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The
Strategies continues...
Managerial talent
Fortune 500 companies are leveraging India as a source of high-quality
managerial talent. These managers are trained and subsequently assigned
to global positions:
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Unilever considers India a vast reservoir
of managerial talent for global posting. |
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GlaxoSmithKline (GSK) PLC, the pharmaceutical
giant, regularly promotes managers from India to other geographies
of GSK. Personnel from Citigroup India are routinely assigned
to global positions at Citigroup. |
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In Prudential, Indian managerial talent is well
regarded and personnel from India have moved on to regional
roles in Asia. |
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Johnson & Johnson's (J & J) Indian R&D
and testing centers provide services to J&J worldwide. Jansen
Cilag (the pharma division of J&J) has a stability center
in India. Indian managers are constantly promoted to overseas
operations. An Indian team is also managing the supply-chain
planning for the Asia Pacific region. |
Sourcing base
Fortune 500 companies are leveraging the availability of a wide
range of raw materials as they reduce the cost of inputs for manufacturing.
They are also exploiting economies of scale and their bargaining
power (on account of bulk purchases) in India:
Coca-Cola India exports commodities and materials such as tea, coffee,
polyethylene terepthalate polyester (PET) resin, closures, crowns
and labels to its global operations.
Localizing the supply chain
To compete effectively on cost, Fortune 500 companies are setting
up operating structures involving various degrees of localization
of the supply chain. For example, local manufacturing is allowing
Fortune 500 companies to avoid paying high import duties, in addition
to leveraging India's low-cost and productive workforce. Many Fortune
500 companies are also leveraging the initiatives taken up by various
state governments to attract investments, such as those related
to improvements (business environment, resource availability), incentives
(tax holidays, policy support) and investments (joint development).
The following are some examples of how Fortune 500 companies are
localizing the supply chain to minimize import duties, in addition
to leveraging India's low cost and productive workforce:
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LG manufactures PC monitors and refrigerators
in India to overcome high import duties and to leverage Indian
benefits. |
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To derive Indian advantages and overcome high
import duties, Samsung India has manufacturing facilities for
color TVs, microwave ovens, washing machines and air conditioners
in India. |
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BASF has adopted a strategy of manufacturing
its products in India in order to exploit the cost advantages
of the country. The group aims to derive 70% of its sales from
local manufacturing facilities in India. |
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A high degree of localization has enabled Ford
to keep its manufacturing costs low. Ford India's localization
program crossed the 90% mark in 2003. |
Meanwhile, as for the American multinationals
in particular, the study reveals that they're all making money.
A majority of US firms with a presence in India have been reporting
double-digit year-on-year growth. According to a study conducted
by the Boston Consulting Group, the Indian arms of two American
banks, Citibank and Bank of America, are more profitable in India
than their global average.
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