Issues on Management in India - Essay Example

Asian Management - Management in India Answer: India is an ancient civilization, rich in arts and possessing intriguing wisdom. The country remained poor and became known for the failure to give its people a higher standard of living. In the year of 1970 countries in South-East Asia started in the road to modernization. In 1980 China followed the modernization and became successful too. But India still did not move on the path of modernization. Then finally in 1990 substantial policy reforms were implemented by the country and since then the country strengthen it economy and management style accordingly. Changing Economic System and Management Style 1st Phase 1950 – 1980: India’s state directed industrialization Indian economy during 1950 to 1980 was highly dominated by the agriculture sector and the five year plan. Some of the acts which were introduced during this period were Industrial Policy Resolution 1956 also called as the unleashing of ‘license raj’, Monopolies and Restrictive Trade Practices Act (MRTP) and Import substitution. (PBS, 2004) Impact on Management Style Bureaucratic control of private sector through licenses, permits, taxes and tariff infuriated quality global competitiveness and managerial imagination. This high level restriction, poor quality of infrastructure along with high level of corruption caused to migration of entrepreneurs from India. Family conglomeration was seen in the Indian corporate sector led by names like Birla, Reliance, Tata, Bajaj, Mahindra, Godrej and Thapar. 2nd phase 1980 – 1990: India limited internal liberalization (deregulation) Rajiv Gandhi emphasizes economic liberalization and pushes for development of the technology sector. The government introduces economic reforms, including reduced quantitative restrictions on imports, decreased subsidies, fewer licensing requirements, the sale of shares in select public enterprises, and tax reforms.(Source: Veen R.V., 2006) Impact on Management Style During this period of liberalization comprehensive changes were seen in the mindset of corporate leaders. India became the host for the global firms which brought world class management in the country. Indian education system improved and India produced half a million of engineers, thousands of doctor and MBAs per year. Indian entrepreneurs who were used to the art of manipulating, managing and circumventing the regime of controls and restrictions and the power centre of licensing, would be able to break away from the past and rise to the occasion of liberalization. 3rd phase 1991 – India’s current: Deregulation, privatization & globalization The country stepped into liberalization. The government sold off shares in its companies and opens the door to foreign investment. Liberalization brought GDP growth to 7 percent, and pushed the inflation down. A new private sector emerged, especially in technology services, side by side with government-sponsored Research and Development efforts in Bangalore. India becomes a major exporter of software. The government favored foreign investment in infrastructure and high technology over consumer products. Deregulation and decentralization of the economy continued during this period. (Source: Bala M., 2005) Impact on Management Style Internal competition of more than 500 companies, entrepreneurs and producers has led India into a global innovation and quality club. The managerial culture within knowledge industry sector enshrines world class quality flat and empowered work teams with a strategic managerial mission and visions. An out of the box thinking emerged in the mind of Indian managers and entrepreneurs and some new trend emerged in service sector which include outsourcing of knowledge and business. Indian Managers started believing in joint ventures, merger and acquisitions. World’s biggest merger and acquisitions started and led by Tata, Reliance, Mahindra and Mahindra, Infosys and many more. Changing political system and management style 1st phase 1950-1980: The influence of colonial rule After independence Indian political and economic system was influenced by the colonial experience which was seen by Indian leaders as exploitative in nature. All economic and political policy were tended towards protectionism, with a strong emphasis on import substitution, industrialization, state intervention in labor and financial markets, a large public sector, business regulation, and central planning. Jawaharlal Nehru, the first prime minister, along with the statistician Prasanta Chandra Mahalanobis, carried on by Indira Gandhi formulated and oversaw economic policy. Impact on Management Style Indian management style during this period had a high effect of family conglomeration. Bad infrastructure facilities and at the same time high level of corruption in the bureaucratic system ruined Indian managerial innovative thinking and hence halted the emergence of entrepreneurs. 2nd phase 1980 – 1990: Post colonial rule In the late 80s, the government led by Rajiv Gandhi eased restrictions on capacity expansion for entrepreneurs, removed price controls and reduced corporate taxes. Since then, the impact of liberalization remained the same, irrespective of the ruling party. No party has tried to help powerful lobbies such as the trade unions and farmers, contentious issues such as reforming labor laws and reducing agricultural subsidies. Impact on Management Style Due to liberalization, the Indian private sector, which was usually run by oligopolies of old family firms and required political connections to prosper was faced with foreign competition. Indian management started practicing and handling economy of scale, revamping management, focusing on designing new products and relying on low labor costs and technology. 3rd phase 1991– current: Coalition Rule The period of coalition rule has an effect of coalition government in India. All the political and economic measure is not dependent on a single political party. This gave a new approach to some good economic measures like privatization and globalization. Infrastructure became a priority in the political agenda and the corporate sector relived by various effective economic majors. To help the corporate sector and enhance the technology and infrastructure various tax reliefs through SEZ (Special economic zone) were given. Impact on Management Style During this period the Indian management style flourished because of friendly political environment. Also due to supportive economic measures, an out of the box thinking came in the mind of Indian managers and entrepreneurs. The managers and government started setting the mission and vision for the country all together. (Kelegama & Parikh, 2000) Conclusion Indian economy has seen various phases of upward and down ward movement in the past 58 years. Since 1950-1980 the country economic growth was negligible due to late economic reforms, and high level of corruption. But since 1991 the country has seen a turnaround in its economic conditions. With improving economic situation the management style in India has also taken a very good step forward to take benefit of friendly and supportive economic and political situations. Indian management style is changing from the family conglomeration to entrepreneurship with some good and innovative entrepreneurs. Bibliography Bala, M. (2005). Economic Policy and State Owned Enterprises: Evolution Towards Privatisation in India. SSRN , 5-14. Khanna, T., & Palepu, K. (2000). Is Group Affiliation Profitable in Emerging Markets? An Analysis of Diversified Indian. J-store (Journal of Finance) , 5-12. Veen, R. V. (2006). Indias road to developement.SSRN (Journal), 10-15. PBS. (2004). Commanding Hights. Retrieved from Commanding hights: http://www.pbs.org/wgbh/commandingheights/lo/countries/in/in_economic.html Kelegama, S., & Parikh, K. (2000). Political Economy of Growth and Reforms in South Asia. Global Development Network , 2-19. Read More