance cover (indemnity cover) for product related performance is better. Therefore costing for exports should reckon all the said factors.
It is to be noted that logistics cost is very significant to certain markets and this is usually variable depending on multiple factors, mostly circumstantial.
Beginnings shall always be to look at export opportunities with our existing customers. This will offer necessary cushion in case of need as at least the product and customer are familiar. If not, it is important to know the reasons why such opportunity does not exist.
Large OEMs usually have the bandwidth to source from anywhere. There are many SME organization which do not have such bandwidth and are good targets for Indian Manufacturers.
Conclusion:
Exports should be based on business fundamentals - Growth & Profits. Exports for sake of Exports are risky. All costs and benefits after suitably discounting for Forex variations should reckoned exclusively for exported products and services. Choice for Indian Manufacturers is limited and every manufacturer should look for export opportunities irrespective of products they operate in. Long term benefits of such market expansion could be Cross Learning, incremental cost advantages and shared best practices.
Lets Go Global with Focused efforts and Targets.