Remaining Competitive: Strategies for Small Medium Enterprises
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This document discusses strategies for small and medium enterprises (SMEs) in India to remain competitive. It summarizes the perceptions of "Brand India" and challenges SMEs face in the domestic market. The document advocates for two competitive strategies: 1) Focusing on internal structure and company spirit by empowering employees and decentralizing decision-making. 2) Building the company brand through consistent branding, visibility, and product innovation. It provides an example of implementing these strategies at SAGE Publications India between 2006 and 2011, which resulted in increased revenues, profits, lower attrition, and other improvements.
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Remaining Competitive: Strategies for Small Medium Enterprises
- 1. Los Angeles | London | New Delhi Singapore | Washington DC India Strategy Forum 2011 - Remaining competitive: possible strategies for SMEs Vivek Mehra Managing Director and CEO SAGE Publications India Pvt Ltd
- 2. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC What is SMEs’ true value to Brand India? ● Contribution • 45% of industrial output • 40% of exports • Employing 60 million • Creating 1.3 million jobs every year • Produce more than 8000 quality products
- 3. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – Global Perceptions ● Bureaucratic and corrupt ● Outsourcing hub for computer software ● Cheap destination for outbound calling ● Questionable quality of products ● Low skill base for technical products ● Culturally incompatible
- 4. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – Fabled domestic market ● Fragmented across segments ● Low accountability – • Will save tax and forego product warranty • High cash spend and hence true income suppressed
- 5. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – Fabled domestic market ● Access to global markets ● High aspirational levels especially of Gen X and Gen Y ● High costs of living – housing, food and transportation (to work) consume 80% of income
- 6. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Brand India – For SMEs: a challenge or opportunity? ● A challenging opportunity ● Extremely price sensitive across all segments • Except the very creamy layer ● Savings based on perceived value not real value (Rs. 2 per sachet is perceived to be cheaper than the bottle) ● SMEs not small enough to survive on local clients (except in remote rural areas) ● Not large enough to get economies of scale
- 7. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC What constitutes good competitive strategy? My top 2 Internal structure and company spirit Brand building leading to product innovation
- 8. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: (Internal structure and spirit) Illustration using SAGE (2006) ● 98 employees ● Middle single digit operating profit ● Revenue that of a large SSI (small ME) ● Decision making highly centralized – (resting with the MD) ● Attrition rate 40% ● Average spend per employee (non salary) Rs. 1500
- 9. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC ● Managers with no real empowerment ● No agenda for training and developing individuals ● Office located in a house – aggressive sealing drive ● Low aspiration among employees ● MD not easily accessible to employees Competitive strategy1: (Internal structure and spirit) Illustration using SAGE (2006)
- 10. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: basic re- structuring ● Empowering managers – decision making decentralized ● Building processes (automation) ● Documenting knowledge (internal) ● Building (manpower) redundancy within departments
- 11. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: HR redefined (the CEO’s agenda) ● Open door policy ● Providing anonymous access ● Creating open forums for discussions (Monthly Staff Meetings) ● Departmental outings to build stronger teams
- 12. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: HR redefined (the CEO’s agenda) ● Interdepartmental conflict resolution procedures defined tightly ● Direct involvement in the appraisal and annual increment process • Charting every employee’s career path
- 13. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy – 1 HR redefined (the employee is the first customer) ● Profit sharing with employees down to the grass-root level ● Sharing company performance with employees ● Documenting hiring processes ● HR policies made employee oriented and not merely legally compliant ● Advertising for candidates repurposed
- 14. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 1: HR redefined (the employee is the first customer) ● Including families in medical insurance policies ● CEO actively overruling policies in favour of genuine employee problems • Extension of maternity leave • Extending financial help beyond basic medical insurance
- 15. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 2: (brand building leading to product innovation) ● Relocating from a house to a professionally laid out open plan office ● Ensuring consistent branding across products and activities ● Building visibility across core markets ● Strategic partnerships with key stakeholders
- 16. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Competitive strategy 2: (brand building leading to product innovation) ● Strengthening product lines, increasing output (60 to 100 books, 16 to 50 journals) ● Adding product lines (swimming against the current) • Legends in Marketing • SAGE Impact • SAGE Law
- 17. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Strategic Tie-ups
- 18. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Report Card 2011 vs 2006 ● 227 employees ● Revenue up 5x ● Double digit operating profit; growth 4.5x ● Attrition = 10% (industry standard 18%) ● Average spend per employee (non salary) = Rs. 20,000 ● Average print run • Academic 1200 units (industry standard 300) • Retail 3300 (industry standard 1600)
- 19. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Sneak peek ● Legends in … ● SAGE e-veda ● Journals 50 to ??? ● Project Aristotle ??? ● …???
- 20. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Two rules to live by A CEO doesn’t live in an ivory tower, he lives in a glass house. Break the mould.
- 21. India Strategy Forum 2011 Los Angeles | London | New Delhi Singapore | Washington DC Thank you Vivek Mehra vivek.mehra@sagepub.in contactceo@sagepub.in