Strategy in Turbulent TimesNMIMS Industry Interaction

Seminar MumbaiR.Kannan

Hinduja Group16th March 2016

Emerging Trends• Global Economic Crisis of 2008 have spill over effects• world is yet to come out of the impact of this crisis• We are living in a VUCA world.• The risks have increased over the years • Predictability has become one of the challenges.• Proven models of forecasting don’t work.• Companies are not able to plan for long term.• Many of the developed economies have seen their

economic growth falling.• Oil and commodity prices have seen a big fall.• Unemployment has reached unprecedented levels.

Emerging Trends• No visible options available for kick starting the economy in

many of the leading economies in the world.• Lower economic growth in countries led to lower trade and

lower corporate Growth• Corporates are finding it difficult to increase the volume

demand for their products and there is a pressure on pricing.• Risks have become multi fold in the last few years and they

are arising from various directions.• There is an increased in uncertainty in Economic, Political,

Social , Technological and Environment aspects .• This has a great bearing on performance of a corporate

Emerging Trends• Growing world Population and it will be 8.3 billion People by

2030 with a Median Age increasing by 5 years to 34 years. 59% of world population will live in cities.

• Globalisation and future Markets . The globalisation of markets will continue and exports and FDI are likely to grow faster than GDP.

• Resources Security. Primary Energy consumption will rise by 26%.Half the world population will have water scarcity. There will be increased food demand.

• Co2 oxide emissions will rise by 16% and Global warning will be one of the major issues for management. Average temperature will rise by 0.5% to 1.5% .

Risks• China experiences a sharp economic slowdown• Russia's interventions in Ukraine and Syria precede a new

"cold war" .• Volatility culminates in an emerging markets corporate debt

crisis. • Due to external and internal pressures, the EU begins to

fracture .• Grexit" is followed by a euro zone break-up.• The rising threat of Jihadi terrorism destabilises the global

economy.• The UK votes to leave the EU.• A collapse in investment in the oil sector prompts a future oil

price Shock

India CEO Survey• 64 per cent of Indian respondents are very confident of their

growth prospects in the next 12 months as compared to 35 per cent globally.

• Indian CEO’s are preparing themselves for the technology disruption and and the global risks arising from various Economic, Political and other global events.

• Speed of technological change is a top concern for Indian CEOs this year. 79 per cent of CEOs are concerned about the influence the speed of technological change . 80 per cent of CEOs believe that over the next five years, technological advances will transform wider stakeholder expectations

• Exchange rate volatility concerns 80 per cent of CEOs in India and 73 per cent of CEOs globally.

India CEO Survey• Demographic shifts and change in global economic power will

transform wider stakeholder expectations.• 63 per cent of CEOs expect that customers are seeking a mix

of cost, convenience and functionality in products/services.• Up to 92 per cent of the CEOs in India reported that they are

changing the way they use technology to assess and deliver on wider stakeholder expectations.

• Data and analytics lead the way, with 78 per cent of CEOs feeling the need for it.

• Customer relationship management systems come next, followed by research and development and innovation.

CII Industry Survey – Dec 15• CII Business Confidence Index (CII- BCI) for October-December

2015 quarter stood at 53.9, up from 53.4 in the previous quarter.

• Majority of the respondents seem unsure about the recovery in credit growth.

• 64 per cent felt that the government’s initiatives for Improving ease of doing business have had a 10-30% impact at the ground-level.

• 55 per cent expect the exchange rate to range between Rs 63-67 per US dollar in 2015-16.

• 44 per cent expect improvement in both sales and new orders.

CII Industry Survey• Major share of the businesses expect capacity utilization to

remain at the 50-75%.• Majority of the respondents anticipate no changes in raw

material, fuel and credit cost, while Salaries are expected to increase .

• Most of the respondents expect status quo in after tax profits.• Majority of the respondents expect no significant change in

external trade .• Low domestic demand and lack of political consensus on

economic reforms emerge as the major concerns

Conclusions from Surveys• Customers and clients are top priority. The development of

online business models have removed the scope for differentiation .

• 90% CEO’s say Customers have the biggest impact on strategy.• Technology and risk management are the top areas .• Data and analytics technologies as generating the greatest

return for stakeholder engagement.• CEOs are most likely to change their talent strategy to focus on

their leadership pipeline.• Business could do more to measure the impact and value of

innovation

Conclusion from Survey

• Business success will be defined by more than financial profit.

• Business should be doing more to measure environmental impact.

• major changes are made in managing brand, marketing and communications.

• Skilled, educated and adaptable workforce should be a priority for business.

• There is a greater alignment to the Vision and Mission .• Corporates stick to their knitting and focus on Core

competencies .

Corporate Strategies• Corporate have started focussing on areas where they are

strong and restrict the focus to the markets where they are strong.

• Expansion initiatives are taken up with careful consideration.• Great movement to reduce the debt in the balance sheets.• They are moving towards high variable cost structure

reducing the fixed costs in the system.• Non core assets are being sold.• Cash generated from the assets are deployed in core business

Corporate Strategies to Focus• To build asset light business models.• Convert most of the fixed costs into variable costs.• Explore outsourcing as a main plank of the strategy.• Focus on growth should be on emerging high growth markets.• Focus should be on middle class consumer segments and fast

growing sectors.• Fast response. The enterprise should become highly agile and

adaptive to the developments at a good speed.• Increased Focus on short term performance.• Closely monitor the environmental developments and the

corporate performance on a continuous basis

Corporate Strategies• come up with appropriate response at regular intervals to

environment developments.• Sensing and addressing the rapidly changing values and

expectations of the stakeholders.• Use big data for decision making.• Should be a focus on conservation of resources .• Improvement in productivity of the enterprise.• Engage with the customer through various channels including

digital marketing strategies.• Adopt technology with an aggressive approach

Thank You