10 lessons we learnt over 30 years of making companies successful in India – Part 1

This two-part series will share ten invaluable lessons that can help any company, irrespective of the size and industry which is keen to enter or expand in India.

Many of these lessons are unique to India, while a few may apply to other emerging economies. So let’s get started.

Lesson #1 - Assume you know very little

When crafting or re-crafting an entry strategy, bad assumptions are a hundred times worse than plain ignorance. This especially rings true for a country with a size and diversity of India where stereotyping or generalization can lead to major miscalculations. Different regions within India vary not just in terrains, temperatures, languages, food and cultures but also in taxation, spread of industries, infrastructure, logistical strengths, and business cultures. So doing a thorough assessment and testing hypotheses can save a great deal!

Lesson #2 - Set up on your own

As much as possible, going on own is undeniably the best way, opposed to tying up with an importer-distributor. A company-owned structure out-performs a third party distribution set-up by a factor of anywhere between 4 to 7. This is due to the low trust put in by a customer in distributor’s technical proficiency and ability to provide the after-sales services. Companies, on the other hand, not only lose money but also suffer a dent in reputation by tying up with distributors who don’t do justice to their products. Many of these distributors lack a robust business plan or access to large key customers limiting them from winning turn-key assignments. Not surprisingly, it is challenging for a foreign player to conduct a thorough due diligence initially and then to control business model and distributor’s operations at a later stage.

Lesson #3 - Most of the time: forget about a joint venture.

Traditionally Joint Ventures have a failure rate of 90% over a 3-5 years run. A 100% subsidiary will out-perform any joint venture over that duration. Having said

Lesson #4 - Be prepared to walk away from an acquisition if in doubt.

An acquisition strategy is only as good as the targets available. Most acquisitions are over-priced and often end up as a can of worms. So make sure you do thorough due diligence – a 360 degree round-up preferably! In India family owned businesses (usually attractive acquisition targets in various industries) prove extra tricky to crack a deal with. Also, don’t set your eyes on deal closure as the final destination. More than half of all acquisitions face post-deal challenges and need additional and expert measures to ensure 100% integration.

Lesson #5 - Plan for it.

Establishing your business in India needs a solid plan – that can help you counter the initial losses and to leverage early profits. A medium to long term strategy based on realistic numbers and forecasts is a must to ensure you reap the fruits of the attempts – instead of diving into the water to find you hit the shallow end! To be concluded in the next part. We hope that these lessons prove useful to you. If you have questions or would like to reach us – write to insights@tecnovaglobal.com