Monday, November 29, 2004

Ships are safe in harbour but....

....they are not meant to be there!!!
Yeah, this was one of the topics for essay for XLRI last year.
I think it is an easy topic as far as interpretation is concerned. This topic has a striking parallel with the state of Indian companies pre-liberalisation. Foreign competition was not allowed so that indigenous companies could grow. But take for example, Bajaj scooter or Padmini cars in those days. People had to wait for months and sometimes even years to get the number and get hold of a scooter or a car. There was no alternative because there was no competition. Both these companies made money but they did so in a highly uncompetitive environment. Post-liberalisation, when MNCs flooded Indian markets, and competition grew by day, everything changed. Why! I don't remember seeing any Padmini car myself since sooooo long. The true test of the business is when it faces competition.
Same is the case with several sectors in India which are protected by government. Telecom used to be one such sector but now recently our Telecom and IT Minister Mr Dayanidhi Maran has declared that a hike is expected for FDI in telecom from 49% to 74%.Till now apart from oppositions from Left, security agencies have also not cleared the idea.The underlying idea is that when there is major stake of foreign investors, they bring competition and better technology with them, this leads to growth of the company as well as test its adaptibility according to the needs of the consumers.
Thus although ships are safe in harbours, they are not meant to be there, they are meant to venture out and face the tide, take people and goods across the sea.
Even in our lives, there are several safe alternatives, which most of the people resort to but Dhirubhai Ambanis, Tatas, Birlas are made out of taking risks and facing challenges.

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