Managerial apartheid                                                                        Top
Why are Western MNCs our first choice?

It may be summer elsewhere. But it is definitely spring time in B-schools. Placements are over. Companies have skimmed off the cream with the bait of bulging salary packages. The news media have sung hosannas in the praise of the ‘exceptional’ talent from IIMs and other better B-schools. Institutes lower down the rungs are indiscriminately placing advertisements about their ‘excellent’ showing in the placements…

MBA aspirants are swooning over such information. Those who know the ins and outs of B-schools are, however, quite skeptical about the claims. They very well know how companies and B-schools artificially inflate pay packages. But most management aspirants are naïve enough to swallow the assertions, hook, line and sinker.

However, this column is not about the nefarious ways of business schools — in fact, a majority of them — who dupe students. It is about the average MBAs’ fascination for MNCs. It is generally presumed that MNCs, specifically the Western ones, constitute the Mecca of the corporate world. They are supposed to embody the best business practices, integrity and foresight. But this is far from the truth. Just see the frequency with which skeletons have been tumbling out of the corporate cupboard in the US. To name just a few who were mired in controversy and terminal crises: Enron, the biggest private sector energy company in the world; Worldcom, the second largest long distance telecom major in the US; Xerox, the inventor of photo copying machines; etc. Accounting behemoth Arthur Anderson was involved in many of these cases. As for business foresight, the reigning sub-prime mortgage crisis knocks the bottom out of the claim.

On the other hand, money is fast moving from the stagnating West to the galloping East. Financial pundits proclaim that the money is going to stay put in the East, in the foreseeable future. It is obvious that money shall migrate to geographies which give it a better return. India and China are leading ahead in the growth race. Japan too is emerging out of its decade-old recession. So the real action will take place in the East. MBAs will thrive here the most. Already, managers from the West are rushing to the Eastern world where a stint today adds tremendous value to their resume.

Serious management students would have noticed how a paradigm shift is taking place in the MNCs’ hierarchy. The MNCs are no longer a preserve of the white skinned. All hues will do as long as the mind and heart are in the right place. Here is a list of 10 NRI CEOs of global firms: Indra Nooyi*, Pepsico chairperson and CEO; Vikram Pandit*, Citigroup CEO; Lakshmi Mittal, Arcelor Mittal CEO; Arun Sarin, Vodafone CEO; Padmasree Warrior, Cisco CTO; Shantanu Narayen, Adobe Systems Inc CEO; Deven Sharma, Standard & Poors’ President; Vinod Khosla, venture capitalist; Dr Amar Bose, head, Bose Systems; and Rajiv L Gupta*, Rohm & Haas chairman and CEO. (Those marked with asterisk are amongst highest paid US CEOs).

Add to this list the names of leading Japanese, Korean and Chinese managers and you will find that the group portrait of global super managers will not have too many white faces. In India itself, Japanese and Korean automobile makers like Honda and Hyundai have left their US and European peers far behind. Consumer durable giants like the Korean LG and Samsung can impart lessons to their Western competitors who have lorded over the world for aeons.

Fundamentally, what is an MNC, after all? A company operating in more than one country. Several Indian companies have been doing that for ages. And with a resurgent Indian business on an acquisition spree, there will be no dearth of Indian MNCs dotting the globe. Ratan Tata’s appetite from Corus to Jaguar to Land Rover knows no end. Western companies are selling their crown jewels to Indian corporates. No wonder, India ranks among the top five in global M&A growth.

This being the scenario, one wonders why Indian MBAs continue to remain in thrall of the Western MNCs. Is this a legacy of the British Raj in India? Most likely! There seems no other reason for a country of largely browns and blacks hankering for ‘convented’ and ‘gori’ (fair skinned) brides through matrimonial advertisements. Enough of this apartheid. Wake up!

— The author is the founder-editor of Management Compass and senior general manager, corporate communication & CSR, Birlasoft. Views are personal. n   Top

A harvest of worries                                                                         Top
Spiralling food prices could wipe out UPA’s achievements over the last four years

The Rs 60,000-crore farm loan waiver scheme has been all but forgotten. The significance of increasing the coverage of the National Rural Employment Guarantee Act to the entire country is no longer being avidly discussed. The attention of the entire political class is on one issue, an economic phenomenon that everybody understands and, that is, inflation.

High prices touch everybody’s life. But inflation hurts the poor much more than it hurts the rich. This is why economists describe inflation as a ‘tax on the poor’. On this particular occasion, inflation is like a double-tax because it is being driven by food prices. And one does not have to be an economist to realise a simple fact: the poor spend a higher proportion of their earnings on filling their bellies in comparison with the affluent section of society or even the middle classes.

The fact that food prices have risen — and continue to rise —sharply is a source of considerable consternation to the country’s rulers. Those in the UPA government as well as supporters of the Congress-led coalition in power are rather jittery. They apprehend that all the achievements of the government over the last four years —including the farm loan waiver, the NREGA and the Right to Information Act — would be sidelined by a single factor, that is, the inability of those in government to keep food inflation under control.

The government is arguing that high food prices are a global reality. True, food prices the world over are currently at record highs. Wheat prices in international markets doubled during the course of 2007. What this implies is that even if the Indian government imports food in large quantities, it would, in effect, be importing inflation. In any case, farmers in Punjab and Haryana are unhappy that the government has imported wheat from Australia at a landed price that is almost twice the minimum support price of Rs 1,000 a quintal paid to them.

The measures taken to curb inflation include restrictions on exports of cereals like rice and wheat and the lowering of customs duties to make imports of certain items like palm oil relatively cheaper. These steps may marginally mute inflationary expectations in the coming months. Nevertheless, politicians belonging to the incumbent coalition are rather scared that they may not be re-elected. Why?

First, it is no use telling the aam admi that inflation here is a consequence of high food prices outside the country. The impact of this kind of explanation is a bit like what Indira Gandhi used to say about corruption being a global phenomenon. The home-maker is not concerned that the annual rate of inflation in Robert Mugabe’s Zimbabwe last year stood at an incredible 1,16,000 per cent!

That’s not all. Few believe the government when it states that the annual rate of inflation as measured by the official wholesale price index touched 7.4 per cent for the week that ended on March 29. The marketplace has a very different tale to tell. Here are a few statistics compiled by the Union government itself: in the country’s capital, New Delhi, edible oil prices have gone up by as much as 40 per cent over a period of 12 months, rice prices are up by 20 per cent, dal by 18 per cent and milk by 11 per cent.

The government is again talking of the need to take stern action against hoarders and black-marketeers, the favourite whipping-boys of Indian politicians right through the 1960s and 1970s. The apprehension in the government is that Indra Bhagwan may not smile too kindly on the country during the coming months. If indeed the monsoon turns out to be unfavourable, inflationary expectations are certain to receive a fillip.

Who remembers that the annual rate of inflation (measured by the WPI) had jumped from 10.3 per cent in 1990-91 to 13.7 per cent in 1991-92, the first year that Manmohan Singh served as the country’s Finance Minister? Public memory may be short but the proverbial person on the street understands a few facts of life.

Even if the rate of inflation comes down in the future — as it probably will — it does not mean that the prices of food products will come down. What a lower inflation rate would merely mean is that the speed or the pace at which prices are going up would slow down. All of which is pretty bad news as far as India’s rulers are concerned. Who does not know that even if the classes rule, it is the masses who vote?

— The writer is editor, ‘Realpolitik’, a teacher and a journalist with 30 years’
experience in various media — print, radio, television, the internet and documentary film making. Top