Wednesday, July 30, 2008

Economics and Politics




Never before has Indian Corporate Inc. been under finer scrutiny when it comes to loyalty. When I use the term 'loyalty', I intend to focus the spotlight on the various factions that an organization is responsible towards i.e. country, organizational growth, society and in some cases, family.
An organization's loyalty towards its own growth may at times hinder with its commitment towards its root nation. Something similar happened when the owners of
Ranbaxy decided to sell the company to the Japanese pharmaceutical giant, Daiichi. Very recently during the Business Standard Awards function, the chief guest of the occasion, Mr.L.K. Advani openly condemned this move by Ranbaxy terming it 'a cause for worry'. Mr Advani feels that profit making motives should never override national interests.However, this is just one side of the coin. I personally can't see anything wrong with the strategy that the Ranbaxy promoters have adopted . They feel that the only way to keep the company growing is to expose it to a much larger platform. Broader exposure is exactly what the company would gain under Daiichi which is a huge name in the international pharmaceutical market. Moreover, if Ranbaxy grows in stature, so would the Indian pharmaceutical industry. After all, the change is only being implemented at the ownership level. Its not that Daiichi would be closing down Ranbaxy's business in India, is it? Eventually, both Ranbaxy and the Indian pharmaceutical market stand to gain from this move. Wouldn't it be great if we could actually look at the larger perspective instead of unnecessarily making it an issue of national pride?Similar is the case when it comes to the RIL-RCom-MTN fiasco, though there's a twist in the tale. Here the battle is more about personal differences and bruised ego rather than national interests. Only the Ambani brothers know as to why they can't stay away from each other's business. Supposedly, Reliance Industries Limited has the right of first refusal when it comes to a sell off in the Anil Ambani led group. Hence, RIL is going all out in making sure that Reliance Communications (which used to be Mukesh Ambani's baby) isn't sold to a foreign entity.The fact however is that no one is aware of the actual reason behind this hindrance from RIL. Is it because Mr. Mukesh Ambani cannot see his start up being sold to someone outside the Ambani family? Is it because he feels no matter what, RCom should remain an Indian entity(given Reliance's national lineage)? Or is it just the case of bruised ego? The point is, what does the picture look like in terms of the larger perspective. If RCom does become a part of MTN, it would increase its foothold by an enormous proportion (courtesy MTN's international network). The deal would also mean exposure to MTN's advanced set of technologies. Ultimately, the entire deal would benefit RCom's customers and the Indian telecom sector on the whole. Of course, even the shareholders stand to gain quite immensely. If the picture looks quite rosy on the larger scale, then why this unnecessary interference?The intention behind citing these examples was not to criticize the people involved. Rather, the objective was to drive in the case of looking at the bigger picture. In this age of globalization and consolidation, the more flexible organizations are, the more they would stand to gain and subsequently help others gain as well. Corporate loyalty is a relative issue and what matters the most is how organizations and the ones in charge perform the balancing act. After all, not all targets can be hit with the same arrow!

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